Why Samsung Galaxy Z Fold 2 5G's $2,000 price tag isn't actually that bad

What a world we live in when the announcement of a $2,000 price tag for a phone seems... not that bad. Samsung on Tuesday provided more details about its new Galaxy Z Fold 2 5G, which it first showed off at a virtual Unpacked event on Aug. 5. The biggest tidbit shared during "Unpacked Part 2" was the device's price: $2,000 in the US -- $20 more than last year's model -- which converts to about £1,490 or AU$2,700.

While $2,000 is prohibitively expensive for many people, especially in the middle of a pandemic, the pricing could have been worse. Samsung packed features into the Z Fold 2 that address most complaints with the older model, and it refined the foldable into even more of a sleek, luxury device. It even expanded its Galaxy Z Premier Service -- which provides dedicated tech support to foldable buyers -- to include perks like a free membership to FoundersCard and delivery of a meal from a Michelin starred restaurant. And Samsung added improvements like 5G to the US model. 

"If you look at what they've done from a tech perspective, I was expecting it to be slightly more expensive," Creative Strategies analyst Carolina Milanesi said. "But they kept the price. It's one thing to say $2,000, but it's another to go over to $2,200 or $2,300." 

Samsung's latest foldable, which hits stores Sept. 18, comes at a difficult time for the phone market. The novel coronavirus has infected over 25 million people around the globe and killed about 850,000. Millions of people are out of work amid a recession that's hitting the US hard, and COVID-19 shows no signs of abating in many places in the world. People have been scooping up electronics that let them work or take classes at home -- like webcams and laptops -- but they've been shunning purchases like 5G smartphones . This year, the phone industry will see its biggest drop in sales in a decade, according to CCS Insight. 

But unlike the Galaxy Note 20, which starts at $1,000, the Z Fold 2 is clearly different from the pack. It's a phone with a design that screams luxury, and while this is by no means a mass-market product, there will likely be a niche audience of people insulated from the impact of the coronavirus willing to pay that premium for something unique. 

While foldables will be a tough sell in this environment, Samsung always finds a crop of buyers who want the latest and greatest -- and don't mind paying for that privilege. 

"We can all probably intuitively agree that [$2,000 is] the high end of what someone's going to be willing to pay for a phone," Drew Blackard, vice president of product management for Samsung Electronics America, said in an interview. "For all intents and purposes, this is a luxury item. That's why we're providing all the benefits along with it for device ownership."

Finessing the foldables

When the Galaxy Fold hit the market a year ago, it was something no one had really ever seen before. The device folded outward from a phone into a tablet, and it wowed most people who tested early versions of the device. But the Fold quickly ran into troubles, with journalists discovering screen defects. Samsung delayed the launch to fix the flaws. The device ultimately went on sale five months behind schedule.

The $1,980 price tag for the initial Fold seemed unapproachable for all but super tech enthusiasts. CNET's Jessica Dolcourt called it "overpriced" and "a status symbol that early adopters with plenty of cash could casually unfold to wow their peers." The main selling point of the device of the Fold was its novelty: It was the first foldable phone from a well-known electronics manufacturer. 

But not many people bought it. In 2019, all foldables vendors together -- including Samsung and Huawei -- shipped fewer than 1 million such devices, according to Strategy Analytics. For comparison, Samsung sold 6.7 million 5G phones last year, even as the networks were just rolling out around the world and as it priced the devices well above their 4G siblings. 

"For now, the foldables industry has several hurdles to overcome, including very high pricing, low yields of bendable displays and questionable durability about whether the hinges or screens will last for more than a few months," Ville-Petteri Ukonaho, an analyst with the tech researcher, noted in February. He made that comment even before the pandemic spread across the globe. 

It's likely some people who may have considered purchasing the initial Fold decided to wait for a more refined model. 

That's what they're getting with the Z Fold 2. Samsung stretched a 6.2-inch Infinity-O cover screen nearly across the entire front of the newer device, rather than including the initial Fold's 4.6-inch rectangle display that most people found to be too small to be useful. Instead of plastic like the original Fold, the interior, foldable 7.6-inch screen is glass. Samsung also increased the size of the batteries and added better cameras, and it improved the hinge from the first model. Like with the Z Flip, you can use "Flex Mode" to prop the phone open on a table, almost like a mini laptop. 

In the US, Z Fold 2 buyers finally catch up to places like the UK and South Korea with embedded 5G connectivity. The initial Fold only came with 4G in the US. This time around, the Z Fold 2 can tap into both types of 5G deployed by US carriers, and it's being sold by all three of the major US wireless companies: AT&T, T-Mobile and Verizon. Only AT&T carried the original Fold, and only AT&T and Sprint -- which is now part of T-Mobile -- carried the Z Flip from earlier this year. 

All of these features increase how much it costs Samsung to build the device. Adding 5G to this year's Galaxy Z Flip boosted that device's price by $70 to $1,450. But instead of increasing the pricing -- something it's also done when adding 5G to its mainstream lineups -- Samsung chose to keep the Fold nearly steady. 

"We really focused on packing a lot into the device itself in terms of performance and expanded features, while maintaining that same or very similar price point to last year's device," Caleb Slavin, senior manager of product management for Samsung Electronics America, said in an interview. 

Making tradeoffs

Offsetting the increase in component cost was the removal of accessories from the new device's box. The initial Fold came with free Galaxy Buds , which retailed for $130, as well as a two-part protective case. You'll have to provide your own earbuds for the Z Fold 2, something Samsung said most people already have. If a Fold buyer needs headphones, Samsung will mail them a pair for free, which it's also offering for the Note 20. 

"A lot of these users are on the bleeding edge," Blackard said. "Where could we provide more value? By adding more screen, more battery, more cameras, full 5G or by giving them something they already have? It's trying to make the device experience as good as possible."

Some of the benefits available with all models of the Z Fold 2 -- as well as the previous Fold and Z Flip -- include Samsung's concierge service and a one-time, $150 screen replacement fee. Along with the Michelin starred meal, you get perks like a ClubCorp membership, which gives users access to golf clubs around the US; six months free of LinkedIn Premium; and $50 off a Glamsquad at-home hair appointment, among other benefits. Samsung will continue to add perks to the program, Blackard said.

Samsung is offering an even more premium Thom Browne model of the Z Fold 2 for $3,300 on Sept. 25, but it includes the $400 Galaxy Watch 3 , $170 Galaxy Buds Live and other accessories along with the Z Fold 2. 

While the Z Fold 2 will set buyers back $2,000, future generations of the device will likely retail for less. The cost of components like 5G chips and foldable displays will come down, and Samsung will better refine the production process. And Samsung's likely going to avoid pricing phones above $2,000, except for specialized devices like that Thom Browne Edition, Blackard said. 

$2,000 is "a price point we're going to want to … bring down over time," he said. "It's hard to tell with the technology and the adoption of the technology what that timeframe looks like. [The Z Fold 2] is definitely the high end of our portfolio today and something we're probably not going to expand on top of anytime in the foreseeable future."

For now, what you'll be paying for is a glimpse of the future with what's likely to be Samsung's most refined foldable yet. 

Watch this: Galaxy Z Fold 2: Hinge, cameras and durability revealed

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