Apple’s new boss starts with gamble on costly new foldable iPhone

John Ternus has embarked on his second week as Apple’s chief executive, and the tech giant has already unveiled what many are calling the most significant redesign to the iPhone since its groundbreaking debut nearly two decades ago. This bold move, a high-stakes gamble on a premium-priced foldable device, marks Ternus’s inaugural major product launch at the helm, setting an immediate tone for his leadership following the departure of his long-serving predecessor, Tim Cook.

Ternus, who ascended to Apple’s top job after Cook’s planned retirement, commanded the stage on Wednesday at the company’s highly anticipated annual product release event. Flanked by colossal, vibrant images of the first-ever foldable iPhone, dubbed the "Duo," he presided over a presentation that signaled a potential paradigm shift for Apple’s most iconic product line. The announcement was not merely about a new phone; it was about a new direction, a statement of intent from a new CEO.

The Duo, presented in an elegant book-style format, represents a significant departure from the traditional iPhone silhouette. When fully unfolded, it boasts the largest display ever integrated into an Apple smartphone, transforming into what Ternus himself described as akin to a "small iPad." Conversely, when folded in half, it assumes the profile of a wider, yet still pocketable, iPhone. This dual functionality is central to its appeal, offering users a versatile device that adapts to various needs, from immersive media consumption to compact portability.

However, innovation often comes at a price, and the Duo is no exception. With a staggering US starting price of $1,999, escalating to a premium tier of $3,200, it is by far the most expensive iPhone ever released, significantly surpassing previous top-end models. UK prices mirror this exclusivity, commencing at £1,999. Ternus acknowledged the inspiration drawn from the iPad for the Duo’s larger format, but passionately emphasized the foldable features as "fluid and completely intuitive," aiming to alleviate common concerns about the durability and usability of folding screens. This ambition reflects years of internal development, as the foldable phone concept has been a closely guarded "work-in-progress" within Apple for several years, predating Ternus’s CEO appointment.

During the keynote, Ternus was keen to differentiate the Duo from existing foldable smartphones on the market. He candidly remarked that many competitor devices often "feel like two phones stuck together… making a larger screen feel much smaller" due to their clunky designs and software implementations. In stark contrast, he asserted that the Duo is the "result of a series of remarkable innovations that we think will redefine the experience of using a foldable phone," hinting at seamless software integration and a refined user interface tailored specifically for the folding form factor. Ternus’s deep involvement in the Duo’s genesis is no coincidence; he spent many years as a top executive within Apple’s vaunted hardware division, a tenure that directly informed his selection earlier this year as Tim Cook’s successor. His promotion, according to industry insiders, was strategically timed.

Ben Wood, chief analyst at technology research firm FDM, articulated this sentiment precisely. "Nothing happens by accident at Apple," Wood stated, suggesting that Ternus’s elevation was likely orchestrated "to coincide with what will be arguably one of the biggest iPhone launches for many years." This deliberate orchestration underscores the immense pressure on Ternus to deliver a product that not only captivates but also revitalizes Apple’s image as an innovation leader. Carolina Milanesi, an analyst at Creative Strategies who was present at the Wednesday presentation, observed that the spotlight on Ternus made it feel "almost like he was a product himself," highlighting the company’s clear intention to present him as the new face of Apple’s innovative future.

The introduction of the foldable iPhone comes at a critical juncture for Apple, addressing some persistent criticisms that the company has struggled to deliver a major product hit or truly exciting innovation since the original iPhone’s debut in 2007. While incremental improvements have characterized recent iPhone generations, the Duo represents a fundamental rethinking of the device’s form and function. However, analysts are divided on its potential impact. Dipanjan Chatterjee, an analyst at Forrester, expressed caution, warning that "the foldable risks becoming a premium-priced ornament in the portfolio, imparting badge value but not meaningful growth." This sentiment echoes concerns about the market’s readiness for such an expensive and novel device.

To put the Duo’s pricing into perspective, the previous highest starting price for a new iPhone model was around $900 (£664). Alongside the Duo, Apple also unveiled the new iPhone 18 and 18 Pro, which, while still premium, start at a more conventional $1,200 (£885) and $1,300 (£959) respectively. Chatterjee drew parallels between the foldable iPhone’s potential trajectory and other high-profile Apple launches. He suggested it could follow the path of the Apple Vision Pro headset, which, priced at an even steeper $3,699 (£2,729), has struggled to gain traction with mainstream buyers. Alternatively, he posited, it could emulate the success of the Apple Watch, a product that, while not reaching iPhone-level ubiquity, consistently sells to millions each year and has carved out a significant niche.

A considerable hurdle for Apple in driving widespread adoption of the Duo is the ingrained user behavior associated with traditional smartphones. The transition to a foldable form factor requires a learning curve, both in terms of physical interaction and software adaptation. "Foldables are interesting devices," Milanesi noted. "A lot of people are intrigued by it, but the software and the learning curve that you have from moving from a traditional phone to a foldable is real." This learning curve, combined with the device’s prohibitive cost, could significantly limit its initial market penetration.

The existing market for foldable smartphones further underscores the challenge. Ben Wood highlighted that current foldable offerings from competitors like Samsung and Huawei constitute a mere 2% of total smartphone sales. Even with Apple’s entry expected to generate considerable interest and demand, sales of foldable devices are only projected to reach 4% of the total market in the next decade, according to FDM data and analytics. This suggests that while the Duo might be a technological marvel, it enters a niche market, making its potential to meaningfully impact Apple’s overall sales — where the iPhone accounts for over half of annual revenue — a significant gamble.

Despite the inherent risks, Apple’s confidence in the iPhone’s enduring appeal remains high. In recent quarters, the company has frequently boasted that the iPhone is "more in-demand than ever," with the most recent conventional version becoming its "most successful product launch" to date. This consistent performance provides a strong foundation, but also places immense pressure on the Duo to live up to the iPhone’s legacy of success.

Beyond the hardware, Apple also used the event to reveal more details about the "coming relaunch" of its long-standing audio and chat assistant, Siri, now rebranded as Siri AI. Starting with the iPhone 18, the intelligent assistant will boast enhanced capabilities, including the ability to contextualize and cross-reference information across a user’s personal data — encompassing messages, emails, and other on-device content — to find information, answer complex queries, and proactively take action on a user’s behalf. Some of these advanced Siri AI features will also extend to the new Apple Watch, notably including the capacity to take notes of conversations and transcribe them, provided the wearer enables the feature.

Ternus characterized these new AI-enabled capabilities on the iPhone as forming an "intelligent personal hub," acknowledging the profound implications of an AI assistant accessing "the most private details of your daily life." However, he emphatically insisted that user privacy would remain paramount. Ternus stressed that a significant portion of the AI features would run "on device," meaning processing occurs locally without sending data to third-party companies. For functions requiring third-party cloud processing, Ternus assured users that data would remain private and secure on remote servers, with Apple itself unable to access personal information. "Others see that data as something to collect and store," Ternus declared, drawing a clear distinction from competitors. "Here, not even Apple can access what’s yours." This unwavering commitment to privacy, a hallmark of Apple’s brand, is intended to instill user trust in the new, more pervasive AI capabilities.

As John Ternus steps into his formidable role, the launch of the Duo represents not just a product unveiling, but a defining moment for his nascent leadership. It’s a bold, expensive bet on a nascent technology, one that carries the weight of Apple’s future innovation narrative and its financial trajectory. Whether the Duo will become a lucrative new pillar or a costly niche remains the industry’s most compelling question.