Duo is both Apple’s official bet on foldable screens and the new CEO’s first major test: will it propel the iPhone into a new growth cycle, or merely become an expensive niche product?
Apple (AAPL.O) has pushed the price ceiling for the iPhone to $1,999. Following the launch of its first foldable iPhone Duo, market debate has quickly centered on one question: Will the high-priced foldable become a new revenue growth driver for Apple, or will it become just another niche premium product amid a limited market size, rising storage costs, and margin pressures?
Gene Munster, managing partner at Deepwater Asset Management, clearly leans toward optimism. He doubled Duo’s revenue forecast for fiscal year 2027 immediately after the launch and called it Apple’s most important new product since the AirPods in 2016.
Morningstar, Jefferies, and Forrester have been more cautious, noting that while Duo may increase the average selling price of the iPhone, its sales volume and profitability still need to be validated.
Apple's stock closed down 0.3% at $315.34 on Wednesday, marking its third consecutive trading day of declines and hitting a two-week low; it rose 0.5% in pre-market overnight trading on Thursday. Over the past year, Apple's stock has risen a cumulative 35%.
$1,999 Duo, Monster doubles revenue expectations
The Duo features a book-fold design, offering a 7.6-inch main screen and a 5.4-inch outer screen, with a display area 50% larger than the Pro Max. Starting at $1,999 for the 256GB model and $3,199 for the 2TB model, pre-orders begin on October 16, with availability in over 70 markets starting October 23.
Monster said, "Duo is significant because it's the first new product Apple has released since AirPods in December 2016 that people will genuinely want." He believes Duo's slim design, nearly crease-free screen, and larger display area clearly exceed expectations, and added:
Sales will be higher than I anticipated before the launch event.
Before the launch, Munster estimated that the Duo would contribute approximately 5% of Apple’s iPhone revenue for fiscal year 2027; he has now raised this estimate to 10%. If one-third of Pro Max buyers switch to the Duo, he expects the Duo to drive a 5% increase in iPhone revenue and a 2.5% increase in Apple’s total revenue, not including consumers upgrading from more affordable models.
Apple also introduced the Duo leasing plan, with the base model costing approximately $58 per month and the Pro Max costing about $35 per month—a difference of just $23 per month. Munster believes that for high-end users already willing to pay over $1,000 for the Pro series, this price gap may be more acceptable than the $1,999 sticker price.
Apple has also split its iPhone release cycle this time. The iPhone 18 Pro, Pro Max, and Duo will launch first, while the standard iPhone 18, 18e, and Air 2 are expected to be released in spring next year. Munster believes that some users eager to upgrade may shift toward the higher-priced Pro series, potentially pushing the revenue growth rate for the March 2027 quarter from Wall Street’s expected 14% closer to 20%.
Meanwhile, the starting price of the iPhone 18 Pro has increased by $100 to $1,199, and the Pro Max has risen to $1,299, representing increases of approximately 9% and 8%, respectively. Munster believes that the price hike can largely offset the rising costs of memory chips.
An increase in average selling price does not equate to proportional profit growth.
The main divide on Wall Street lies here. The iPhone accounts for more than half of Apple's annual sales; raising prices on the Duo and Pro series could significantly increase the average selling price, but it remains uncertain whether revenue growth will translate into profits.
Morningstar raised its fair value estimate for Apple from $285 to $290, primarily due to higher assumptions for the average selling price of the iPhone after incorporating the Duo into its forecasts. However, this valuation still remains approximately 8% below Apple’s Wednesday closing price of $315.34.
Morningstar expects Apple's iPhone sales for fiscal year 2027 to remain roughly flat, but average selling prices are projected to rise by double digits. On the other hand, rising storage costs are expected to reduce Apple's gross margin by more than 100 basis points in fiscal year 2027, with relief from this pressure likely only coming after supply conditions improve in 2028.
Jefferies maintains its "Underperform" rating on Apple and a $263.66 price target, implying approximately 16% downside potential. The firm believes Apple’s introduction of a 256GB entry-level version for Duo reflects a possible priority on increasing sales volume rather than maximizing per-unit profit. While this strategy is "understandable," it may further pressure profitability.
Ross Gerber, CEO of Gerber Kawasaki, also questioned price acceptance:
$2,000 to buy a new foldable phone. I like this new phone, but has $2,000 become the new $1,000?
Foldable screens account for only 2%; Duo must first prove the market size.
A bigger issue than price is that foldable screens still belong to a niche market.
Ben Wood, Chief Analyst at FDM CCS Insight, noted that foldable phones from manufacturers such as Samsung and Huawei currently account for only about 2% of total smartphone sales. Even with Apple’s entry stimulating demand, the firm expects this share to rise to only around 4% over the next decade.
Consumers also need to change long-established mobile phone usage habits. Carolina Milanesi, an analyst at Creative Strategies, said that while consumers are indeed interested in foldable screens, switching from traditional smartphones to foldable devices requires readjusting to software interactions—the learning curve is real.
Forrester analyst Dipanjan Chatterjee therefore outlined two possible paths: Duo could become a high-priced product with limited demand, like the Vision Pro; or it could become the next Apple Watch, not reaching iPhone-scale volumes but establishing a steady market of millions of units per year.
He warned that Duo might ultimately become nothing more than a "high-priced ornament" in Apple's product lineup, offering status symbol value but failing to drive meaningful growth.
This product also marks the first major test for Apple’s new CEO, John Ternus, who is just entering his second week in the role. Previously responsible for Apple’s hardware division and directly involved in the Duo’s development, Wood believes his promotion was timed to coincide with this major iPhone launch, stating, “Nothing at Apple happens by accident.”
Apple also seeks to enhance the value of its premium hardware through AI. Tunes positions the iPhone as an AI-powered "personal hub," with the new Siri AI capable of searching for and acting on content across personal data such as messages and emails. However, Patrick Moorhead, Chief Analyst at Moor Insights & Strategy, believes this release still lacks significant breakthroughs in AI capabilities.