DYNAMIC DUO: Apple’s gamble — the iPhone now folds — and SA’s digital divide just widened

Apple's latest R40,000 flagship smartphone, the iPhone Duo, has introduced a new product category – folding phones – to South Africa. The unveiling at a Surprise and Shine event left spectators in awe, including the reporter's son who was impressed by the phone's ability to change postures. Samsung had previously introduced folding phone technology with the Galaxy Z Fold, but Apple has managed to perfect the design through thoughtful software engineering.

The introduction of the iPhone Duo came after the National Treasury and Department of Communications and Digital Technologies (DCDT) removed the 9% ad valorem luxury excise duty on smartphones priced under R2,500. This policy change aimed to make smart devices more accessible and affordable for South Africans, allowing them to access various opportunities such as online job searching, online learning, and accessing government services, online banking, and connecting with more customers.

While the government's efforts reduced tax barriers, smartphone original equipment manufacturers (OEMs) faced challenges due to global supply chain inflation, specifically in the memory chip and RAM markets. The price of these components had doubled or tripled, leading to increased manufacturing costs and putting pressure on OEMs to strike a balance that maintains device affordability while staying within the R2,500 duty-free threshold.

For Honor, a South African smartphone manufacturer, the challenge was to maintain their products under R2,500 to avoid additional taxes that would make their devices less accessible to consumers. They achieved this by carefully selecting the best specifications that met the majority of customers' needs, ensuring affordability. Between April 2025 and February 2026, Honor increased its range of sub-R2,500 devices from two models to three, demonstrating the impact of tax relief on their product strategy.

A Global System for Mobile Communications Association (GSMA) study revealed significant changes in South Africa's smartphone market from March 2025 to February 2026. The tax relief led to an immediate turnaround in the sales of entry-level smartphones (priced under R2,500), which had been experiencing a decline before the policy change.

Average monthly unit growth shifted from -7.9% to +6.2%, indicating a surge in the adoption of entry-level smartphones. Additionally, there was a notable decline in feature phone sales, with volumes dropping by 87% over the same period.

The policy change also encouraged low-income households to upgrade from feature phones to entry-level smartphones, as the price gap between the two device categories narrowed. This shift highlights the importance of treating entry-level smartphones as essential tools rather than luxury items, as it mitigates regressive taxation that disproportionately benefits lower-income citizens.

By making smartphones more accessible, South African users can benefit from mobile financial services, digital payments, and access to various online platforms, ultimately connecting them to more opportunities and improving their quality of life.