Apple (NASDAQ:AAPL) unveiled the iPhone Duo this week, its first folding smartphone. Starting at $1,999, it opens into a 7.6-inch display and aims to combine an iPhone and a small tablet into one device. Apple stock reacted positively to the news, closing 3.5% higher Thursday (10 September).

Here’s why I believe it could be a game-changer for the business.

Why it’s big news

The iPhone generated $209.6bn in Apple’s latest financial year, accounting for just over half of total sales. I believe some people think the firm has a much more diversified revenue stream, but in reality the iPhone is still crucial to its success. Based on this, even relatively small changes to the average selling price can have a significant impact.

The Duo sits considerably above Apple’s conventional premium phones. If it persuades even a fraction of existing customers to upgrade to a $2,000-plus device, it could improve revenue per iPhone user. Analysts reportedly expect six million Duo sales this year despite its October launch.

Yet the sales in the coming months are only part of the story. For long-term investors, the real juice comes from growth in the Foldables market. It currently represents less than 3% of global smartphone sales. You can probably see where I’m going here.

Apple has a history of entering product categories after competitors and subsequently helping to push them into the mainstream. If this happens with Foldables, it could have a significant financial benefit to Apple.

The Apple ecosystem

If the technology eventually filters into cheaper models, Apple could create an entirely new iPhone upgrade cycle. A larger screen also offers intriguing possibilities for gaming, productivity and AI applications, potentially strengthening the wider services ecosystem.

If we’re talking about the ecosystem, we need to talk about Apple’s enormous installed device base, which provides opportunities to cross-sell everything from iCloud storage to apps and subscriptions. A new premium hardware category can therefore generate value beyond the initial handset sale.

Some caution needed

At $1,999, the Duo’s expensive. Foldables remain a niche market and consumers might simply decide they don’t need one. Even though I love it, my current phone contract means it’s unlikely I’ll be upgrading anytime soon, and still need to find a way to justify the spend! Durability, battery life and the folding mechanism could also cause problems. Production constraints could also limit initial volumes.

For Apple stock, there’s also worry it’s already priced in plenty of future growth. The share price is up 36% over the past year, with a market-cap of $4.77trn! This means it could be harder for the stock to rally hard given how large it already is.

Yet even with those concerns, I think the new iPhone is a big shift. It’s the largest change for a decade, and it opens up a huge new market for the company. On that basis, I do think it’s a game-changer and am seriously thinking about adding it to my portfolio.

Should you invest £5,000 in Apple right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Apple made the list?

Jon Smith does not hold any positions in the companies mentioned.