Why Apple needs a smaller, cheaper iPhone SE

Three explanations for a new iPhone in March

Hours from now, Apple will very likely take the wraps off a new iPhone, a smaller iPhone that’s more affordable and more suited for those who think one-handed usage should be an option regardless of the task.

The iPhone SE, or whatever Apple decides to call it, is all but certain to replace the iPhone 5s as the cheapest iPhone available, though it begs the question: Does Apple really need this iPhone to grow its business? The short answer is yes. However, a far more important question is why Apple is releasing a watered-down version of a great phone.

We think there are three explanations for Apple’s second attempt at a mid-tier handset (rest in peace, iPhone 5c).

Two iPhone announcements in a year

The first is the most obvious: Coming out with another iPhone line allows Apple to rain on Samsung’s Galaxy S parade in February or March, while at the same time undercutting its chief competition with a cheaper but not necessarily more capable product, although it can be a springboard to introduce new features and design changes. In a way, it can be a preview of things to expect in September’s iPhone.

Apple can even bump up future announcement dates for its smaller and cheaper iPhone to hijack the hype of Android devices announced at the annual International CES [Consumer Electronics Show] and Barcelona’s Mobile World Congress.

It’s a win for Apple, but that’s assuming the handset is a big hit. Which is assuming quite a lot given Apple’s recent failure in the midrange. And by “failure,” we mean the iPhone 5c didn’t take off as expected, with 9to5 Mac reporting last year that the iPhone 5c accounted for only 8.5 percent of active iPhones at the time.

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iPhone for emerging markets

Apple’s smartphone shipments are expected to fall short of projections for the first time since 2003, despite its retail efforts in China. Add to that the slowing smartphone adoption rates in countries where Apple is considered a top contender, and it’s not surprising to see the company setting its sights to India and other emerging economies. India, after all, has leapfrogged the U.S. into second place in terms of smartphone shipments last year.

But here’s the thing: Low-priced Android phones dominate low-income markets, and, price-wise, current iPhone models, with the exception of the iPhone 5s, aren’t competitive enough. But that may soon change with the arrival of the iPhone SE, even though we don’t expect it to be cheap.

A reasonable estimate would be around $US400 (Php19,000), which is still cheaper than paying full price for an off-contract iPhone 6s (starts at $US650). And let’s not forget that carrier subsidies could write off the upfront cost of the cheaper iPhone, putting it in the hands of more consumers.

A “new” iPhone 5s

Perhaps we don’t need to tell you this, but it’s time to retire the iPhone 5s. It has been on shelves for years now, which is too long in the fast-paced mobile industry; the hardware is already showing its age, as any iPhone 5s user on iOS 9.2.1 will tell you. Next to a 2016 Android phone in the midrange, the iPhone 5s right now is about as appealing as a pair of Crocs, or a minivan.

Most of the leaks surrounding the upcoming iPhone suggest a 4-inch phone that’s just as capable as the 4.7-inch iPhone 6s, and they’re probably not far off, if only because Apple can’t use the same components it used to build the iPhone 5s for reasons stated above.

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If Apple wants the iPhone SE to succeed in the long term, it’s going to have to pack enough oomph to run the current iOS version, the next and the one after that without performance issues. We don’t see that happening with anything less than what the iPhone 6s offers.

Image credit: Nick Beeep

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