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It might be time to say goodbye to Apple’s cheapest iPhone

It might be time to say goodbye to Apple’s cheapest iPhone

It might be time to say goodbye to Apple's cheapest iPhone

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An iPhone that offers almost the same performance as the iPhone 14 for about half the price, sounds like a great idea, right? Apparently not. According to analyst Ming-Chi Kuo, Apple may be dropping the next version of its wallet-enabled iPhone SE, which was supposed to arrive next year.

“Supply Chain has received instructions from Apple that 2024 iPhone SE 4 production and shipment plans have been canceled rather than delayed,” Kuo wrote in a Medium post on Jan. 6.

If Kuo’s predictions are correct, only Apple knows the reasoning behind the cancellation. But research and media reports suggest there could be a very simple answer. More expensive iPhone models tend to be more popular, perhaps leaving Apple with little incentive to keep chasing cheaper phones like the iPhone SE.

Apple did not immediately respond to CNET’s request for comment.

The third-generation iPhone SE, which debuted in March, starts at $429 and is essentially an iPhone 8 stuffed with the guts of an iPhone 13. CNET’s Patrick Holland called it “astonishing value” in his opinion on the iPhone SE (2022)but it also highlighted missing elements that make it dated, like its lack of a full-screen design or a night mode for the camera.

Previous generations of the iPhone SE took a similar approach. the 2020 version had essentially the same design but had the iPhone 11 chip. The 2016 model had the body of an iPhone 5S with the processor of an iPhone 6S. A fourth-generation iPhone SE is rumored to adopt a new design similar to the iPhone XR, according to YouTube personality and gadget leaker Jon Prosser.

To understand why Apple may have canceled its upcoming iPhone SE, consider Apple’s recent changes to its iPhone 14 lineup. Unlike the previous two years, Apple hasn’t released a cheaper “Mini” version of its new flagship iPhone in 2022. Instead, it released a larger version of the standard iPhone 14 called iPhone 14 Plus, which costs $100 more. than the regular $799 iPhone 14, raising the barrier to entry for buyers.

The change follows reports from Nikkei Asian Review and Kuo (via MacRumors) that Apple will phase out the iPhone Mini in 2022, with the former adding that the Mini model wasn’t resonating with consumers. Taken together, the elimination of the Mini and reports that the rumored iPhone SE will be phased out next year could indicate that Apple is moving away from releasing smaller, cheaper iPhones.

But Gene Munster, managing partner at technology investment firm Loup and a longtime Apple analyst, doesn’t see it that way. He believes the iPhone SE still plays an important role in Apple’s lineup due to its low price.

“It’s still, I think, the best value for money when it comes to an iPhone,” he said.

Apple is rumored to be scrapping next year’s iPhone SE as it sees high demand for more expensive phones like the iPhone 14 Pro and Pro Max (pictured)

James Martin/CNET

Evidence suggests that the most expensive iPhones tend to be the best sellers, which could help explain the change. The average selling price of an iPhone rose 7% year over year in the third quarter of 2022, according to Counterpoint Research. The market research firm also reported in June that Apple dominated the global premium phone market with a 62% share in the first quarter of 2022. It’s important to note that Counterpoint defines premium phones as devices that cost $400 and above, which means the third-gen iPhone SE would fall into this category since it starts at $429. The report says, however, that Apple’s growth in the premium category is largely coming from the iPhone 13 lineup.

The more expensive iPhone 14 Pro and Pro Max also appear to be the stars of Apple’s new smartphone lineup so far. The news reported that Apple cut production of the iPhone 14 Plus within two weeks of its launch, while research firm Trendforce claims that Apple increased production of the iPhone 14 Pro and Pro Max. . Kuo too said on Twitter in September that the iPhone 14 Pro Max was responsible for about 60% of Apple’s order increase for the Pro line, suggesting that Apple’s most expensive new iPhone is also its most popular. A November 2022 report from Wave7 Research also said that 38 of 39 carrier service representatives surveyed said they had no in-store inventory of the iPhone 14 Pro or Pro Max.

The iPhone SE, meanwhile, has only accounted for about 5% to 8% of quarterly US iPhone sales over the past two years, said Josh Lowitz of Consumer Intelligence Research Partners. When looking at the total volumes of newer iPhone models in any given year, the Pro versions typically account for 35-40% of sales, while the iPhone SE accounts for around 20%, according to Munster.

Carrier discounts also made it easier to buy premium phones at cheaper prices, especially when trading in an old device, like my colleague Eli Blumenthal pointed out after the launch of the iPhone 13. Many US buyers also pay for their phones in monthly plans through carriers, which can make it easier to absorb higher prices. These two factors can make it all the more difficult to buy a cheaper iPhone with fewer features.

“Because you’re paying over such a long period of time…the $100 price difference, or even a $200 price difference, isn’t that big per month,” Lowitz said.

At the same time, Samsung has been successful in the low-cost phone market. Its Galaxy A phones, which typically cost hundreds of dollars less than its flagship Galaxy S phones, accounted for 58% of Samsung’s smartphone unit sales in 2021, according to Counterpoint Research data previously provided to CNET. Samsung’s Galaxy A phones have modern features not found on the iPhone SE, such as a camera with multiple lenses and larger screens, though they often run on lower-powered processors than the phones. more expensive from Samsung.

The idea that Apple may have canceled the 2024 iPhone SE raises questions about the future of the SE line in general. Apple extended the SE brand to the Apple Watch in 2020 for the first time and launched a sequel to this product in September.

The fact that Apple rolled the SE line into another product made it a more permanent part of Apple’s lineup. But if Kuo’s insight turns out to be correct, the iPhone SE’s days could be numbered. And once you take a closer look at the evolution of Apple’s smartphone lineup and phone shipment data, it’s easy to see why.

But Munster isn’t convinced that cheaper iPhones like the SE are going away for good. Having a more affordable option makes it easier for Apple to achieve its larger goal of attracting more customers to its network of products and services.

“I think it plays an important role,” he said. “I don’t think Apple is giving up on that award.”

Tech

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