The idea keeps cropping up. Apple should resurrect the iPhone SE or make a less expensive version of a current iPhone. Apple has rejected that notion.
There are many reasons why this eternal fantasy is a bad idea.
Each year, the iPhone technology improves. Not every user uses all of the new features, but many users use many of them. In order to lower the cost, Apple would have to sacrifice abitrary functionality in a new model iPhone. For example, a less capable camera would sacrifice touted Augmented Reality (AR) capability as well as pose a dilemma for some developers.
Apple has solved this problem by continuing to sell older models at discounted prices. At least the customers know what they’re getting. They willingly live in the past, with a known, less capable iPhone in exchange for a more favorable price. Expectations are set, and there’s no buyer’s remorse when purchasing a modern iPhone that somehow doesn’t have a critical feature that they didn’t realize would be missing.
There are basic components of any iPhone that create a minimum subset of functionality. The wireless modem must still support all frequencies and carriers. The Secure Enclave mut still be there. The display and glass must meet Apple’s quality standards. And so on.
It’s very difficult to look at an iPhone’s bill of materials and identify where significant cost savings can occur and then meet some fantasy price that would ignite customers who had otherwise passed on a full-featured, expensive iPhone.
That price elasticity is well understood by Apple, and a suitably attractive low pice is hard to engineer. Customers would just rather pay an extra US$10/month to have the best iPhone and be done with it. iPhone SE sales proved that.
And don’t even think about Apple accepting a lower profit margin to promote sales. Apple doesn’t go down that road with new products. Share holders would howl.
iPhone SE Failure
Apple’s iPhone SE was a failed experiment. Much loved by a few, it lacked the most modern technologies of its big brothers and was not a hot seller, averaging 7 to 8 percent of all iPhone sales in the years it was shipping.
If selling a new iPhone with constraints just to have a low cost leader—to introduce new users—was such a good idea, Apple would have continued the iPhone SE tradition. It did not. And the fabled SE 2 was shelved.
But Apple knows its customers. Those customers don’t want last year’s technology in a branded new iPhone that might be missing something they need for a special app. Even if it’s at an attractive price. Better to know what one is getting with an older iPhone model, and that’s why Apple does continue to sell the iPhone 7 and 8.
In summary, Apple is showing no signs of conjuring up a new, cheaper iPhone model to undercut its flagship models. Apple makes the best iPhone money can buy. It’s Apple’s brand. What Apple is doing is working.