The new iPhone SE is relatively inexpensive by Apple standards. But it will be a big money maker for Apple. How so?
iPhone SE Success Patterns
For a long time now, Apple’s iPhone has been a big money maker. As the top of the line model’s price has crept up, the metric called Average Selling Price (ASP) across the lineup has risen, and that has pleased both Apple and the financial analysts.
And so, to first order, a very popular, inexpensive iPhone appears to upset the Apple cart—so to speak.
Not so in this case.
1. There are, at any given time, many Apple customers looking for a new iPhone. But now, amidst the current economic downturn, the iPhone Xr, 11, and coming 12 look to be just too expensive a proposition for those urgently in need of a modern, quality, secure iPhone.
Rather than sit on an aging or failing model, many (who still have some cash) will find the US$399 price fairly enticing. A sale will occur when, before, there was little prospect for Apple. Gene Munster expects Apple to sell 30 million of them over the next year.
2. The iPhone SE will help Apple greatly in emerging foreign markets where very inexpensive Android or nationally home grown smartphones are stealing market share from Apple. Admittedly, US$399 won’t turn the tide completely, but it will help Apple compete more effectively. That’ll be new revenue.
3. A high quality iPhone with a decent sized 4.7-inch Retina HD display supporting 4K and Dolby Vision is a nice gateway into all of Apple’s services. That will, perhaps, bring in additional revenue that would have been lost if the customer had stayed on an older iPhone and remained in a conservative frame of mind.
4. By the way, Apple’s special offer of “buy a new iPhone, iPad, iPod touch, Apple TV, or Mac, it includes one year of Apple TV+ for free” is still in place. That offers some level of enticement to upgrade to a new but inexpensive iPhone. Eventually, some percentage of SE buyers wil opt-in at $4.99/month.
5. U.S, Android customers who were absolutely not interested in the more expensive iPhones will reconsider. Many will now see an opportunity to switch, and that’s also new revenue.
All in all, there’s a certain sense of enthusiasm for a modern iPhone with an A13 Bionic chip, even if it doesn’t have Face ID. (That’s where at lot of the cost saving is.) This new iPhone SE will get many people talking and dreaming of a modern, relatively inexpensive device that has what they need.
It’s going to be a winner and a money maker.