Apple’s $399 budget phone comes as millions are out of work — but access to a working device is essential.
Apple on Wednesday finally introduced the phone some fans have anticipated for four years: the new iPhone SE. It couldn’t have come at a better time.
The new iPhone SE is essentially an iPhone 11 stuffed into the revamped body of a 4.7-inch iPhone 8. It has an A13 Bionic processor, Qi wireless charging and haptic touch, just like its high-end iPhone 11 siblings. The new iPhone SE has a single rear 12-megapixel camera, similar to the main camera found on the iPhone 11 and 11 Pro, and it keeps the Home button with Touch ID.
But the most notable feature of the new phone is its selling price: $399, a level not seen by a new iPhone since 2016’s original iPhone SE. That device also cost $399.
Instead of hosting one of its trademark flashy events, Apple on Wednesday unveiled the new phone in a press release. It also said its Magic Keyboard for its new iPad Pro will arrive next week, sooner than earlier expected. Apple, like everyone else in the world, has shifted its normal launch plans to help contain the spread of the novel coronavirus. Preorders for the new iPhone SE start Friday, and it should arrive by April 24.
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“The first iPhone SE was a hit with many customers who loved its unique combination of small size, high-end performance and affordable price,” Phil Schiller, Apple’s head of marketing, said in a press release. “The new second-generation iPhone SE builds on that great idea and improves on it in every way — including our best-ever single-camera system for great photos and videos — while still being very affordable.”
It’s a tough time to launch a new smartphone. The world is grappling with a pandemic that shows no sign of ending. The coronavirus, which causes an illness called COVID-19, has spread across the globe and has infected 2 million people. Cities and entire countries have issued lockdowns, shuttering stores, canceling events and ordering citizens to stay at home to help contain the coronavirus. As a result, millions of people have lost their jobs, sparking one of the worst economic downturns in decades.
That downturn is already impacting the phone market. Smartphone shipments saw their biggest-ever drop in February — down 38% to 61.8 million units, according to Strategy Analytics — as COVID-19 ravaged China, one of the world’s largest markets and a vital manufacturing hub. For this whole year, phone sales are projected to hit a 10-year low, with shipments tumbling 11% to 1.26 billion units, according to CCS Insights.
Apple’s not immune to the economic hardship. The company, one of the richest in the world, has faced slower demand and manufacturing problems for its iPhones and other gadgets. In January, Apple warned that the COVID-19 outbreak in China would cause it to miss its projections for revenuein the March quarter. It also has closed all of its stores outside Greater China indefinitely.
No one’s clamoring for a new phone, even if it’s an iPhone. What Apple’s hoping, though, is that people who really need a phone right now — or who have been diehard fans of smaller screen sizes — will latch onto the new device.
At the same time, the iPhone SE legitimizes the midtier phone market — the devices that fall between the flagships and the cheap one-offs — that’s really been a nonstarter in the US. The SE is also expected to be popular outside the US, where people can’t afford a $1,000 iPhone but still want an updated Apple device.
“There’s going to be tremendous interest in a newer, lower-cost Apple phone because of where we are economically,” Technalysis Research analyst Bob O’Donnell said. “The timing of that couldn’t be better right now.”
Smaller and cheaper
Phone screen sizes — and prices — have been steadily increasing over the years. Moving to a bigger-screen iPhone with the 4.7-inch iPhone 6 in 2014 helped Apple report the highest profit of any public company ever at the time. Once it started going bigger, it never looked back.
Well, except for the iPhone SE.
That low-end model, released in March 2016, sported a 4-inch screen and looked like 2013’s iPhone 5S. While the phone had a small screen, it wasn’t hampered when it came to specs. The older iPhone SE ran on the same A9 processor as Apple’s flagship phone at the time, the iPhone 6S, and featured a powerful camera and battery.
The iPhone SE quickly gained fans who wanted high-end specs in a cheaper, smaller package. But Apple never updated the phone. Despite that, nearly every year rumors spread about a second iteration of the device. Instead, Apple has kept more of its flagship lineup around for years after the phones went on sale. This year, it still offered the iPhone 8 and 8 Plus from 2017. Those phones have 4.7-inch and 5.5-inch displays and cost $449 and $549, respectively.
While the base price for Apple’s flagship phone is now $1,000, its most popular model has been the more limited sibling in the lineup. Apple’s iPhone 11, which has a 6.1-inch display and starts at $699, became the company’s best-selling model after it hit the market in September. The device comes with two camera lenses, unlike the three found in the 5.8-inch iPhone 11 Pro and 6.5-inch 11 Pro Max. The pricier models also have OLED displays and faster charging capabilities.
This year’s iPhone SE, too, sports many high-end specs, particularly its processor. The 4.7-inch Retina HD display with True Tone (which isn’t OLED) is packed into an “aerospace-grade” aluminum and glass body and comes in black, white and red. The new iPhone SE is dust- and water-resistant up to a depth of 1 meter for 30 minutes, and boasts three storage sizes: 64GB, 128GB and 256GB.
The most notable shortfall from the iPhone 11 lineup is the camera. The new iPhone SE has a single rear 12-megapixel camera with a 28-millimeter f/1.8 lens with Portrait Mode, Smart HDR and optical image stabilization. It’s similar to the main camera found on the iPhone 11 — which has two lenses — and the 11 Pro, which sports three cameras on the rear of the device.
For most people, one camera lens and slightly less flashy specs are good enough — especially when they don’t want to spend a grand on a phone. That could be a higher number of people than in the past, as the coronavirus wipes out 401(k) plans and puts millions of people out of work. But on the flipside, those people may find even $399 hard to stomach.
“The ones who’d benefit from the phone [are] also under more pressure financially,” Creative Strategies analyst Carolina Milanesi said.
The iPhone SE also is lacking a major feature expected in its pricier siblings later this year — 5G. The super-fast connectivity being rolled out around the world promises to significantly boost the speed, coverage and responsiveness of wireless networks. It’s the most significant advancement in mobile network technology since the introduction of 4G a decade ago, and it could have major implications for how we live.
This year, virtually all high-end phones launching in the US will come with 5G, and that’s expected to include Apple’s new high-end iPhones. The iPhone SE is a notable exception.
The SE is geared more toward budget-conscious buyers and should be more popular outside the US than in it, analysts say. Here, its opportunities could be limited.
“There are enough other products, even within the existing Apple portfolio, to meet the needs of what the SE 2 would do,” Strategy Analytics analyst Ken Hyers said. “But more to the point, Apple really does want to push the 5G portfolio as much as it can in North America.”
Apple is expected to introduce at least one 5G iPhone — but likely several — later this year. It normally unveils its newest devices in September, and reports say it’s still aiming for that timing, assuming the coronavirus doesn’t slow down iPhone development more than it already has.
This year, smartphone makers should ship about 30 million 5G phones in the US, Hyers said. About two-thirds of the total 5G devices in the US will come from Apple when it introduces its new 5G iPhones.
“It’s going to be the 5G leader in the US, by far,” Hyers said.
It’s still early days in 5G, which means the new iPhone won’t be hobbled. The vast majority of 5G sales — 95% — will come in the second half of the year, Strategy Analytics said, and late 2020 and early 2021 is when 5G becomes a must-have. For the people seeking out the iPhone SE, 5G likely isn’t the highest priority on their lists.
The new iPhone SE falls in a unique area, price-wise. The bulk of phones sold in the US are either pricey, high-end phones above $600 — think the latest iPhones, even the $699 iPhone 11, and Samsung’s Galaxy S lineup — or cheap models under $250, such those from TCL’s Alcatel or Samsung’s new Galaxy A01. Only about 17% of phones sold last year in the US cost between $400 to $600, according to Counterpoint Research.
“That’s a very limited segment,” Counterpoint analyst Neil Shah said.
There’s potential for that area to grow, though, particularly as people watch their budgets more closely. And other companies are eyeing similar pricing.
Samsung, the world’s biggest phone maker and Apple’s chief rival, last week introduced six new Galaxy A Series phones aimed at budget-conscious buyers. The four new 4G LTE models range from $110 for the Galaxy A10 to $400 for the Galaxy A51. Samsung even introduced two 5G devices, the $500 Galaxy A51 5G and the $600 Galaxy A71 5G, giving the South Korean company two of the cheapest 5G phones in the US.
And TCL, best known for its TVs, said it will sell its first TCL-branded 5G phone in the US for $399 (£399, approximately AU$800) later this year. The company hopes that pricing will help it immediately attract buyers as it tries to build its brand outside its BlackBerryand Alcatel labels.
Of those companies, only Samsung has brand cachet on par with Apple. But even it can’t get people to line up for its devices like Apple can.
There will be no lines for the iPhone SE this year — the pandemic has made sure of that — but there are sure to be plenty of consumers interested in a phone that actually fits in their pockets.
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