Anyone for a Smaller, Cheaper iPhone?

Anyone for a smaller, cheaper iPhone?        

By Melinda Chapman Student Id: 90426817 | WordPress Username:meljchapman

With the recent launch of Apple’s iPhone SE (21st March 2016) we were presented with an ‘old is new again’ product; an iPhone with no groundbreaking features or updates, but one positioned as “the most powerful 4inch phone ever”. It is effectively being marketed as having the same power, camera quality and aesthetic design of its bigger ‘iPhone 6’ brother, but all tucked into the compact iPhone 5 body. Apart from the smaller screen, only a couple of features (notably 3D Touch and the high resolution ‘selfie’ camera) are not on par with the latest iPhone 6s. At $399 in the US for the 16GB model ($679 in Australia), it’s also the cheapest iPhone ever launched.

Cheaper but not for the budget buyer

Regardless of its cheaper price in comparison to others in the iPhone line-up, the SE is still a premium product and is not targeting those in the market for a ‘cheap’ (~$200 AUD) smartphone. It may nevertheless hold extra appeal to those who are a little more cost sensitive and research from Slice Intelligence indicates it is attracting more android users and those who have not purchased a new phone in over 24 months.

Is there even a market for a 4 inch smartphone?

30 millWith the popularity of large screen smartphones, where, according to The Guardian, even the iPhone 6s is one of the smallest, the high performance iPhone SE is bucking the trend of ‘bigger is better’. But during the keynote, Apple highlighted that it sold around 30 million 4-inch iPhones last year alone. Clearly, a significant market does exist, at least for now.

“Some simply love smaller phones” touted Apple’s Greg Joswiak, VP of Product Marketing, further indicating that the phone is an important addition to the existing line up and a response to its customers’ demands. He went on to state that for approximately one third of those 4inch phone buyers, it was their first iPhone. In China, this percentage increased to two thirds. The keynote made it clear China was a key regional market for the SE. Interest in the iPhone SE from China and India has been higher than elsewhere; within a week of the launch, CNBC reported that three retailing sites in Beijing already had 3.4 million pre-orders.

Made for China or missing the mark?

apple_china

With China the largest smartphone market and India now topping the US as the second and fastest  growing, some, including The Atlantic have suggested that the iPhone SE would enable Apple to further expand into China and emerging Asian markets where people’s stature, and subsequently hand size is generally smaller than their Western counterparts. Obviously a more affordable iPhone would also gain traction here. However, with the Apple iPhone SE now price competitive with some android brands, CNBC reported that the big debate in China was now “Do you want an Apple iPhone or do you want a larger screen? It would seem that the cheaper price is appealing but not the small size. As reported, the Chinese may love the iconic status of Apple but they also like to watch movies on their phone. The Chinese, like the rest of the world, prefer the larger screens. “Smartphones are often the main connection to the digital world, and a big screen is highly valued.” (Fortune, 2016)

So who is it for then?

As an ‘iPhone loyal’ myself, one of the 61% of iPhone owners who stick with Apple when upgrading to a new device (Deloitte, 2015), I was admittedly somewhat reluctant to switch from my smaller iPhone 5, where I could comfortably access all areas of my phone with one hand, to the 4.7 inch iPhone 6. If it wasn’t for the battery issue at the time, or more truthfully, my inability to resist getting the latest iPhone each time my contract is up, I may have become one of Tim Cook’s estimated 60% (worldwide) still using Apple’s smaller iPhone 4 & 5 models.

That 60% is a large potential market and no doubt a key target for the iPhone SE. Certainly, encouraging this resistant group to upgrade to a phone that has the same internals as the iPhone 6 means the number of hardware variants Apple has to support would significantly reduce.

So who are they? I personally know two: my 21 year old daughter who has tiny hands and defiantly refused to upgrade to the iPhone 6 when she had the chance; and my 49 year old husband, who despite having huge hands, doesn’t like change. But he does like the fact that his iPhone 5 fits easily in the front pocket of his jeans and interestingly, fits the demographic of those more likely to buy an iPhone SE according to Slice Intelligence:

More than one fifth of SE buyers are in the 45-54 age demographic, versus 18 percent for all iPhone buyers; and 77 percent of SE buyers are men, versus 69 percent… Only 39 percent of new SE owners have a college degree, whereas 46 percent of those who pre-ordered an iPhone 6 or 6S did.

iphone-se-52 male

Given neither my daughter or husband have experienced a larger screen size, the SE is a likely to be a winner, but it’s not for everyone. Those like me, accustomed to the larger screen are unlikely to go back.

According to Computerworld, in early sales, the SE has recorded only 3 percent of the sales compared to the iPhone 6. But this is not surprising given the ‘laggard nature’ of this target market. Far from being early adopters more akin to the stereotypical Apple fan, this niche market who simply prefer a smaller phone or perhaps can’t be bothered with change and updates, is not going to be beating down doors to get their hands on the SE. Next week, next month maybe…when they’re good and ready.

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