Often in history, it has been proven that the smallest of things pack the biggest punch and if initial reports are to be believed, Apple’s new iPhone SE is a seriously powerful little device. For years, Apple Inc. (NASDAQ:AAPL) fans had clamoured for a bigger screen on their iPhones and with the 6 Plus, Apple had finally given in to their customer demands. Yet, it seems that a significant chunk of iPhone users is hesitant to upgrade to the newer versions of the iPhone. Standing at 4.7 inches and 5.5 inches, the latest 6s and 6s Plus both come as a huge jump in screen size to the previous generation of iPhone users who are still stuck on the iPhone 5 and 5s.
The iPhone SE helps to bridge that gap excellently as the phone keeps the 4-inch screen of the previous 5s and totes internals at par with the latest 6s model. With almost all smartphone manufacturers moving towards bigger and bigger screens, Apple seems to have taken a step backward with the iPhone SE. While the smaller and powerful iPhone at a lower price point of $399 could spark some much-needed momentum in the sluggish iPhone sales growth, it remains to be seen if Apple can carve out a market for such a tiny device in this media-centric smartphone world. Join us as we analyse the pros and cons and market potential of this 4-inch pocket-rocket!
The iPhone SE: A Small Phone With a Big Impact
Apple touts the iPhone SE as the most powerful 4-inch smartphone ever made. And considering that it’s a screen size segment that it has got all to itself, it seems to be a claim that is well grounded in fact. However, that does not say that the internals are anything to scoff at. In fact, if anything, they’re as good as the latest iPhones barring the absence of one critical feature, 3D Touch.
As the video above clearly portrays, the iPhone is no slouch when it comes to gaming multimedia or even day to day usage, so below we take a quick look at the internal specifications of the latest product to bear the iPhone moniker.
- 64 Bit A9 processor
- 12mp iSight camera on the back paired with a 1.2 mp selfie cam with a front facing flash
- 4-inch Retina Class Display
- Apply Pay with Touch ID Fingerprint Sensor
Other than the smaller iPhone, Apple also announced another device to the audience at last night’s event. A smaller iPad Pro which retains much of the similar specifications to it’s elder brother including support for Apple’s Stylus the iPencil and the Keyboard case. The screen size is a tad smaller and so is the price tag. In fact, keeping with the trend of budget offerings, the Apple Watch received a markdown of $50, probably in anticipation of the Apple Watch version 2 that is slated to make an appearance along with new Macbooks in the next Apple event.
In fact other than the recurring trend about security in light of the recent privacy debate, the other factor that made headlines was the fact that for the first time, Apple seemed to be making a conscious decision to lower prices and target the mid-range segment. We elaborate more on this in our final segment where we take a brief look at the impact that the iPhone SE could have on the global smartphone market.
The Future of iPhone Rests on Tiny Shoulders
Apple’s first tryst with the budget segment ended horribly and the iPhone 5c stands out as the black sheep of the iPhone family. This time around, even though the pricing strategy for the SE is on the lower end of the scale, yet Apple has held onto their design philosophy and there doesn’t seem to be any apparent corners cut on the 4 inch iPhone to drop the phone down to $399 for the 16 gig model.
Despite the fact that the iPhone SE looks to be shaping up to be a stellar device, one question still remains, why did Apple choose to go back to their roots and make a smaller 4 inch iPhone? The answer to this lies as much in the past as it does in the future and before we embark on that journey, let us first take a quick look at the graph above!
Tim Cook estimated that as much as 60% of the people who are on older smaller form factor devices from the pre 5s era have not upgraded to newer devices because of the discomfort of using large smartphones. Apple hopes to entice this large segment of its users to upgrade to their latest product as we see that more than 39% of users on the iOS mobile platform are using devices in the 4-inch screen size. With that being said, there is a lot more to the smaller iPhone that just getting older customers to upgrade!
The iPhone 6s and 6s Plus, despite their early success, has failed to capture the imagination of iOS users. In fact, as a result of the failure of the recent iPhones, Apple for the first time in years has forecasted their fiscal Q2 2016 to have a diminishing rate of growth. With sales of iPads and Macs warning,  Apple has turned into a one-trick pony, and it cannot afford to have its iPhone line of devices falter.
With the average ASP of smartphones in 2015 hovering around $290, it gets increasingly difficult for Apple and their premium line of iPhones to penetrate newer markets. On the other hand, Apple’s largest markets thus far, China and the US have both shown clear indications of slowing down and in order to maintain their growth rate, Apple needs to expand into newer markets.
The booming smartphone market of India provides a ripe opportunity for Apple but the high price tag has been a barrier for the company to grab a significant chunk of the coveted Indian smartphone pie. While the price cut in recent times has helped Apple in securing a strong foothold in India, here are a few things that Apple would do well to keep in mind while setting price points and expectations from the iPhone SE
- In the face of companies like Le Eco and Xiaomi, both of whom have been launching affordable and well-built phablets in the Indian smartphone space, Apple, despite all its brand value may struggle to find a footing with the iPhone SE. Recent reports show that small screened phones are headed the way of the dinosaurs and this doesn’t auger well for the 4 inched iPhone.
- Over the years, the fact that iPhones have had almost similar functionality across device ranges has remained one of the best selling points of the device, But the lack of 3D Touch on the iPhone SE may demarcate it as a budget product and thus dissuade potential buyers from picking it up thus defeating Apple’s purpose entirely.
- And finally, in spite of the many positives and possibilities that the iPhone SE had, Apple has managed to screw all of it up yet again, at least in India. With a price tag of  39,000 INR, the iPhone SE has placed itself in direct competition with the likes of Galaxy S6, Nexus 6P and LG G4. Phones which obliterate the new iPhone in all technical aspects.
When we first heard news of the new smaller iPhone, we questioned its credibility yet heralded it as the probable saviour of the iPhone lineup! Yet as matters stand now, Apple’s foray into the budget market seems unlikely to yield any result and we predict yet another impending price cut in the near future! The iPhone SE may just as well stand for Still Expensive as far as the India is concerned and we do not see the Indian audience warming up to this new product from Apple’s stables anytime soon.
