smartphone sales have neared 1.5b annually around the world … Apple sells ~200m a year on average, which means there is certainly room to grow.
…we all know the market for premium flagships is capped, and that has played a role in Apple’s volume ceiling.
Origin (subscription): Tech.pinions Think.Tank – The iPhone SE and Apple’s Art of War
…the iPhone is perfectly and purposefully targeted at the portion of Apple’s existing customer base who does not buy flagship phones and often buys last years, or the year before model, at a lower price and holds onto it for 3+ years.
There is also a massive second hand, or hand-me-down, market for iPhones that this device will play an interesting role against. I’ve seen estimates that anywhere between 350-450 million of Apple’s ~1 billion iPhone installed base is second hand or hand-me-down devices. At $399 the new iPhone SE makes for an interesting proposition to get someone on the latest and greatest technology.
Expanding beyond premium will almost guarantee Apple attracts new customers in every market of the world, and particularly those where the price is more of a concern. In every market, there is a tier of smartphone prices and customers who fit those tiers. Apple asking every potential customer to spend well north of $500 for modern technology, was always going to limit their potential customer base. The iPhone SE is perfectly positioned for the middle tier of the market and the customers who look more at price and value for the price than anything else. This market is extremely large around the world.
In the case of the iPhone SE, it is hard to neglect the most significant opportunity offered by much of the install base who is using a 4.7-inch iPhone. Whether it is the iPhone 6, the iPhone 7 or the iPhone 8, users have been accustomed to that size as well as features like the home button. It would be fair to characterize this user base as a more pragmatic one, that puts value on core features that have a long-lasting impact on their experience.
…it is not a model we should expect to be refreshed with the regular cadence we see in the rest of the portfolio. Instead, it’s a product that serves the purpose of getting the most pragmatic users to upgrade after holding on to their phones for years. These users might be coming from a hand-me-down or a secondhand iPhone or even be Android users looking for their first iPhone. Last September, I felt the new price of the iPhone XR at $599 and the iPhone 8 starting at $449 offered some great options for upgrades. But in some markets where installment plans are not as common or for those consumers on a tight budget, $50 makes a difference, so the new iPhone SE will certainly further widen the addressable market.
While if you have an iPhone model with Face ID, you might never entertain the idea of going back to Touch ID (even with the current mask requirements) the consumers who are likely to be interested in the iPhone SE love their Touch ID.
One last point on the iPhone SE is that it is one of those slow-burning models that will have a long-tail impact on sales and considering how much more we depend on technology the need for a phone that does the essentials well especially for consumers who use their phone as their primary computing device.