With the iPhone SE (2020), Apple has challenged the Android competition in the market for mid-range smartphones. Is the company now going one step further?
Apple could unveil a new iPhone SE for 2022 as early as the beginning of March. If a well-known industry analyst has his way, this is an opportunity for the company to sell the current 2020 iPhone SE at a much lower price.
Will Apple make the iPhone SE even cheaper in 2022?
Mark Gurman from Bloomberg writes in his newsletter that Apple could lower the price of the old SE to 199 USD with the launch of the new iPhone SE. That would make it half the previous price of $399 on Apple’s site. Gurman argues that this would give Apple a chance to establish itself in regions such as Africa, South America and parts of Asia. Apple’s market share has been small there so far; instead, inexpensive Android smartphones are widespread. However, with an iPhone for under USD 200, the company could outdo the competition. That would be a lucrative model in the long run for Apple, which is trying to further expand its subscription services like iCloud, Arcade, Apple TV+ and Apple Music. The iPhone is also the entry point into Apple’s ecosystem for many and an incentive to buy more products like AirPods or Apple Watch.
As an example, Gurman cites India, where Apple has a smartphone market share of less than four percent. Here, people spend an average of 196 USD on a smartphone. So an iPhone SE for 199 USD would have a good chance of being a sales success. But there is also a market for a budget iPhone in Europe and North America.
Gurman has an accuracy rate of 85.5 percent when it comes to his predictions, according to Apple Track. For instance, he correctly predicted the launch of AirPods 3 and new MacBooks with M1 Pro and M1 Max, as well as numerous iPhone 13 features in 2021.
Read more about iPhone SE 2022: All the information about iPhone SE Plus and iPhone SE 3.
Can Apple sell a low-cost iPhone at a profit?
The legitimate question here is whether selling an iPhone below the $200 mark is worth it for Apple. According to Gurman, the iPhone SE’s material costs were around $200 USD two years ago. The company is drawing on many parts from the iPhone 8 to drive down costs. Meanwhile, manufacturing should be even cheaper for Apple. Still, a profit margin of 30 to 40 percent, which is common for Apple products, is not to be expected. So the company would have to hope for accessory sales and subscription deals.
Bloomberg newsletter “Power On” by Mark Gurman