When Apple launched the iPhone SE first generation in 2016, in the “Let us loop you in” event, Apple executive Greg Joswiak stated “Apple has sold over 30 million 4-inch iPhones in 2015” explaining that few consumers still prefer compact phones. The design of the first-generation SE was like the iPhone 5S launched in 2013, but with the latest available chipset (A9 – same as in the 6S series launched in 2015) and several spec improvements. Meanwhile, there had been a shift in the form factor for Apple since the launch of the iPhone 6 in 2014, which featured a larger 4.7-inch display. Hence, Apple was able to use the older form factor, bringing it to a lower price band – US$399, keeping it well differentiated from its more expensive line up. Consumers who wanted to enter the Apple ecosystem at a cheaper price point were happy to make the trade-off with the smaller display.
A similar trend followed in the launch of the iPhone SE 2 in 2020. The SE 2 came with a similar design to the iPhone 8 (launched three years before in 2017). Again, with the iPhone X and XR, there was a change in the design of iPhones, and the iPhone 8 form factor had become “old”. SE 2 also featured the latest available chipset which was A13 Bionic. However, the SE 2 was more than just a smaller iPhone. With Apple focusing on a service-driven business model, the iPhone SE provided an affordable entry point to Apple’s ecosystem and the A13 could provide best-in-class experience for all Apple’s services to its consumers. It helped in bringing new users to the iPhone installed base. It was also favored by many corporate buyers looking for a lower cost and therefore, lower risk platform to run enterprise applications.
SE was again refreshed in 2022 bringing 5G capability to the mid segment in Apple’s portfolio. It also featured the A15 bionic chipset. SE 2022 performed well in some markets like Japan and the US. However, it has not been as successful as SE 2. The form factor of SE 3 now looks dated and needs an upgrade. Over, the last few years, consumers are also preferring smartphones with larger display sizes. Considering the trend, Apple has in fact launched the iPhone 14 Plus with a larger display size.
In 2016, the average screen size of smartphones was 5.1 inches. This is when SE’s first generation was launched with a 4-inch screen. However, the average screen size of smartphones sold in 2020 was 6.2 inches and 2021 was 6.4 inches. While the SE second and third generation featured a 4.7 inch screen. The gap between the average display size and SE’s display size has been widening. Hence a larger display SE is due already. This is where the iPhone mini, with a 5.4-inch display might come in.
Exhibit – Average Display Size of Smartphones 2016 vs 2021
Source: Counterpoint Research Handset Model Sales
Apple launched the “mini” series with iPhone 12 and refreshed it in the iPhone 13 series. However, in terms of sales, its performance was underwhelming. From the launch, until Q2 2022, iPhone 12 mini contributed to less than 10% of 12 series sales, and iPhone 13 mini contributed less than 5% of iPhone 13 series sales. As a result, the mini-series was discontinued with the iPhone 14 launch. Likely, one of the main reasons for this underwhelming performance was the smaller display at a premium price point of US$699.
However, if Apple were to bring the ‘mini’ form factor at a lower price point of around US$429 in a refreshed SE model it would substantially change the value proposition. With the success of older generation SE devices, we have seen consumers are willing to accept some trade-offs of smaller displays in return for the overall Apple experience. Hence, re-spinning mini as a new SE would make a lot of sense. It would also allow Apple to amortize development costs related to the mini form factor such as tooling and other mechanical components.
One of the differentiating features of SE was including the latest available chipset, but in an older form factor. However, with the 14 series, Apple has shifted its strategy with only Pro models getting the latest A16 Bionic chip. While the USD prices have remained the same, there is now a wider gap between the Pro and the non-Pro models in terms of specs. A new SE, which will likely launch in 2024 (assuming the two-year SE refresh cycle), along with a larger display, will likely sport the latest available chip in the “non-Pro” iPhone models.
Note: This information is speculative and not based on any specific evidence or knowledge of Apple’s plans.
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