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.
During its first event of 2022, Apple announced the launch of its newest iPhone SE. This is the third iteration of the iPhone SE, the first of which launched back in 2016 and the second in 2020. As expected, the newest addition to the iPhone family is 5G capable, an increasingly necessary feature at its price point.
The selling points
When the iPhone SE launched in 2020, 5G connectivity was still a rather limited feature due to the restricted reach of 5G networks. In the US, Apple’s largest market by revenue, 5G networks were limited to low-band spectrum that yielded meager improvements over LTE, or constituted isolated pockets of mmWave in a spattering of metro areas. That is no longer the case. T-Mobile’s mid-band spectrum now covers over 230 million Americans, while Verizon’s C-band spectrum, launched earlier this year, now covers about 90 million. Similar expansions are taking place across the world and 5G connectivity is now expected for nearly all devices priced above $300 in markets like China, Western Europe, South Korea, Japan and the US. Besides, the cost of putting 5G components in a device has declined.
The iPhone SE 5G features Apple’s 5nm process A15 Bionic chip, also used in the iPhone 13 series and a significant step-up from the A13 Bionic chip used in the iPhone SE 2020. The A15 Bionic chip will also give the iPhone SE the most powerful processor in its price segment by a significant margin. This will be more than enough processing power for the day-to-day tasks that most users in this price segment engage in, while being able to handle more demanding tasks like gaming at an affordable price point. The updated chipset also ensures that iPhone SE users will have the processing power to get the most out of Apple’s features, including AR and XR, machine learning, and new features that will emerge in the next few years.
Where the latest iPhone SE falls short is in camera features and design. The previous two launches of the iPhone SE played off the nostalgia that many consumers had for the classic iPhone design, home button and all. But this nostalgia may be wearing off as Apple recycles the same design for the third time with the iPhone SE 5G. Meanwhile, mid-tier Android devices now regularly feature 6.5” displays, multi-lens camera arrays and relatively thin bezels. The iPhone SE 5G still features just a single rear camera lens and the dated design of the iPhone 8, including a 4.7” display and chunky bezels. If Apple is trying to win Android users away, a design revamp seems due.
For many low-to-mid range Android users, the combination of 5G connectivity and Apple’s latest silicon at an affordable price will lure them to the iOS ecosystem. But the dated design of the device and relatively mundane specs outside of the A15 Bionic chip may not generate excitement in markets like China where consumers are very conscious of specifications and look to get the best bang for their buck.
The US, Japan and Western Europe are likely to be the best-performing markets for the new iPhone SE due to their strong iOS installed base and the strong performance of previous iPhone SE devices. At the same time, the improved chipset and 5G connectivity may help Apple gain share in increasingly important markets like China and India.
There are millions of low-end Android users across the globe who aspire to own an iPhone but don’t have the resources to join the most premium ecosystem in the world. The launch of a powerful, 5G enabled and affordable iPhone SE amid an environment of rising ASPs may be enough to convince a significant number of Android users to make the switch.
A podcast discussing the launch of the iPhone SE 2020 can be accessed here. For more insight on the latest iPhone SE launch, read here.
Boston, Toronto, London, New Delhi, Beijing, Taipei, Seoul – March 9, 2022
Apple just announced its new iPhone SE smartphone at its online Peek Performance event. The new device will be more expensive than its predecessor but comes with a more powerful A15 Bionic processer and 5G network support.
Despite the bigger $429 price tag, the updated iPhone SE is expected to do well, with 5G network support now bringing it in-line with key competitors across the mid-end segment.
According to Counterpoint Research’s Smartphone Model Share Tracker, Q4 2021, the 4G iPhone SE 2020 accounted for 12% of Apple’s total iPhone unit sales from its launch in Q2 2020 to Q4 2021 – with Japan and US the biggest markets for the device globally.
“The iPhone SE has been a solid mid-segment performer for Apple, with the 2020 version accounting for 13% of overall sales during its launch year in 2020,” states Jeff Fieldhack, research director of Counterpoint’s US practice. “It’s continued to have fantastic longevity with the device appealing to both new iOS users looking to upgrade from budget Android or iPhone owners replacing iPhone 8 (or older) devices, which this new SE body is based around.”
Sujeong Lim, senior analyst, Smartphones, highlights the importance of key regional markets to the success of the new 5G enabled device, noting, “Developed markets like Japan will be critical to the success of the new iPhone SE, where one-third of all 2020 SE models have been sold – and, of course, stalwarts like the US and China which accounted for another third of unit sales will be big drivers.”
“But this time, we expect demand to open up more across other markets like Europe, SE Asia and Korea – regions where many consumers stayed away because of the lack of 5G support.”
“The pricing is a slight surprise to the upside, but it shouldn’t be considering the chip upgrades coupled with recent events only intensify short-term supply chain risks,” observes senior analyst Ivan Lam. “I think they had room to move, especially with supply issues hitting lower-end components like 4G chipsets much harder than 5G, but this is a solid device with a long runway.”
Jeff Fieldhack notes, “The A15 Bionic supports all current services and others to come for the foreseeable future, so they can run this device for years with only slight tweaks or upgrades. And the higher starting price doesn’t just mitigate short term risk, it gives them extra padding to drop prices tactically in tandem with new 5G launches and as the product ages.”
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
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New York, San Diego, Los Angeles, Boston, Toronto, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul
July 20, 2020
During the second quarter of 2020, US smartphone sell-through fell 25% year-over-year, according to Counterpoint Research’s preliminary US Smartphone Channel Share Tracker. Prepaid channels were hurt the most during the COVID-19 outbreak despite a higher percentage of stores remaining open compared to postpaid. Postpaid channels declined 20%, a steep fall but one partly offset by an almost doubling of the percentage of devices sold online.
Commenting on Q2, North America Research Director, Jeff Fieldhack, said, “Mid-March through mid-April saw the weakest sales as it was the height of the first COVID-19 lockdowns in the US. April was the weakest month for smartphone sell-through as about 80% of smartphone sales channels were closed; sell-through volume was down over 50%. Smartphone sales for May through the end of June grew week-over-week. June 2020 sales were stronger than June 2019 sales, which shows the US smartphone market is resilient.”
Fieldhack added, “US smartphone sales picked up when the first stimulus checks were received by consumers during the back half of April. Soon after, carrier stores and national retail began opening again which further helped the recovery. There was also a bit of pent-up demand created by the weeks of store closures. Many consumers who may have wanted a new device but still had a functioning phone simply put off their purchase. Finally, US operator net additions will probably not be as disappointing as smartphone sales due to spikes in sales of hotspots, other connected devices, and used smartphones being connected again.”
Commenting on OEM performance, Senior Analyst, Hanish Bhatia noted, “All OEMs were down in Q2 year-over-year. Due to lockdowns, the share of online sales grew to 31% from 14% last year. However, because of strong online presence, Samsung and Apple volumes fared better than the overall market aided by a higher percentage of online sales. Alcatel also performed well considering the tremendous market decline. Alcatel benefitted from solid sales within government subsidized programs and within prepaid channels.”
Regarding the Samsung Galaxy S20 launch, Bhatia added, “The timing of the S20 family launch was unfortunate. Just as channels filled with devices, the majority of stores closed. This led to an estimated 38% fewer Galaxy S20 series activations than last year’s S10 series during the opening four months – March through June period. Many potential Galaxy S20 purchases will simply be pushed into Q3, but some will be lost.”
Commenting on the Apple iPhone SE launch at the end of April, Fieldhack added, “Apple volumes grew through the quarter and were especially helped by iPhone SE volumes. It was not a typical Apple launch with large fanfare and a launch event at the Steve Jobs theatre, which normally also includes a blitz of TV ads. However, the device has been successful and selling above expectations in both postpaid and prepaid channels. Since the iPhone SE launched, carrier stores and national retail have been re-opening. Some channels saw large promos to draw shoppers back to stores. This was especially true within Walmart, Metro by T-Mobile and Boost. Our checks show that iPhone SE sales are unlikely to be cannibalizing fall 5G iPhone sales. iPhone SE buyers are more pragmatic about price, less concerned with 5G, and the smaller display is not considered a hindrance. Over 30% of iPhone SE buyers came from using an iPhone 6S or older handset—handsets four years old or older. Over 26% of iPhone SE users moved over from an Android device, which is higher than normal Android to iOS switching.”
Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.
Last week, Apple held its annual developer conference, WWDC, which was different than the past few years. Instead of having developers and journalists from across the globe in the auditorium, Apple went ahead with a virtual keynote, as this is becoming a new normal in this COVID-19 pandemic situation.
The WWDC 2020 conference saw Apple executives announce software updates and new features coming to iPhones, Macs, iPads, and Apple Watch devices. Apple also announced software updates for Apple TV, AirPods Pro, and HomeKit.
And, as expected, the much-rumored, but potentially game-changing ARM-based Apple Silicon was also announced. Future Macs will cut their reliance on Intel, and run on Apple-made custom chips instead.
Here’s a quick summary of announcements made at WWDC 2020, and what it means if you are an Apple user.
iOS 14 Brings Improved Siri, Widget Customization and More
App Library and Widgets
As iOS does not come with an app drawer, all the installed apps go on the home screen and other pages. And as the number of apps that we use increases, organizing them was becoming a nightmare for some. Apple has taken that into account when working on iOS 14.
Apps are now automatically organized in the App Library, which is a new space at the end of your home screen. It offers a simple and easy-to-navigate view. The folders are now categorized based on Entertainment, Social, Game, Productivity, and other apps. This also allows you to hide other pages that you do not want. On the top, you also get newly added apps, suggestions and search bar too.
Widgets have been a part of iOS for a while now, and they offer information at a glance, without having to open the app. Apple has added the ability to have widgets in different sizes, and now you can add them to the home screen and other pages too. There is another interesting addition called Smart Stack, which will display a widget based on the time of the day – like top news in the morning, upcoming meetings in the afternoon, and activity information in the evening.
Picture-in-Picture For Uninterrupted Viewing
Similar to the iPad experience, the picture-in-picture feature is now making its way to the iPhone with iOS 14. When you are watching a video, and swipe up for the home screen, the video screen will minimize and you can continue watching even when you move around the apps. It will be in the form of a small overlay on top of apps.
Siri Gets a New Visual Interface and Improvements
Currently, when using Siri, the iPhone switches to a full screen. With iOS 14, Apple is introducing a new compact design where the Siri icon appears at the bottom while it carries out the task. So, say you are in the Notes app or browsing through your Instagram feed, and you want to know about the weather. Just say, “Hey Siri, how’s the weather?” and the result will pop-up on the top of the screen as a notification, rather than taking up the whole screen. You can now even ask Siri to send audio messages.
Apple is also introducing a new translate app, which allows for on-device translation in 11 different languages. These include Mandarin Chinese, German, Arabic, Russian, and more. Turning the phone to landscape view brings up conversation mode with a side-by-side view for two people to follow the conversation. The best part here is that the app will intelligently detect the language you are speaking and translate in the other language.
iMessage Gets New Features
iMessage has been a big part of iOS, and the new update now lets you pin messages on top of the list. This way all your important conversations are always on top. What’s more, you also get a nice animation when you get messages from these pinned users.
For group conversations, there is a new in-line replies feature. It allows you to reply to a specific conversation. Apple has also added a mentions feature, so you can direct the message to a specific user. And as group messages can get chaotic, you can mute it, and only get a notification when someone mentions you.
Maps and CarPlay
Apple has been working on improving its Maps app and brought new features over the years. Now, the improved maps will also be rolling out in UK, Ireland, and Canada. Maps will also offer guides with suggestions for great places to eat, city-explore, and even shop.
You can also get cycling directions across the city. It will alert about elevation, quiet or busy roads. This feature will be available in New York, Los Angeles, San Francisco, Shanghai, and Beijing. There is also EV routing feature, which will help electric car users to easily route to charging points of compatible vehicles from BMW and Ford.
CarPlay now gets new wallpaper options and new categories which include parking, charging, and food ordering. The surprise announcement was the digital version of car keys – allowing you to leave your keys at home, unlock and start your car with your iPhone. It relies on NFC to unlock your car. There is also a security element attached to it, enabling you to disable the digital-key unlock feature via iCloud. The feature will work on BMW’s 5-series from 2021, with support for more car models to come later.
App Clips – Instant Apps for Quick Use
App Clips on iOS 14 is similar to Instant Apps on Android. The feature will let you use an app without downloading it. It will also take away the hassle of signing up to create an account. App Clips will load a lightweight version, allow you to use Sign In with Apple or Apple Pay to carry out the transaction.
Improved Security and Privacy
Apple announced three new security features coming to iPhones with the iOS 14 update. Unlike Google, Apple’s business model is to sell hardware and services, so it does not have to rely on advertisers. And privacy has been one of the unique selling points for Apple iPhones. With the new iOS 14, Apple will now let you know when an app is using the microphone or camera. A small orange dot will appear above the network bar as an indicator. In such challenging times when everyone is using more of voice and video calls, this is an important feature to have.
While not many users are aware of this, apps can track your activity in the background. With the new OS, you will get control over the data that is bring shared. Whenever apps try to track you across services, you will now be able to choose between “Allow Tracking” or “Ask Not to Track.” This can definitely help in limiting the Ad Tracking so as to reduce getting targeted ads. What’s more, app developers will also need to declare the data they collect. This will help you have more clarity over information that apps collect.
List of iOS 14 Compatible Devices
iOS 14 is compatible with a total of 16 devices. These include the iPhone 6s and 6s Plus, iPhone 7 and 7 Plus, iPhone 8, and 8 Plus. It is also compatible with the first-gen and second-gen iPhone SE, iPhone X, XR, iPhone Xs, and Xs Max, and the iPhone 11-series. iPod touch (seventh-generation) will also get the iOS 14 update. It is good to see that the iPhone 6s-series and iPhone SE first-gen models are also a part of the list, and most of these features will make it to them.
The Developer Beta version is already out, while the iOS 14 Public Beta is expected sometime in July. The official version will be rolled out later this year in the fall, right after the new iPhones are launched.
iPadOS 14 New Refinements
There is no denying that the iPad is getting as powerful as many computers, and can do most tasks that you can on a laptop. The latest iPad Pro also comes with an add-on full-size keyboard with a trackpad. With the new iPad OS 14, Apple is bringing redesigned widgets to the iPad, like what we have seen for iPhone with iOS 14.
Compact Call Screen
Today, when you get calls on an iPad, it takes up the entire screen, and that changes with the new OS. Now, the call window is compact on the top, displaying the name, number, and call answer and reject button. As it doesn’t take up the whole screen, you can continue using the app after you accept the call.
Apple has introduced a new feature called Scribble. When using the Apple Pencil, you can start writing in a free form anywhere in the Notes app, copy and paste in the other app. It will automatically convert handwriting to text. You can also write in your handwriting using the Apple Pencil on the Search Bar or in the To-Do List, and it will automatically convert that into text. There is also a Smart Select feature where you can select the handwritten text and make it bold, change color, and so on. Besides handwriting, it can also detect shapes as you draw and snap them into an ideal form.
iPadOS 14 Compatible Devices
The iPadOS 14 is compatible with iPad Mini fourth-generation and upwards, iPad Air second and third generation, iPad fifth generation and upwards, and iPad Pro models. Similar to iOS 14, the iPadOS 14 developer preview is rolling out, Public Beta coming soon, and final version on the fall. Users who have iPad Pro models along with Apple Pencil are the ones who will benefit most from the new features.
AirPods Pro Get Spatial Audio
The AirPods Pro already offer a great audio experience with a noise-cancellation feature. With the latest update announced at WWDC 2020, Apple is bringing spatial audio via a software update. Apple says it will help deliver theatre-like audio listening experience. That’s not all, a new automatic device switching feature will let you switch between iPhone to iPad and MacBook with ease. Say you are listening to podcasts while the AirPods are connected to the MacBook, and you get a call on your iPhone, the AirPods will automatically switch to the phone, and once the call is complete, it will then switch back to the Mac.
Apple Watch gets Sleep Tracking and More
The WatchOS 7 brings a bunch of new features, such as the ability to share Watch Faces, Cycling Directions with the Maps App, and more. And along with tracking workouts such as cycling, running, jogging, and more, it can also track your dance workout. But two of the most exciting features for me would be the Sleep Tracking and Hand Washing modes.
Yes, Sleep Tracking is finally here. The Apple Watch will now be able to use the accelerometer to notice the movements and differentiate between walking and sleeping. When you go to sleep, the Do Not Disturb mode will be activated and dim the Watch display. In the morning, you will get sleep analysis and average bedtime for the past few days.
With the COVID-19 pandemic, washing hands frequently with soap has become more important than ever. Using the microphone (to determine water sound) and motion sensors, the Apple Watch can detect handwashing and start a 20-second timer, helping you wash your hands properly.
Siri on Apple Watch can translate 10 languages and has on-device dictation too. The new features will make way to Apple Watch Series 3, 4, and 5. Though, not all features will make it to older devices. The developer beta is already out, with Public Beta coming out next month, and the final version in the fall.
macOS Update Brings Improved Safari Features and More
The macOS is also getting a big update, and the new version is called Big Sur. The new update brings a refreshed dock with a sleek design and new icons. Apple has also brought the control center to the Mac, giving you quick access to Wi-Fi and Bluetooth controls among others. There are other design retouches and performance improvements too.
But the one update I am looking forward to is the new Safari browser. You now get a customizable start page, giving the ability to add background images, iCloud tabs, and reading lists. Along with improved tab design, Apple has also added support for extensions from your favorite developers. For instance, you can get Grammarly, Duck Duck Go search engine, Pockets, and a lot more.
The Safari browser can also intelligently track websites you browse and offer a weekly Privacy Report. In case of a data breach or so, the browser will also let you know if your passwords have been compromised. Improvements also bring 50% faster loading time, and up to 3 hours more battery life.
Compatible devices include MacBook Air and Mac Pro models from 2013 and later. MacBooks from 2015 and later, iMac Pro from 2017 and later, iMac and Mac Mini from 2014 and later will also be compatible with macOS Big Sur.
‘Find My’ Network to Help Track Lost Items
We have been hearing rumors about Apple working on a Bluetooth-enabled item tracker like Tile, but there has been no product in sight yet. However, Apple did announce something that could be setting the state for a product launch later this year. The “Find My” app has been baked into iPhones since 2017, allowing users to locate lost devices on a map. It uses signals like Bluetooth, GPS-powered location services, and internet connectivity to locate devices.
Apple is now extending the Find My network capabilities for compatible devices. Even devices without internet connectivity, such as popular Bluetooth tracker Tile, will be able to sync to the network and become locatable. You can attach these trackers to your keys, wallets or bags, making them trackable. Developer preview of the same is out now, and official announcement could be expected in September along with the iPhone 12 series.
The Rumored Apple Silicon Goes Official
For more than a year, the rumor mill has been abuzz about Apple ditching Intel to bring its own custom chipsets. And it is finally happening. At WWDC 2020 the new Apple Silicon, based on an ARM architecture, was announced. While Apple did not reveal many details about the chipset, it did demo a Mac running on Apple Silicon called A12Z Bionic.
Apple is promising better performance and lower power consumption with the new ARM-based chipsets. It will allow Apple to have a common architecture across iPhone, iPad, and Mac, which will also help developers in writing a single code, to make their apps available across devices. For instance, an app designed for the iPhone, will also be scalable to be used on iPad and Mac.
The Apple Silicon will also bring HDR display support, high-performance video editing and GPU performance, high-quality camera processor, machine learning, neural engine, among others. The new chips also mean Apple will have tighter software and hardware integration; something that has been at the heart of the iPhone’s impressive performance.
Apple mentioned that the first Mac devices powered by the new chipsets will arrive at the end of 2020, and the transition from Intel to the new silicon will take two to three years. In the meantime, new Macs with Intel chipsets will arrive later this year.
WWDC 2020: Apple Ecosystem Stats in Numbers
Siri now has 25 billion monthly requests
iMessage sees 40% growth over last year, 2x growth in group messages
Apple CarPlay now available on 97% of new cars sold in the US
Outside US, CarPlay is available on 80% of new cars that are being sold
Sign in with Apple now has 200 million accounts since launch
In 10 years, Apple has shipped 2 billion SoCs
Key Takeaways from WWDC 2020
As I mentioned above, this year’s developer conference was different than the usual. The new features introduced look functional and meaningful. Even the demos were shot well to give an idea of how the features will benefit the users. Here are some of my concluding thoughts:
The ability to use your iPhone as a digital key to unlock your car and even start it shows how deep Apple is invested in the connected future. It is something that will help Apple differentiate from the competition.
Pinned conversations and new features in group chats shows how serious Apple is in giving competitor platforms like WhatsApp, WeChat and Telegram a tough fight. The ability to receive and respond to iMessages from across Apple devices makes it stickier still.
A lot of iPad Pro users use Apple Pencil to jot down Notes and draw rough sketches. The handwriting recognition and other features will make using the iPad Pro more productive for creators.
New features like Sleep Tracking and Dance Activity trackers will make the Apple Watch an even better fitness-focused device. Features like ECG and Heart Rate Sensor already make it a great activity tracker.
Apple also demoed face recognition and activity zones for HomeKit accessories, which will let users make the most of these connected devices.
For me, the Apple Silicon announcement was the star of the keynote. It shows how Apple is putting a lot of its focus and efforts towards supporting the ARM transition. It ends Apple’s longstanding partnership with Intel, but Apple Silicon will help Apple design a powerful and energy-efficient device ecosystem, offering a smooth app continuity experience from iPhone to iPad to Mac.
Four years after launching the compact and powerful iPhone SE, Apple has finally launched its successor. The new and refreshed 2020 model is also called the iPhone SE. A lot has changed in the past four years where modern smartphones now come with an edge-to-edge screen, multiple cameras among others. Yet, Apple has gone with the old design featuring thick bezels, a physical home button and more. So, why exactly did Apple launch the iPhone SE in 2020?
At $399, the smartphone brings the latest and fastest A13 Bionic chipset, water and dust resistance, and wireless charging. But is there an audience for this new iPhone? Is this the right time for Apple to launch a 4G smartphone on the cusp of the 5G era? We have already discussed these in our blog. And, in the latest episode of “The Counterpoint Podcast” our host and research director Jeff Fieldhack, and research analyst Hanish Bhatia deep dives into Apple’s strategy behind reviving the ‘SE’ brand and the outlook for the same in these testing times.
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The next-generation iPhone SE has been launched after many rumors and leaks over the last three years. The device is a successor of the previous generation iPhone SE launched in March 2016. According to Counterpoint Research, we expect 2020 shipments of the new iPhone SE to exceed 15 million units driven by the lower price point and best-in-class A13 Bionic chipset, which is also used in the iPhone 11 series models.
The device was initially expected to launch during March 2020, but the launch was delayed due to factory shutdowns in China amid the ongoing COVID-19 outbreak. However, factories in China are nearing full capacity again. Apple and its manufacturing partner have done an admirable job bringing this device to market given that Chinese factories were closed for almost two months during the factory ramp-up phase. This is also an indication that upcoming Apple launches may also adhere to expected launch timelines, but we will have to wait and watch.
4G LTE iPhone Amid 5G Noise
While many markets have shifted focus to the 5G smartphone race, Apple delivers one last shot at a mid-range 4G LTE before finally shifting towards a 5G-heavy portfolio. Global network operators are focusing on the faster throughput speeds and the better economics of 5G networks, but we can’t overlook the fact that there remain many hurdles and work to be done. These include spectrum acquisition, investments for tower upgrades, and for years we will see patchy 5G coverage in many regions. Apple will have a 2-3-year window before a majority of 4G LTE users finally migrate to a 5G network, even in the developed markets. The iPhone SE taps this window of LTE opportunity for Apple. By foregoing 5G, Apple allowed the device to be priced at $399 instead of at least $450. It also would have been challenging to fit the extra 5G components into the SE’s tight, aesthetic 4.7” package. Finally, with the latest A13 Bionic CPU, Wi-Fi 6, and a modem that supports GB LTE, it will probably feel sufficiently powered to most users, even though it lacks 5G. The device is likely to be a mid-range “cash cow” for Apple for the next 2-3 years.
A13 Bionic Chipset to Drive the Consumption of Apple Services
The new Apple iPhone SE has a 4.7-inch LCD screen, Touch ID fingerprint recognition, and a design similar to the iPhone 7 and 8 series, with a single camera on the back. What makes iPhone SE 2020 stand apart from the crowd is the A13 Bionic chip. Having an A13 bionic chip inside the iPhone SE means that it now has one of the best-in-class chipsets, which is comparable or better than many Android flagships. Apple’s A13 was a large upgrade over the A12 chipset used in iPhone XR models. It is based on the 7nm chip architecture which is more optimized for machine learning operations. But why would Apple put its best-in-class chipset in a mid-range device? The answer:
In Q1 FY20, Apple’s revenue hit an all-time quarterly high of $91.8 billion, up 9% YoY for the three months ended Dec 2019. Out of the total Q1 FY20 revenue, $12.7 billion came from its service segment which accounted for 13.8% of the total revenue.
The old generation Apple iPhone 6S/7/8 models don’t have the hardware to support the latest services while delivering best-in-class user experience.
Apple has tested its price elasticity and realized that marginally aggressive pricing can potentially generate a much higher “customer lifetime value (CLV)” over a period of 24-30 months.
The A13 Bionic chipset will enable these users to get a taste of new services. 4K video recording, Smart HDR, Gigabit-class LTE and Wi-Fi 6 will act as a backbone to drive the overall consumption of services such as Apple Arcade, AR Apps, Apple TV+, Apple Music, while driving faster consumption of iCloud.
According to Counterpoint, Apple can potentially generate a Customer Lifetime Value (CLV) of US$2,400 over a period of 30 months from a “power” iPhone user with the latest hardware, subscribing to its existing and new Apple services.
Capturing the Mid-Range Demand with a Lean Portfolio
Although the market is rapidly shifting towards higher device specifications (including >6-inch display, multi-camera setups, 3D face unlock, AI features), there is still a segment of consumers who still feel more secure with a fingerprint unlock and a screen size that fits well in the palm. On top of that, some of these consumers are previous generation Apple users who are nearing the end of their device life cycle. These users are seeking high brand value with good performance without paying $1000 or more – especially in world in which normal economics have been altered by the coronavirus.
Apple iPhone SE will consolidate the demand for existing older generation iPhone 6/7/8 series models towards a single device – iPhone SE. This will also enable Apple to maintain a leaner 4G LTE portfolio while it transitions to 5G. Meanwhile, other global OEMs will face stronger competition from Apple in the mid-range. For example, iPhone SE will compete strongly with Samsung’s Galaxy A series, LG’s ThinQ series, Motorola Z series, and the upcoming Pixel 4a series.
North America, Europe, and Japan to be Primary Target Markets
A budget category Apple device is often considered as a device targeted for Asian and Latin American markets. However, these markets have shown modest uptake of existing Apple devices in the $400-$600 price band in the past. The aspirational value of the Apple brand remains high in these markets, but these markets have remained highly competitive and consumers tend to lean towards buying a device that offers higher specifications. The consumers in these markets also pay a significantly higher cost for Apple devices due to additional customs duty, currency fluctuations, supply issues, and other local taxes. For example, Apple iPhone SE is priced at $550 (approximately) in the Indian market. So iPhone SE may still end up competing in the premium category in these markets. Having said that, the iPhone SE may still manage to gain significant traction given its latest hardware.
Therefore, the primary target market of iPhone SE will be North America, Europe, and Japan. These are primarily the same markets where the iPhone 7, 8 as well as the iPhone XR series continue to rank among the best-selling models. But now, the availability of the new iPhone SE may leave some prospective iPhone XR buyers confused, as they may end up paying more but end up with an older A12 Bionic chipset. Also, the timing of the iPhone SE launch is not favorable. Carrier stores in North America, Europe and some other parts of the world remain closed due to the COVID-19 lockdown since mid-March 2020. This means Apple may lose out on some initial launch push, but sales will gradually pick up in H2 2020 if the COVID-19 situation continues to improve.
Overall, the device maintains a fine balance among device specifications, design, and pricing while keeping in mind the aspirations of a certain set of consumers. This will entice the mid-range consumers to upgrade without paying the premium cost for a new device while Apple gets an opportunity to capture more value over the lifetime of the device. At last, Apple should be able to capitalize upon its stellar hardware integration and the design “nostalgia” which lasted for more than three years and became the hallmark of Apple’s design finesse.
BONUS! Podcast – New iPhone SE: Powerful Apple Experiences at $399
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