Why does the iPhone SE make sense? Apple’s new iPhone still launches amid Covid-19
On April 15th, Apple announced the release of the iPhone SE. This is the budget version of the most popular mobile devices in the world. Touted as the “the most affordable iPhone” coming in at $399, Apple has decided to continue with the launch despite pandemic conditions.
“a powerful new iPhone featuring a 4.7-inch Retina HD display, paired with Touch ID for industry-leading security. iPhone SE comes in a compact design, reinvented from the inside out, and is the most affordable iPhone.”
I am a long-time user of Apple products, starting with the original iPhone and have since expanded to the iPad, Macbook, AirPods, and Watch. Since my initial purchase, back when iPhones where only available through AT&T, the way Apple has treated this product has evolved constantly reinventing itself. Apple at first came out with a new named model every year; however, two-year contracts implemented by the carriers enforced an exchange cycle based on the contract. As contracts went the way of the landline, renewal/rental programs became more popular and the “S” versions encourage many to upgrade every year. However, more recently, global trends have seen the time between new phone upgrades lengthen despite efforts to encourage spending by adding more features every year instead of minor internal upgrades between major updates. This most notably happened when skipping the “iPhone 9” to introduce the iPhone X, releasing the X max a year after, and adding a 3rd camera in the 2019 update.
Apple’s Ecosystem
The iPhone is key to the entire Apple Ecosystem, which prides itself on the effortless communication between devices. Apple’s goal is to win over customers to purchase Apple’s devices wherever it offered. Hence the incompatibility of charging cables (until USB-C) and its reluctance to license the H1 chip to other headphone manufacturers.
For many, the iPhone is the introduction to the Apple ecosystem, and directs users to explore more Apple products compatible with phone, or while in the store waiting for the tech to repair the phone’s screen. Because this is likely an introductory product, it is important for it to introduced as early in a customer’s lifecycle as possible. The low price point of the iPhone SE is in the perfect range to purchase as a kid’s first phone.
The Competition
Although Apple’s iPhone has continued to dominate the US market, the worldwide market shows the loss of market share to android. This is mainly due to pressure from companies on both the luxury side such as Samsung, Huawei, and Google, but also on the lower end by Samsung, OnePlus and Xiaomi. To be competitive in the international market, Apple needed to provide a low budget alternative to compete in the market where budget phones from big brands like Samsung were also available.
Although Apple was seen as the innovator and market disruptor when the initially announced the phone with no keyboard or stylus. Apple has lagged many other tech companies when it comes to the most innovative phone technology. Samsung beat Apple to punch when releasing fast charging, face recognition and camera quality. However, Apple has pivoted to focus quality of the feature, taking advantage of its ability to completely control the hardware and software often resulting in fewer issues and more efficient/ smooth experience. For many this is Apple’s biggest selling point, their devices just work well.
Economics of CoVID
Apple, much like other businesses big and small, has been affected by the Coronavirus. Supply chain disruptions in China in January resulted in adhoc revision of Q1 performance; at its low, the company had lost nearly 28% of its market cap. Also, Apple had adopted additional projects to help battle the pandemic such as a Virus tracking application in conjunction with Google.
Despite the headwinds Apple is facing, this is actually a good time for Apple to make a push to capture market share, especially in emerging markets such as India. As the world approaches a global recession, larger companies such as Apple will be better equipped to weather the storm, while smaller companies with less liquidity and access to debt, will likely allocate resources towards protecting their core business and less on growth. This provides Apple an opportunity to gain traction in areas that used to be more saturated with competitors.
