iPhone sales are down, especially in emerging markets. The reason is simple: Apple’s devices cost too darn much. And the solution is equally simple: Apple must make a new budget model. In short, it needs a successor to the iPhone SE to ensure short-term profits as well as long-term viability.
This device has to have a low, low price. Even if that means a phone so bare-bones that most Americans turn up their noses at it.
A real budget iPhone
There are occasional rumors that Apple is prepping an iPhone SE 2. They almost always promise cutting-edge features like Face ID, wireless charging and a big screen. But that’s just not going to happen. We’ve already seen Apple’s rock-bottom price for a handset with this feature set, and it’s the $749 iPhone XR.
To be a real success, the iPhone SE 2 must sell for $349 — even less than its predecessor. For that money, the device is going to have a small display and Touch ID. In other words, it should be quite a bit like the original iPhone SE, with its 4-inch screen.
That said, Apple should put in a faster processor, like the A10 used in the iPhone 7. But that’s about it for upgrades: The original iPhone SE already packs a 12MP camera and at least 32GB of storage.
There’s a huge iPhone SE 2 market, it’s just not you
It’s possible few Americans or Europeans are going to be interested in a device with these specs. Apple’s most popular models all have big, generous displays.
But the iPhone SE 2 would sell in huge numbers in India, and do fairly well in China, which isn’t happening with the company’s current lineup. The same holds true for other developing countries, where there are millions of people for whom $349 is doable but a $999 iPhone XS is completely out of the question. Even a $749 iPhone XR is way too much for the emerging middle class in parts of Asia, Africa and South and Central America.
For the most part, these consumers turn to used iPhone models exported from developed countries. But there’s a limited supply of refurbished iPhones. And Apple doesn’t profit from these resales if they are made by other companies.
Apple needs the revenue from providing millions of new iPhone SE 2 units in emerging markets. Just as importantly, the company needs iPhones that people can afford to be available in these areas for strategic reasons. Long term, the worst thing that could happen to Apple is for most of the population of Asia, Africa and the Americas to become committed Android fans because these are the only handsets they can afford.
An iPhone just for emerging markets?
If Apple is concerned that this $349 model will cannibalize demand for its more profitable products in North America and Western Europe, maybe the iPhone SE 2 shouldn’t be released in those areas. It could be just for developing countries.
But there are plenty of people in the United States who can’t afford a high-end Apple handset but would still like the quality and ease-of-use of an iPhone. And, given its very modest feature set, this device is more likely to hurt sales of cheap Android products than cannibalize top-tier iPhone demand.
There are potential customers for an inexpensive iPhone on almost every continent, even if the device lacks high-end features. Apple is doing all these people, and itself, a disservice by not offering a model in the sub-$400 price range … such as the iPhone SE 2.