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iPhone SE too expensive for developing markets

The new iPhone SE has the body of a two-year-old handset with the insides of a one-year-old device.

The new iPhone SE has the body of a two-year-old handset with the insides of a one-year-old device.

Apple's latest smartphone offering has been positioned as the iPhone for emerging markets. The company aims to lure new users with its feature-packed, small 4-inch screen, and "low" priced iPhone SE.

Prices for the new phone start at $399, which will translate to between R6 000 and R9 000 when it reaches South Africa because of the high exchange rate, shipping costs and retail mark-up.

The iPhone SE is the same size as the iPhone 5, but has all the functionality of the latest iPhone 6S – though not 3D Touch.

However, says Arthur Goldstuck, MD of World Wide Worx: "A $400 phone is not a developing market phone – it is still very expensive.

"It is hard to see where the iPhone SE will fit in the market," says Goldstuck, who believes the mid-level small screen smartphone market is already well fleshed out. "Apple has positioned the phone as an ‘exciting new idea', but it is not.

"I find it puzzling that you have a phone in the body of a two-year-old [handset] with the insides of a one-year-old [device] and call it a new idea," says Goldstuck.

"This suggests innovation is not front and centre of Apple's strategy."

Size matters

The entry- and mid-level smartphone market is moving from the 3.5-inch to 4.5-inch format, says Goldstuck. "The reason for this trend is because prices for the 4.5-inch screen have dropped."

Therefore, there will be a large number of much cheaper smartphones this size.

Goldstuck says he cannot see a big demand for the iPhone SE, especially in the small size. "The reason Apple made the bigger iPhone 6 in the first place was because the market was screaming for it," says Goldstuck.

He says commentators are also falsely equating Apple's high proportion of users still using the 4-inch format (those still using the iPhone 4 or iPhone 5) as users who will automatically want another 4-inch phone.

These users could still be on a two-year-old contract, and their upgrade will be an iPhone 6S or 7, not the iPhone SE.

"So much more activity on smartphones is now visual as opposed to voice. Once people have experienced that, they don't often go back," says Goldstuck. 

Aspirational appeal

"If it is sold at a price point of close to R7 000 in South Africa, it could do quite well, considering the aspirational value of an iPhone," says Brian Neilson, director at BMI-TechKnowledge.

Also, he says there is a larger number of people shopping in this price range compared to the significantly higher prices of top-of-range iPhones and equivalent models from the likes of Samsung.

"The SE has been hailed as a ‘6S in a 5S frame', implying it's functionally very strong, just smaller and cheaper," says Neilson. "The 6S sells for over R12 000, depending on the specification."

The iPhone SE represents Apple's second bid for the crowded mid-tier market after an unsuccessful foray three years ago, with the iPhone 5C. The 4-inch 5C had a plastic backing and came in five different colours which immediately identified it as a cheaper model.

"The 5C lacked the aspirational appeal of the S models," says Neilson. The iPhone SE has a metal backing and comes in the popular rose gold colour, as well as silver, gold and space grey.

Apple is still expected to introduce a top-of-the-line, large-screen iPhone 7 later this year. The company now appears to be following a two-pronged approach to attack the top and the middle of the smartphone market.

Android smartphones with similar price points and screen sizes to the iPhone SE:

Phone

Cost

Screen size

 

iPhone SE

Expected to cost R6 000 – R9 000

4-inch

LG G4 Beat

R3 799

5.2-inch

Xperia Z5 Compact

R10 899

4.6-inch

LG G4

R7 399

5.5-inch

Samsung Galaxy S6

R8 699

5.1-inch

Huawei P8

R7 699

5.2-inch


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