Apple is expected to debut a new iPhone SE very soon, possibly as soon as March 8, when the Cupertino firm is expected to hold its first media event of 2022. While the new iPhone SE is expected to replace the current iPhone SE in Apple’s overall lineup and be priced at $399, Apple may be considering keeping the older, 2020 iPhone SE around, making it available at a lower price to compete with budget-priced Android models in some countries.
In this week’s “Power On” newsletter, Bloomberg‘s Mark Gurman indicated that Apple could keep the 2020 iPhone SE in the iPhone lineup, at least in certain countries. Gurman says Apple could drop the price to around $199, which would allow it to capture market share in Africa, India, South America, and other regions where people tend to prefer lower-cost Android devices.
While the $399 iPhone SE is Apple’s lowest-priced phone, Gurman indicates that component costs could be low enough for the older handset for Apple to consider the lower-priced iPhone.
Bill-of-material estimates from two years ago pegged the hardware cost of the iPhone SE at around $200, meaning a $199 price tag would be a money-loser. But time and economies of scale have probably made that cost much lower by now. Would the cost be low enough for Apple to earn its typical profit margins? No, but the chance to sell services and other products to big new markets could make up for that.
Apple has a track record for keeping around older iPhone models, dropping the price, and offering them as cheaper options than their yearly flagship handsets. When the iPhone 13 debuted, Apple dropped the price of the iPhone 12 and kept it hanging around. 2019’s iPhone 11 is still available.
While a $199 iPhone SE could be an initial money-loser for Apple, it may indicate the Cupertino firm is ready to take a razor/blade refills approach to profits, as they will basically sell the phone for a loss, but they will improve their sales in some large markets where low-cost Android devices have held sway, and improve their long-term services revenue by growing the iOS ecosystem.
While Gurman says he hasn’t seen any real signs from Apple that it has firm plans to offer the older iPhone SE at a loss-leader price, he insists there is the incentive for such a move.
(Via MacRumors)
