There’s a reason Apple owns about 90-percent of the smartphone industry’s profits. Marketing. Alright, I’m being a bit callous but you’ll see what I mean in a moment. Yes, I love my iPhone 6s Plus. But I also have a Galaxy S7 for work which allows me to see both sides of the fence at the same time. The Galaxy is good (photos are incredible). My iPhone is more usable. But there’s a reason some cell phone carriers offer a two-for-one deal on Samsung’s flagship. Marketing.
The Little Phone That Could
Like most technology companies Apple is an ever-changing entity made up of many moving parts. This month the company broke with the tradition of launching new iPhone’s every fall by introducing an iPhone 5s-like model, Apple’s previous entry-level model, with an upgraded camera, a faster CPU, battery life, and plenty of other goodies which almost make the iPhone SE a mini version of the iPhone 6s.
Why a 4-inch iPhone SE? Apple has perhaps 700-million iPhone users in the world and a big chunk of them have 4-inch iPhones so there is a big market to address and that’s what Apple did with the SE. Special Edition? Small Edition? Whatever the SE means it has a another purpose in life that goes beyond those customers who don’t want a phablet in their pocket.
As the really truly entry-level iPhone– billed as ‘the most powerful 4-inch phone ever‘ the SE carries the design from the iPhone 5s the tock design that came after the tick of iPhone 5, so the look and feel is aging, but still does well against small competitor phones. More importantly, iPhone SE is there to give the iPhone line an entry level model that makes Apple money no matter how many are sold, and helps to protect the gargantuan gross margins on the iPhone 6 line which includes iPhone 6, iPhone 6 Plus, iPhone 6s, and iPhone 6s Plus.
Bigger Is Better
Put another way, bigger and better also means more expensive. The larger-screen iPhone models cost more. The basic iPhone SE starts at $399 with 16GB while 100GB more moves the sticker to $499. The slightly larger and more popular 4.7-inch iPhone 6 starts at $549, a mere $150 more than the entry-level iPhone SE. That means at Apple larger is more expensive than newer. Even the entry-level 16GB iPhone 6s starts at a mere $100 more than last year’s iPhone 6 which uses the older A8 CPU while the iPhone SE is blessed with the A9 CPU. At the low end and mid-range, larger screen iPhones cost more, while more power does not.
What iPhone SE does is protect Apple’s gross profit margins to a greater degree than previous entry-level iPhones which really were little more than three-year-old devices that still looked good and felt good when taking them out of a new box. If you couldn’t afford the newest iPhones or the bigger screen iPhones you could afford an older iPhone, but now, for roughly the same money, you get a more powerful– albeit smaller screen– iPhone.
This is a nice phone and many tens of millions of iPhone SE owners will feel privileged to have upgraded hardware in a diminutive package, but what this model does more than anything else is provide the iPhone line with a wider spectrum of models that appeal– $100 at a time– to a wider audience of customers, further putting pressure on the premium Android smartphones while keeping Apple’s prices at a level to maintain those famous gross margins.
Here’s a good definition of ‘marketing:’
Marketing is the process that delivers goods or services to customer or user
That means everything Apple does is related to marketing– the brand, the products, manufacturing, finance, service and support, supply chain, distribution chain, engineering, R&D– everything. Including the need to protect pricing which results in margins which make up profits.