Apple has always been a premium brand, which is why it’s made sense that, outside of a few notable exceptions, iPhones have always carried a certain prestige and high price tag. But last week, the firm launched a new handset that broke this trend: the new iPhone SE 2.
For those that missed it, the iPhone SE 2 is a new, small-hand-friendly iOS phone with one key factor differentiating it from its iPhone 11 siblings – it only costs £420.
This isn’t revolutionary; old iPhones have hit the same price point before. But for me it’s a clear sign Apple’s cottoned on to a critical shift in the market that competing companies have known for quite some time – no one wants to spend £1000 on a new blower every year, especially during a global pandemic.
Analysts have been warning that phone sales, especially in the top end £1000-plus market, have been slowing. This is because, like laptops before, people are wising up to the fact they don’t have to buy a new phone every year. Most recently the clever folks at IDC highlighted this in its latest quarterly phone tracking stats, which showed massive drops in flagship phone sales across the board.
This is partly due to the global lockdown, which certainly has exacerbated the trend, with people sensibly being more cautious with their money when all signs point to a huge downturn in the global economy and mass job losses.
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Apple’s traditionally tried to buck this trend by simply lowering the price of its older iPhones to target the mid-range market. But it’s not really worked, as iPhone buyers generally want the best of the best, and will nearly universally opt to buy the latest iPhone when upgrading regardless of price, or if it’s actually any good. This is why, despite the cheaper iPhone 8 being on sale all quarter, it was the iPhone 11 that drove the most numbers for the company last quarter.
There are plenty of possible explanations for this. But for me, it’s a consequence of Apple’s continuous marketing as a luxury, lifestyle brand. If all you do is tell people how great your top end stuff is and market it as cutting edge, no-one’s going to want your old stock.
This is why Android brands, like the Xiaomi Mi-series, Moto Gs and Samsung Galaxy A-series have been able to dominate the mid-range market and succeed in regions Apple hasn’t really cracked – like China, Africa and South America, where people consider £200-£400 a lot to spend on a phone.
But this is also why I think the new SE is a stroke of genius, and shows that Apple is finally waking up to this fact.
Being blunt, I think the SE 2 looks like a little bit of a half-arsed effort, but I also know it’s going to enjoy gangbuster sales, and that’s because of how Apple has positioned and marketed it. Being a new iPhone, people will view it entirely differently to a discounted old Apple handset. It’ll carry the same prestige as getting an iPhone 11 despite being half the price because it is technically Apple’s latest model. It’s also the only option for iOS fans on a budget now, with Apple having retired any old competing models from its official store.
As a result, with the iPhone 11 more than halfway through its lifecycle, Apple fans in my mind will have two choices, wait for the fabled iPhone 12, or jump at the iPhone SE 2. In the current global climate, I can’t see many doing the primary and being willing to part with £1000 for a new phone. This is a key reason Samsung saw a massive 18% drop in phone sales this quarter, with buyers being understandably more cautious with their money and not wanting to spend over a grand for a Galaxy S20 Ultra.
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Because of its smart pricing and current status as Apple’s newest phone, next quarter, I can see the iPhone SE 2 being one of the top sellers globally. I’m not alone in thinking that. IDC said as much in its latest mobile market tracking stats when it noted:
“Looking forward, the launch of the recent SE (2020) device targeting the lower-priced segment could work well for the vendor if consumers shift their buying preferences towards more budget-friendly devices in the uncertain economic climate of 2020.”
This is a little sad, as I’d have liked to see Apple try a little harder and make something a little more revolutionary with its first serious entry into the mid-range market since the iPhone 5C.
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