Is the iPhone SE a Commercial Success? Conflicting Reports Make It Hard to Tell

iPhone’s Market Share in China Continues to Drop Rapidly
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The iPhone SE has launched, and reports have gone back and forth as to whether or not the device would sell or has sold as well as was previously expected.

Earlier in the week, research notes from well-respected KGI Securities analyst Ming-Chi Kuo suggested that sales of Apple’s new 4-inch phone were “lackluster,” calling into question other reports that Apple had topped 3.4 million sales of the iPhone SE in China.

SE

“Although there exists a market survey that indicates iPhone SE preorders top 3.4mn units in China, we couldn’t find more evidence to support this. However, judging by the delivery time for iPhone SE preorders, we believe initial demand for the iPhone SE following the announcement has been significantly lower than that of past new models.”

Still, new reports suggest that in reality sales of the iPhone SE are far higher than Apple might have expected – how do we know? Well, demand for the iPhone SE has outstripped supply, with shortages existing in both the Apple store and in Apple’s online store. This may not seem like a good thing, suggesting that Apple can’t keep up, but in reality it just means that sales have been better than what Apple was able to anticipate.

In fact, according to analyst Amit Daryanani from RBC Capital Markets, Apple could sell as many as 40 million units over the course of 2016. Not only that, but while the iPhone SE release may mean lower sales of higher end iPhones, Daryanani thinks that the iPhone SE will drive 15 million more incremental iPhone sales for the year.

The stats go further than that. Daryanani says that Apple is hitting around 35 percent gross margins with the iPhone SE – that’s a little lower than the iPhone 6s, which hits around the mid-40s-percent gross margin, but despite that he estimates that the iPhone SE will drive as much as $6.8 billion in revenue and that it could be the source of 23 cents in earnings per share for Apple.

Regardless of the numbers, most agree that the iPhone SE is good move for Apple, whether it sells millions upon millions of units or not. Apple has long been known for being a more expensive option, and even though competitors’ flagship devices often match iPhone prices, competitors also usually offer cheaper options for those that want them. Apple has largely failed to offer a budget smartphone apart from the iPhone 5c, which was a short-lived experiment for the company.

iPhone 5c

Of course, it’s important to remember, Apple is a different beast than its competitors. Apple is known for offering devices that have a premium look and feel, and part of that is pricing. The higher Apple prices a device, the more desirable that device is. Apple has found a great compromise in making a device extremely desirable yet still affordable for most middle class people. Now it’s turning towards trying to entice a new group of people to buy its phones, people who previously might have only purchased a used iPhone or an Android device. It will certainly be interesting to see if the iPhone SE is able to cut into the dominance of Android in the smartphone market.

As some reports note, the iPhone SE launch coincided with the release of the new Tesla Model 3, and media coverage generally geared more towards the affordable electric car rather than the affordable smartphone.

The iPhone SE does, however, live up to expectations, and has many of the same specs as the iPhone 6s, including the same processor. While some of these specs will be “out of date” when Apple finally releases the iPhone 7, the fact remains that as a budget device the iPhone SE is a very good option. Perhaps the only argument one could have against the iPhone SE is the lack of 3D Touch and the fact that Apple has effectively recycled the design of the iPhone 5 and 5s.

It’s also important to remember that it’s unlikely that the iPhone SE will ever match sales of Apple’s flagship phones. The SE is largely considered to be an upgrade to the iPhone 5s, and as such the hype surrounding it, while big, will never match the hype surrounding a new flagship phone from Apple.

 Learn More: iPhone SE Teardown Reveals a Frankenstein Mix of iPhone 6s and iPhone 5s Parts

What do you think about the iPhone SE? Is it an exciting midrange device or a total snooze-fest? Let us know in the comments.

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