The iPhone 16e represents a huge change from the third-gen iPhone SE it replaces. A modern design, OLED screen, Face ID, latest(ish) A18 chip, Apple Intelligence, 48MP camera sensor, 26-hour battery, USB-C, C1 modem, and more.
But there’s one other huge difference, and it’s this one which I think makes the latest entry-level iPhone a crucial experiment for the Cupertino company …
The price tag.
The iPhone SE 3 started at $429, while the iPhone 16e starts at $599.
Of course, you’re getting a lot more phone for your money, and it’s entirely possible to make the case that the latest model represents better value. But what’s notable is that Apple didn’t add the iPhone 16e to the line-up; it replaced the budget model altogether.
There’s no iPhone SE 4 as such, and the 3rd-gen model is no longer on the company’s website. Right now, if you want to buy a brand new iPhone direct from Apple, $599 is the new starting price.
$600 is a lot of money when compared to an awful lot of mid-range Android phones, and Apple is gambling that enough of the people who’d previously bought the iPhone SE are willing to pay an extra $170 to instead buy the iPhone 16e.
It seems entirely obvious that some of the people who were willing to lay out $429 are not willing to hand over $599. The crucial question here is will enough of them do so to make the math work out in Apple’s favor?
Top comment by Dominik Hoffmann
If the number of iPhone purchases goes down, even with increasing revenue, the size of the iPhone installed base goes down. This has a longer-term impact on Apple’s profitability. I am sure, Apple is taking this into account. Going along with the upshot of the article: let’s wait and see how it plays out.
The equation here is ($429 x loads of sales) vs ($599 x fewer sales).
Some might say Apple is confident that the second number will be bigger – or, at least, the profit on the second number. But I don’t think that’s the case: I don’t think Apple knows. In my view, this is an A/B experiment on the part of the company, and the result of that experiment will determine its future entry-level strategy.
If Apple makes more profit by selling the more expensive phone to fewer people, the $400-ish price point will be gone forever; if not, some kind of iPhone SE will return.
Image: Apple
FTC: We use income earning auto affiliate links. More.
Comments