Do you remember how big cell phones were when they first hit the market? They were the size of shoes. Then they started getting smaller, and soon, whoever had the smallest phone was the coolest kid on the block.
Then, as people started watching TV on their phones they wanted bigger screens. So, phones started getting bigger again. It looks like the table is turning once again.
Apple on Monday launched a new 4-inch iPhone as a way to boost sales in its key markets of China and India.
But, how does one go small and inexpensive without looking cheap? That’s Apple’s dilemma as its tries to get Asian consumers to forgo their big screens in favor of the feature-rich and lower-priced iPhone SE.
“With the iPhone SE, Apple is choosing to aim at an under-served segment of consumers that prefer small screen smartphones and have been reluctant to upgrade,” research firm IHS said in a note. “Importantly, Apple’s competitors have chosen not to target the premium compact smartphone market.”
The iPhone SE will come with its latest processor, fingerprint scanner, Apple Pay and a powerful camera. With these features, Apple is offering a premium product, but with this pricing Apple is taking direct aim at big-screen phones being cranked out by Asian competitors such as Huawei Technologies, Oppo, One Plus, and Xiaomi. Apple’s attack on Xiaomi’s home turf might also be Apple’s way of getting back at Xiaomi for entering overseas markets, especially the US.
“This will appeal to more people who otherwise couldn’t afford their flagship phone. This will make the market more competitive at that price point as Apple is preparing to take more share,” Anshul Gupta, research director at Gartner told Reuters.
At the product launch in Cupertino, Calif., Apple vice president of iPhone Product Marketing Greg Joswiak said four-inch displays like that on the iPhone SE were still popular with first-time smartphone buyers.
He singled out China as a target market by adding that Chinese buyers tend to start off with a 4-inch screen. As overall iPhone sales decline, the company is relying on growth in China, its second-biggest market, and India, one of the fastest-growing major markets in the world.
“The Chinese market is not bringing as much growth as previously and is becoming more competitive than ever,” Ronan de Renesse, an analyst at research firm Ovum told Reuters. “Apple must decrease the entry price of new iPhones to sustain growth in China. The iPhone SE offers very high specifications for a low price, which is essential to appeal to Chinese consumers.”