Apple is set to launch a smaller and cheaper iPhone on Monday. The phone’s target market is reportedly the emerging markets, possibly China which is known to be the world’s biggest smartphone buyer.
Reuters reports that the company is looking to reverse a decline in worldwide sales of its most important product. Launching the phone (expected to be called the iPhone SE) would be Apple’s second attempt at entering the mid-tier market after a failed attempt three years ago.
This could also be the tech giant’s opportunity to boost its sales in the African, Indian and Middle East markets. However it could also mean a cut down in its average phone prices and profit margins.
Analyst, Bob O’Donnell of TECHnalysis Research said, “The iPhone SE provides a new incentive to upgrade for iPhone holdouts who don’t want a large-screen phone.”
O’Donnell further stated that even though less expensive iPhone could appeal to emerging markets customers, it may not be a definite hit since it might still be more expensive than competitors running Google’s Android system, and most of the target market is already in emerging markets have already developed a taste for larger screens.
Reporters have been invited to an auditorium at the Apple Cupertino, California headquarters in Silicon Valley on Monday. This is in contrary to the massive stages the company typically uses to unveil it’s new iPhones and other major products.
It comes as no surprise that the company has of course been silent on the new product but technology and financial analysts predict a cheaper, entry-level phone with a screen around 4 inches (10 cm) that still runs some of the latest features such as Apple Pay.
Reuters further reports that the more compact design comes after its move to expand the size of the screens in its high-end iPhone 6 and iPhone 6 Plus phones in 2014, featuring a screen as large as 5.5 inches. That was broadly seen as an attempt to match rival Samsung Electronics (005930.KS) with its large-screen Galaxy phones.
The iPhone is sold around the world, but with a price starting at $649 for the current top model without a contract, it is beyond the reach of many. A mid-range or entry-level phone could broaden Apple’s appeal, although it is not clear what price range it will aim at.
Apple still believes the mid-size market is worth pursuing, analysts have said, as it looks to counter the global spread of phones running Android, made by Alphabet Inc’s Google.
Technology research firm IDC is expecting an uptick in sales of devices running Android this year, to account for almost 83 percent of smartphones sold worldwide. It expects iPhone sales to fall slightly, making up 15 percent of the market.
Apple said in January it expects a decline in iPhone sales overall this quarter compared to the same period a year ago, the first such dip since Apple essentially created the smartphone market nine years ago. The product drives about two-thirds of Apple’s sales and no other gadgets in its lineup are close in popularity.
Wall Street analysts worry the company does not have another blockbuster product to replace the iPhone. Apple is also expected to announce a new iPad on Monday in an attempt to buoy flagging tablet sales, and new bands for Apple Watch, the wearable gadget it released last year to mixed reviews.
If the iPhone SE is unveiled on Monday, it will be Apple’s second run at the entry-level or mid-tier market following the iPhone 5c, a lower-end phone with a colorful plastic body that was launched in 2013. After initial excitement, it did not prove to be a big seller and has since been dropped from Apple’s lineup.
The anticipated iPhone SE could give Apple a short-term boost without running into the low end of the smartphone market dominated by Android devices, said analyst Patrick Moorhead of Moor Insights & Strategy, especially if it has the company’s high-powered A9 chip and supports a feature that makes phones work better on wireless networks, called “carrier aggregation.”
But even with that, he warned the new phone will face tough competition from Android.
“The new phones from Huawei, LG, Samsung andXiaomi are the best I have seen from them in years,” said Moorhead.