AAPL Apple Inc

By Dan Gallagher 

Apple Inc. finally got around to updating the iPhone SE. And not a moment too soon.

The new iPhone SE was announced Wednesday -- just a little over four years since the company unveiled the first version. That first phone represented a departure from Apple's modus operandi, in the sense that it offered top-of-the-line performance in a smaller and cheaper design. The new phone adheres to that same idea, offering the same A13 processor that powers Apple's iPhone 11 family at a starting price of $399 -- 43% below the starting price of the base iPhone 11 model.

That should appeal to buyers who can't stomach smartphone prices now commonly reaching well above $1,000. And there are a lot more of those lately. In America alone, nearly 17 million have hit the unemployment lines in just the past three weeks. The coming global recession also sets a poor stage for Apple's reported plans to launch its first 5G devices this fall.

And unlike in the last recession, when Apple successfully launched its very first iPhone, smartphones are now a practical necessity for working adults and students alike. Apple is right to cater to a wider swath of customers -- even if a lower-priced phone doesn't boost the company's sales to the same degree. The last iPhone SE sold just under 50 million units between Apple's 2016 and 2018 fiscal years before it was taken off the market, according to consensus analyst estimates from Visible Alpha. That's a little less than 8% of total iPhone units sold in that time.

A cheaper iPhone serves Apple's interests in other ways, too. The new SE model replaces the iPhone 8 family, effectively dropping the two-and-a-half-year-old A11 processor from the iPhone lineup and shifting a larger proportion of the installed base to the more robust A12 and A13 chips. Newer processors offer better performance for the apps and services that Apple now counts as its second-largest business segment and main driver of growth. Taking less up front makes Apple's service upsell go down a little easier.

Write to Dan Gallagher at dan.gallagher@wsj.com

(END) Dow Jones Newswires

April 15, 2020 13:18 ET (17:18 GMT)

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