After a four-year hiatus, an updated iPhone SE, dubbed the SE 2, is expected to make an appearance in March. It’s a mid-range phone from Apple that should retail starting at US$399 and up. This will make an iPhone affordable for a wider range of consumers.

Apple has seen great sales traction for the comparatively “less expensive” value-packed iPhone 11. The phone was so popular that when it first launched, Apple was not able to keep up with the demand. This $700 “affordable” iPhone 11 was one of the main reasons for Apple’s Q4 2019 smartphone growth across regions.

Apple focus on service

Apple is also emphasizing its focus on becoming a services company – be it Apple TV+, Apple Arcade, Apple News+ or Apple Music. Their services saw double digit growth in Q4 across regions, with a target to reach 600 million paid subscriptions by the end of 2020. The company is getting aggressive in its goals to get its phones into as many hands as possible and keep increasing its installed base. iPhones are primary enablers of Apple’s services ecosystem. Therefore, a cheaper iPhone will draw more customers into the Apple family. The A13 processor on the SE 2 will allow customers to run Apple’s services well without slowing speeds.

Speed is on a par

The SE 2 will have a display between 4.7 inches to 5.4 inches. This will still be smaller than the 5.8-inch screen on the 11 Pro, currently the smallest iPhone available. The original iPhone SE was hugely popular because of its small four-inch display and portability. The SE 2 is built on the iPhone 8 chassis, which is why it may be called the iPhone 9 instead. The phone will come with Apple’s latest A13 Bionic chip, so its speed and performance will be on par with the newer range of iPhone flagships like the iPhone 11.  The company will be making some smart compromises on the SE 2 to keep costs down. For example, Face ID will be replaced by Touch ID. The device will have one rear camera instead of two, and the phone will include 3GB of storage.

Slower upgrade rates prompted junior flagships

The older iPhone SE was Apple’s first affordable device, and an update has been long overdue. Since the original SE, prices of flagship phones have shot up. People are keeping their phones longer and upgrade rates have slowed, due to which the U.S wireless market is seeing the emergence of a new category of smartphones called the junior flagships.

Junior flagships, like Google’s Pixel 3a series and the OnePlus 6T, are mid-range phones, selling between USD $300-$600. Apple is paying close attention to this category. These smartphones trade on their brand name and include key features of premium phones at half the price. This is similar to what Apple is doing with the SE 2. These phones are a market response to increase new phone shipments and to shorten the duration between phone upgrades.

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By GlobalData