Apple stimulates the mobile phone industry with the launch of affordable iPhone SE 2020

By Jonathan Owen
Marketing Manager

The new iPhone SE 2nd generation was released last month. While for many this was a surprise, without any announcements from Apple, the world’s tech gurus were expecting it. While we are in the middle of the coronavirus crisis, this may be an opportune time for Apple to launch an affordable but high-spec iPhone. Therefore, we decided to take a look at how this new iPhone will stimulate the mobile phone industry.

The new iPhone SE 2020 could not only be what we needed, but what Apple needed as well. Since September 2016, when iPhone 7 was introduced, Apple has seen a decrease of interest in the brand (see picture below). Even with the exciting phone launches every fall, the interest in Apple is dropping. iPhone 7 was the last phone which really differed from its predecessors, while the following phones look very similar and offer small improvements in technology but big increases in price. The 2nd generation iPhone might spark the interest in Apple once again and attract people who perhaps went for Samsung, Huawei or other phone brands or just didn’t see the point in changing their existing iPhone.

Cheap iPhone? This can’t be it! It is no secret that iPhone prices have risen over the years. According to self, since its launch in 2007, iPhone prices have increased by 70%. Even though the iPhones we have now are incomparable to the first iPhones, the increase in price is rather significant (given inflation rates). In UK alone, the iPhone is 133% more expensive now than when it was first launched. This is the highest increase in the world!

The prices of network tariffs for iPhones have increased as well. If we would pay £40 a month for an iPhone 7 with unlimited calls, internet and messages, now a plan for iPhone 11 Pro with the same features would cost around £70 a month! No doubt, the 11 Pro is a more advanced phone, but it is unclear whether the difference in price is justifiable. However, taking into consideration the last Apple launch with relatively cheaper iPhone 11 and now the iPhone SE, it might be that Apple are starting the route of producing more affordable devices. The new SE enables Apple to compete head-to-head in the market against mid to higher end Android devices. It is a defence play in terms of gaining market share, but also a means to encourage existing iPhone users to upgrade. And, all importantly, continue to increase Apple’s subscriber revenues via its larger product range.

So should you upgrade? Many ask this question every time a new phone is launched. However, according to PCmag, the usual 2-year upgrade cycle is non-existent. According to o2, 43% of their customers keep their phone for over three years, and one in five use their device for more than four years. There are many reasons for this lengthening in ownership. Firstly, early smartphones offered bigger leaps in design and functionality than their predecessors. Nowadays the new smartphones’ specs and design are not that different to the ones of their predecessors, if they differ at all.

Secondly, there are many phone recycling programs present in the market, and they are becoming more popular amongst mobile users. Some of the recycling programs are seeing more than a 50% increase in recycled devices sold since launch. These recycling schemes offer people to sell their used phones to them and then re-sell them in to the market.  Most of the devices are in great condition and are affordable, therefore many people don’t see the need to upgrade, instead they choose to buy refurbished.

What does this mean for phone sellers? This could mean that they are seeing decrease in devices sold year on year and therefore, a decrease in revenue and profit. While for bigger companies this decrease might not be that great, smaller businesses could be significantly affected by the increase in upgrade cycle. Adding phone insurance to offering could create bigger trust in company from customers’ side, customer feeling protected and seeing the advantage over other phone sellers. This could , therefore, lead to customer making a repeat purchase when looking for a new device for themselves or their family.

With the phones getting less affordable for consumers and longer upgrade cycles impacting networks, phone sellers and insurers, a phone like iPhone SE 2nd generation is what we needed. After the first week of sales, SE 2020 is selling better than expected, even in this uncertain time. But this might not be a big surprise for Apple. According to Tech Crunch, when the 1st generation iPhone SE was launched, it was the top selling smartphone in the UK with 9.2 percent market share, just ahead of then-popular iPhone 6s on 9.1 percent.

The 1st generation iPhone SE proved to be a success story for phone insurers as well. Loveit coverit have reported that it has insured more SE’s than iPhone 6’s and 7 +’s. In addition, the number of insured SE’s competes with a popular phone like the iPhone X which was a very expensive and high-tech phone, and still is. This once again highlights that people are interested in buying cheaper but still very capable phones and it is very likely that this trend will continue with the 2nd generation iPhone SE. The new iPhone is also a great phone for businesses – it is affordable, familiar, yet packed with the newest technology coming from a reliable phone manufacturer.

Luxury gone affordable: Apple was always seen as a luxury brand. But now, people can get the luxury brand for a price of a mid-range smartphone. Moreover, some of the iPhone SE 2020 features are the same as for the high-end iPhone 11 Pros. Both devices run on the powerful A13 chip, which ensures smooth running of the device. ‘The brains of iPhone 11 Pro in iPhone SE body’ Apple website claims. The new iPhone really looks like a good catch – technologically advanced, luxury product for an affordable price. People will definitely see this phone as an opportunity to access the latest Apple technology at a cheaper price.

With all of this in mind, we are very likely to see the kick-off in the upgrade cycle, particularly combined with the launch of 5G iPhones later this year. This will also mean a surplus of phones in households, which can be recycled, passed down or kept for a rainy day. In addition, with new phones being most likely to be insured, there is an opportunity to ensure customers are covering their phones with a quality insurance product as they make the purchase.

Now is an opportune moment to diversify your product portfolio and increase the average value of a customer, as they adopt the new iPhone SE 2020.

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