Apple turning comparatively low profit on iPhone SE despite cheaper parts, analyst says

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  • Reply 21 of 27
    radarthekatradarthekat Posts: 2,995moderator
    mac_128 said:
    The SE will have a two-year life cycle, and the 6S will likely be around for that long too in meaningful unit volumes. 
    I doubt that's true. It will most likely have a 3 or 4 year life cycle. The 6s is an amazing phone, and the 5s case is tried and proven, and short of some kind of major new wireless technology hitting the worldwide market in the next 4 years, the SE will serve the worldwide entry level market well for several years past its shelf life in the US, and other developed nations.

    I can see the SE staying around until it hits the $199 mark in the US, which means they might even keep it around 3 years in the US, until their next 4" phone depreciates to a similar level.

    For the first time, Apple is able to offer a high quality product for the same price as a cheap Android device, and that's an important milestone for expanding market share, without compromising their stated principles.

    ---

    I should have clarified.  I meant it'll be the flagship 4" iPhone for two years, meaning they won't likely refresh that form factor next year.  And during those two years that the SE will be the flagship 4", incorporating the components borrowed from the 6S, the 6S will also continue selling in meaningful quantities.  After that, the quantities will drop off as the market moves on to a new 4" model, presumably with the A11 CPU, in common with the 7S.  Rinse and repeat for two more years.


    edited April 2016 netmage
  • Reply 22 of 27
    tzeshantzeshan Posts: 1,885member
    An A9 produced last September and never used until this March?  When was the A9 made in recently sold 6S? So the Digitimes article about supplier parts in Q2 is meaningless to 6S sales now.  
  • Reply 23 of 27
    mac_128mac_128 Posts: 3,399member
    mac_128 said:
    The SE will have a two-year life cycle, and the 6S will likely be around for that long too in meaningful unit volumes. 
    I doubt that's true. It will most likely have a 3 or 4 year life cycle. The 6s is an amazing phone, and the 5s case is tried and proven, and short of some kind of major new wireless technology hitting the worldwide market in the next 4 years, the SE will serve the worldwide entry level market well for several years past its shelf life in the US, and other developed nations.

    I can see the SE staying around until it hits the $199 mark in the US, which means they might even keep it around 3 years in the US, until their next 4" phone depreciates to a similar level.

    For the first time, Apple is able to offer a high quality product for the same price as a cheap Android device, and that's an important milestone for expanding market share, without compromising their stated principles.

    ---

    I should have clarified.  I meant it'll be the flagship 4" iPhone for two years, meaning they won't likely refresh that form factor next year.  And during those two years that the SE will be the flagship 4", incorporating the components borrowed from the 6S, the 6S will also continue selling in meaningful quantities.  After that, the quantities will drop off as the market moves on to a new 4" model, presumably with the A11 CPU, in common with the 7S.  Rinse and repeat for two more years.


    And I'll clarify as well ... I still think they will introduce a new 7 series 4" iPhone next March, and sell it for $599. Then it will depreciate along with the 7, and by the time the SE ends it's run, the "7se", or whatever it's called, will take over the previous price point the SE had fallen to. It's great marketing because people who can't afford the top tier iPhone prices, are also not likely to upgrade them as often either. 

    Now this all assumes the 4" sells well. Otherwise, I could see the SE extending out to the launch of the 7s, but no later as they wouldn't likely invest all that money to redesign a new 4" case for only 6 more months of premium sales as the current model (7s). What made the 5s possible was a popular pre-existing 4" case design. Apple has yet to make a brand new budget phone from scratch, not counting the 5c, but certainly not one that costs less than the 3 year old entry level phone (as the SE does). And the 5c while having a brand new case, had the exact same guts. So, once the SE depreciates off the books, there won't be another 4" case with which to pull the same low budget trick, without designing and engineering both the inside AND outside at the same time. The only time Apple has done that is with a premium flagship model. Hence my theory that Apple will want to make as much money off the new design as possible, then depreciate it to replace the presumably successful SE that has dropped as low as Apple can take it, pulling in a whole new market segment that previously couldn't afford even the entry level iPhone, and who will likely wait several years between upgrades.
    edited April 2016
  • Reply 24 of 27
    I predict that  's average margin will increase due to the SE. 

     has essentially found a channel to buy more 6/6s components than 6/6s sales can support, thereby ensuring that component cost discounts are maximized (while the entry level phone's performance is boosted way over what old generation components can support.). This is a big win-win for Apple and consumers. 

    On the logistics and manufacturing side, the logistics costs are massively reduced via component commonization, whereas the tooling and production equipment costs are minimized by massively reusing the infrastructure from the 5s. 

    Once the the word gets out how good this phone is, they will sell many more than the current 30M rate of the 5s, and in so doing, Apple will put pressure on itself to massively upgrade the 7 in order to reduce cannibalization risk (but remember, if Apple has a significantly higher margin on the SE, than the 7, a bit of cannibalization isn't as dire as it would appear at first glance.)  High margin on the low end, big new features in the upper end are another win-win for Apple and consumers. 
    xamax
  • Reply 25 of 27
    misamisa Posts: 827member
    linkman said:

    The article doesn't mention the $100 price differential between the 16GB and 64GB models. There is a large difference in the profit margin on the two.


    While there will be some cannibalism from 6s model sales, most of the purchases of the SE will be from customers that would not buy the larger models. All of the profit from the SE would have been unrealized profit for Apple.

    There won't be any cannibalism. People who want the smaller screen, want the smaller screen. That is the only deciding factor here. People aren't going to pick a smaller phone to save money just like they don't pick a smaller capacity to save money. They pick what they need.
    netmage
  • Reply 26 of 27
    Why, oh why, does Apple apply an excessive markup in Europe.
    In the US, the iPhone SE is very affordable, but only marginally so in Europe.
    I hope they don't make the same mistake in other foreign markets.
  • Reply 27 of 27
    linkmanlinkman Posts: 893member
    Why, oh why, does Apple apply an excessive markup in Europe.
    In the US, the iPhone SE is very affordable, but only marginally so in Europe.
    I hope they don't make the same mistake in other foreign markets.
    Wouldn't it have something to do with the higher cost of doing business there? Doesn't the EU require a 2 year warranty where Apple only offers 1 year in other locales? I would imagine that is the #1 cost adder. I'm sure that VAT (15% to 27%) is being passed onto those consumers instead of having people in other non-VAT countries share that cost. France has a 35 hours limit per week before overtime is paid vs. USA's typical 40.  
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