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  • Writer's pictureElliot Mulley-Goodbarne

Are you really surprised?

If I were to quiz you on the newest iPhone, what do you think the headlines would be?

Great camera, facial recognition, bezel less display, maybe even a fingerprint sensor under the screen would be my guess and yet only one and a half can be said to be true.

Through the darkness of the coronavirus lockdown Apple brought the light, announcing the latest SE device, it's budget handset starting at a score over £400. Features included the much beloved TouchID fingerprint reader, Apple's latest A13 chipset used in the iPhone 11 Pro and the same rear camera module that is found in the iPhone XR.

This Frankenstein's iPhone may be perplexing to some, a stroke of genius to others and a necessary business move for any left over. In all truth it's a rational and sensible decision.

As more technology is being packed into devices, prices have been increasing exponentially over the past five years or so. Therefore its great to see a device from Apple that, for a basic model, is actually cheaper that it's flagship iPhone 6s from 5 years ago that started from £539.

However in those five years, the industry has seen a form factor shift away from big forehead and chin bezels to screens pushed to all corners of the device, ushering in a necessity for new 'lip', 'tear drop' or cut out designs for front facing cameras and sensors on the front screen.

These new designs may represent the bleeding edge of mobile innovations, letting everyone know you have the newest device in the process. However I would argue that Apple's core USP is simplicity, the damn thing just works, and facial recognition, big swipes to view the home screen and a little one to look at your open apps is too far removed from that original USP.

The SE editions allow Apple to continue to penetrate a market that isn't fussed about the latest screens, 5G connectivity and new ways to unlock the device. They want to take a picture of the kids (or grand kids), keep in touch with their friends or check the footie scores and the stats would back that up.

As soon as June last year, according to Statista, just over a third of iPhone sales during the quarter ending June 30th were made up of the 7th and 8th generation, a slight drop from the 35 per cent in the first full quarter after the launch of the iPhone XS, XS Plus and XR.

With the SE, Apple can reach out to an audience that isn't necessarily averse to change but doesn't want it and, more importantly doesn't need to keep up.

That's without touching on the pricing and competition. If we take the latter subject first, as I see it, Apple have two main competitors in the smartphone market now in Samsung and Google. Although Google doesn't seem to be putting too much effort into it's Pixel devices, the potential for market share is huge and it's smartphone fortunes have been turned around by the introduction of the Pixel 3a. Similarly, according to Counterpath, Samsung's most popular smartphone in the second quarter of 2019 was the Galaxy A10, rather than any of the four flagship S10 devices released towards the end of the first quarter of the same year.

With devices costing over £1,000, the mid range is soon becoming the new hunting ground for sales where devices have all the features that matter most to consumers, mainly centred around the camera and battery life, for less than half the price. Which brings us to the last point.

This move is genius. The margins on the new SE devices have to be in excess of 90%. Think about it. R&D for the camera module from the XR and chipset from the 11 Pro will have been factored into the $750 and $1,000 pricing of the respective models, then add the chassis of an iPhone 8 that is approaching end of life, if they haven't already, add the same TouchID fingerprint reader found in six generations of devices and a refurbished battery and you have over £400 worth of device to sell to a third of your market. Raking in near 100% profit margin whilst taking sales away from refurbished and second hand retailers and putting them in the pocket of the big A themselves.

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