Apple's (AAPL -0.66%) unit volumes have been suffering in recent years as upgrade cycles continue getting longer and longer while prices climb higher and higher. The company stopped reporting units for all of its major products within the past year, presumably as part of a broader effort to get investors to focus on the growing services business. Apple discontinued the iPhone SE about a year ago, which at $350 was the tech titan's most affordable handset.
A new affordable model may be coming next year.
A successor to the SE
The Nikkei Asian Review reports that Apple is planning a low-cost iPhone model for early next year. The company is not expected to use the same chassis as the iPhone SE, which had been recycled from the iPhone 5 while including newer specs like a faster processor. It's not clear what Apple might call the rumored device or how it will be priced, but the smartphone is considered a spiritual successor to the iPhone SE, according to the report.
The affordable model is expected to have a 4.7-inch display like the one found on the iPhone 8, and will include many of the same components that will be inside the 2019 flagships. In order to cut costs, the display will use traditional LCDs instead of OLEDs, which are more expensive. Putting newer components into older models helps Apple get even more mileage out of its industrial designs, particularly as much of that manufacturing infrastructure remains in place at partner facilities.
Apple will likely target emerging markets with the new entry-level iPhone, as the company continues to struggle in huge markets like India. The Cupertino tech giant recently discontinued some of its most affordable iPhones in that country, effectively raising the entry-level price in a bizarre move. Apple has also been trying to absorb foreign exchange fluctuations in order to maintain stable local pricing in emerging markets, which has helped support demand.
"We're seeing positive customer response to recent pricing actions in certain emerging markets, as well as enhancements to our trade-in and financing programs and our year-over-year performance improved relative to our December quarter results in Greater China, in the Americas, and in Japan," CFO Luca Maestri said in April.
Midrange pricing worked for Google
Alphabet (GOOG -0.99%) (GOOGL -0.81%) subsidiary Google launched its midrange Pixel 3a earlier this year with much fanfare. That $400 device (the same price where the iPhone SE had launched in 2016 before falling to $350) was heralded as offering the best camera in that pricing segment. As a result, Google's smartphone shipments more than doubled in the second quarter.
"By taking advantage of our leading software capabilities, we can offer users a premium phone experience at a much lower price point," CEO Sundar Pichai said in July. "With the launch of Pixel 3a in May, overall Pixel unit sales in Q2 grew more than 2x year-over-year."
An affordable iPhone could help Apple's unit volumes similarly bounce back.