iPhone 5s. Image source: Apple.
Apple (AAPL 1.10%) is widely expected to be hosting a product event next month, and the two headline products should be a new 4-inch iPhone as well as a refreshed iPad Air 3. The company may have some announcements related to Apple Watch 2, but the wearable device isn't expected to see a full refresh until later this year.
According to a recent report from 9to5Mac, both the purported iPhone 5se and iPad Air 3 will launch on March 18, just days after the event (which is tentatively pegged for March 15). Better yet, the iPhone 5se has already started to ramp up with production.
What to expect when you're expecting a new 4-inch iPhone
While I happen to hate the rumored iPhone "5se" moniker, Apple seems intent on making its product naming conventions more convoluted. Beyond what Tim Cook & Co. decide to call it, the new smaller iPhone should include the current A9 processor alongside an M9 motion co-processor. Better cameras are supposedly in store, too, and perhaps most importantly an NFC chip will be included for Apple Pay support. To date, Apple Pay has been limited to Apple's larger handsets.
The iPhone 5se should look pretty similar to the current iPhone 5s, except maybe with some minor design tweaks.
Not everyone wants a bigger smartphone
A meaningful portion of Apple's user base has not upgraded to the larger 4.7-inch or 5.5-inch iPhones yet. We know that 60% of people that had an iPhone before the larger models came out have not purchased an iPhone 6, 6s, 6 Plus, or 6s Plus. On one hand, this represents quite a bit of opportunity for Apple if a lot of those users do decided to make the jump eventually. That's particularly true considering the storage pricing structure that strongly encourages upsells and boosts average selling prices for Apple.
But at the same time, it's also not as if all of the iPhone install base will opt for bigger iPhones. There will always be a market for relatively smaller 4-inch models, and it's this market that Apple will cater to with the iPhone 5se. You might also remember that Apple resisted the calls to go big for a very long time.
Years ago, back when Android OEMs were all flocking to larger models, Apple was still doing a remarkable job selling 4-inch smartphones. For example, for a while Apple's older and smaller iPhone 4s consistently outsold Samsung's newer and larger Galaxy S III. There was never a rush for Apple to go big, even though it was always bound to happen sooner or later.
Now that Apple has given in to market pressure by embracing larger phones, it's not as if Apple has never looked back. Clearly, the company realizes that it needs to address all market segments.
