Apple (NASDAQ:AAPL) is expected to launch a new 4-inch smartphone, dubbed the iPhone SE, later this month. The device is expected to be fairly high end, particularly as it is expected to feature many of the same internals (including applications processor) of the relatively new iPhone 6s.
One feature it is expected to be missing, though, is 3D Touch. The exclusion of this feature is likely for a couple of reasons. The first is that the additional components required to add 3D Touch tack on cost and that may simply reduce margins by too much, particularly on a low-cost device. Secondly, Apple likely wants to give customers a reason to "buy up" to the higher-priced iPhone 6s and 6s Plus.
Although I understand Apple's reasoning, and it probably makes sense from a near-term financial and business perspective, I still believe that Apple should have endowed the SE with 3D Touch.
It's mostly about the app ecosystem
Apple has done a generally good job of making sure the core apps that come preinstalled on the iPhone 6s/6s Plus offer 3D Touch support. This situation is only expected to improve with the upcoming release of iOS 9.3.
However, in order for 3D Touch to truly be a game-changing feature -- one that drives customers to want to upgrade to newer iPhones -- it's going to need to see very widespread and meaningful adoption by major software developers.
Now, to be fair, 3D-touch enabled devices are already out there in the tens of millions and once the iPhone 7 drops and the iPhone 6s/6s Plus waterfall to lower price points, 3D Touch-capable phones will be more than ubiquitous. This is likely to be incentive enough for most developers with deep pockets.
However, Apple is probably going to sell a good number of these updated iPhone SE phones, particularly to customers who simply prefer to have a premium smartphone experience in a compact form factor. In fact, one analyst with RBC Capital believes that the iPhone SE will add a full $5.5 billion in incremental sales to the company's top line this fiscal year and $0.23 per share in net income.
That's a non-trivial number of small iPhones set to be sold to current and potentially new Apple customers! Coupled with the fact that a relatively low proportion of the overall pre-iPhone 6/6 Plus installed base has upgraded to newer phones (about 40% per the most recent earnings call), smaller developers might simply be uninterested in supporting 3D Touch until it is more ubiquitous.
Beyond the app ecosystem argument
In addition to the app ecosystem argument, there's also the simple fact that Apple spent a significant amount of time touting 3D Touch as the killer new feature in the iPhone 6s/6s Plus. In fact, of the roughly 1 hour that Apple spent at its fall event talking about the new iPhones, a full 10 minutes were spent on extolling the virtues of 3D Touch.
It just seems strange for the iDevice maker to launch a new premium-tier phone without this key feature.
In fact, I think that's the main problem that I have with the upcoming iPhone SE. If the device doesn't have a "trick" or an interesting selling point beyond the fact that it's smaller and a bit cheaper than the iPhone 6s, then I don't see it as a device that can help Apple gain all that much share.
At best, it will be a device that should convince those owners of older/smaller iPhones to finally upgrade if they had been holding out for a newer, compact device.
Perhaps that's the real job of the iPhone SE -- a fairly easy way to leverage preexisting technologies in order to grab as much incremental revenue as possible until the iPhone 7/7 Plus show up to help boost iPhone sales performance.