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Apple, Inc.'s New iPhone SE: Off to a Big Start?

By Daniel Sparks – Mar 28, 2016 at 9:00PM

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Apple's newest phone appears to be a hit in one of the company's most important markets.

With Apple's (AAPL -2.54%) iPhone sales growth forecasted to come to a halt for the current quarter, it's likely the company's March 21-announced iPhone SE was part of Apple management's plan to reinvigorate sales of the important segment. And, based on a new CNBC report on pre-orders for the new, smaller iPhone, it may be fulfilling its purpose. Pre-orders are off to a big start in China, according to CNBC.

iPhone SE. Image source: Apple.

iPhone SE gets a running start
In what may seem like a step back compared to previous iPhone launches, Apple's new iPhone SE offers a lower price and an older form factor, essentially replacing the iPhone 5s. Of course, its guts are significantly improved compared to the 5s. The phone's selling point is its price. With its smaller, four-inch display compared to Apple's flagship 4.7- and 5.5-inch iPhone 6s and 6s Plus, the company is able to offer the phone at a significant discount. The iPhone SE has a starting price of $399 -- $250 less than the starting price of Apple's iPhone 6s.

Image source: Apple.

The phone's bang-for-your-buck value proposition makes it a good buy in markets where the price of smartphones is more important to buyers. China, in particular, is one of these markets. Fortunately, if this new data from CNBC is true, the new SE appears to be off to a solid start in the important market.

Apple has garnered more than 3.4 million pre-orders from retailers in China for its new iPhone SE. This is a particularly big number since it doesn't include pre-orders made directly through Apple.

For some context, Apple announced after its iPhone 6s and iPhone 6s Plus launch that it had sold more than 13 million new models in the three days following the launch. While this isn't an apples-to-apples comparison since it compares preorders to sales, it does highlight strong demand for the phone in China. Over three million preorders from China retailers alone, excluding preorders made directly through Apple, suggests the new phone's first-weekend sales will be robust.

Shipments for Apple's iPhone SE will begin on Thursday, March 31. So, the first apples-to-apples comparison may come around Monday, April 4, assuming the company keeps with its usual method of reporting first-weekend sales at the beginning of the week following the launch.

iPhone SE: Image source: Apple.

A mid-cycle boost
What stands out most about this iPhone launch is how it departs from the company's usual practice of sticking to its once-a-year announcement of flagship smartphones. Further, the company's decision to give one of its lower-cost devices an overhaul in between its flagship iPhone launches highlights Apple's growing emphasis of faster-growing emerging markets as U.S., Canada, and European markets mature.

Beyond any data on preorders and first-weekend iPhone sales for the new model, investors will be looking to see whether or not the new iPhone can prevent Apple's sales from a potential year-over-year decline during the second half of the year.

Daniel Sparks owns shares of Apple. The Motley Fool owns shares of and recommends Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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