3 min read.Updated: 09 Mar 2022, 05:54 AM ISTTae Kim, Bloomberg
Apple iPhone: The company that once regularly dazzled consumers with its products now seems complacent, at least when it comes to more affordable devices.
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When Steve Jobs led Apple Inc., the company was famous for making products that would impress and even “delight" its customers. The uninspiring iPhone SE unveiled today shows how far Apple has strayed from that standard.
That’s unfortunate, because the world’s richest technology giant certainly has the means to do better.
The Apple iPhone SE, introduced in its current form in 2020, was designed to appeal to budget-minded consumers who might otherwise gravitate to competitors such as the Google Pixel. At $399, the SE cost around half the more popular flagship models. But for that price, consumers got a smaller screen and a weaker camera.
On Tuesday, Apple revealed its newest update to the phone, one of several new and upgraded devices rolled out at a product event. The new SE features a faster processor and higher-speed 5G wireless capability instead of the 4G used on the prior model, among other incremental improvements. But that’s about it. The phone has a similar design to its predecessor, and Apple raised the price to $429.
A snappier experience from new chips and better wireless network access are welcome. But most SE users will barely notice the change. Nearly all the commonly used mobile apps, including TikTok, Instagram and YouTube, work nearly as well on 4G networks, and there aren’t yet any killer apps that require the faster speeds.
Overall, the SE will be a letdown for Apple customers who have been waiting for a while for an updated affordable iPhone. The design, based on a 5-year-old configuration, feels stale. It’s clear that Apple isn’t prioritizing customers at the lower end of the market, which is disappointing for a company with an annual R&D budget of $22 billion.
Apple could have been more aggressive with the SE either by sharpening the design, improving the screen or camera, or even cutting the price. IPhones account for just 28% of the global smartphone market, compared with 71% for Android-based phones, according to StatCounter. A superior SE phone could have made significant inroads with the competition.
Why did Apple opt to do so little with the new SE? The company presumably expects its sticky ecosystem of software and services, including iMessage, enhanced security and reliable customer service, to keep users in the Apple fold.
Apple also might be worried that a dramatically improved iPhone SE would eat into demand for the more expensive iPhone 13 and iPhone 13 Pro Max. Those two models cost about $800 and $1,100, respectively, for the base phones. Wall Street analysts estimate that the SE will account for only around 30 million out of the annual 245 million iPhones expected to ship this year.
But Apple probably wasn’t in much danger of cannibalizing its higher-end phones. The majority of iPhone users are likely to keep buying premium models no matter what Apple does with the SE. Meanwhile, Apple customers wanting an affordable, full-featured phone either have to put up with the lack of innovation or take their money elsewhere. And some might: Midprice competitors such as Alphabet Inc.’s $599 Google Pixel 6, which has a considerably better camera system and vibrant OLED display, stand to benefit from Apple’s complacency around the SE.
Apple has decided that when it comes to the affordable segment of the market, minor upgrades will suffice. That’s quite a comedown for a company once known for making every detail count.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.