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It brings 5G cellular connectivity to cheaper iPhones, a move that some on Wall Street say will continue to drive record sales this year as concerns persist over demand for more expensive versions.
The Cupertino, California, tech giant has started a virtual event on its website with CEO Tim Cook. During the event, the company is set to unveil the third generation iPhone SE. Apple is also expected to unveil an updated iPad Air with a faster processor in addition to 5G, and new computers with faster chips, according to a person familiar with the plans.
The iPhone SE was a beloved early pandemic for Apple. Device sales approached 25 million, or 12% of the company’s estimated global smartphone shipments, in 2020, according to researcher IDC. Apple does not separate the results by iPhone model.
The low-end model, which starts at $399 and comes with the smallest 4.7-inch screen size, has been less successful in the past year with the arrival of major Apple products. These include the iPhone 12 lineup, which introduced ultra-fast 5G to the company’s smartphone offerings for the first time and got a boost with price cuts from carriers eager to lure customers into the new cellular networks.
Sales of high-end devices helped drive iPhone sales to a record $192 billion in fiscal 2021 and contributed to it Record year profit of nearly $100 billion. At the same time, shipments of the iPhone SE lacking 5G are down about 40% in 2021 compared to 2020, according to IDC.
“Obviously some of the phones Apple released were really expensive, for mostly mid- to high-end consumers, so now you can get an affordable phone with 5G,” said Samik Chatterjee, an analyst
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He said in an interview.
Chatterjee raised its earnings estimates for the fiscal year due to expectations regarding the iPhone lineup, including his belief in the potential of the SE model to attract price-conscious buyers looking for 5G. He predicts that the SE version could record 30 million units sold in the first year and help boost overall iPhone shipments to a record 250 million.
“This is what will give investors confidence that Apple can continue to increase iPhone revenue,” he said.
From February, US cellular carriers will start shutting down 3G. WSJ’s Joanna Stern gets an old iPhone 3G and iPhone 4 running on the old network, in order to remember everything she did to shape the smartphone revolution. Image caption: Preston Jesse for The Wall Street Journal
The iPhone 12 — and the frequent iPhone 13 launches last fall — helped rejuvenate Attention among Chinese consumers. The iPhone’s strength was buoyed by the collapse of Huawei Technologies’ smartphone business amid US government sanctions. Sanctions strip Huawei of its ability to use
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Android operating system. In the last three months of last year, the iPhone regained the first place as the best-selling smartphone in China. Chatterjee said the SE could benefit from the dynamics in China and the country’s interest in 5G phones.
Other analysts seem comfortable with Apple’s capabilities this year, too. As recently as late last year, the median estimate of analysts polled by FactSet forecast flat iPhone sales for the current fiscal year, which ends in September, amid concerns that the iPhone’s appeal may have peaked during the year after a major upgrade with 5G. Technique.
In recent weeks, optimism about the company’s outlook has grown, buoyed by stronger-than-expected results for the last three months of last year. Analysts now expect iPhone revenue to rise 5% this fiscal year — after rising 39% in fiscal 2021.
When the first SE model debuted in 2016, some analysts said the device could help Apple in markets outside the US where the price of the iPhone – which can cost more than $1,500 – was out of reach. Instead, the top three markets for the cheaper device last year were the US, Japan and Western Europe, according to IDC.
““Some of the phones that Apple released were really expensive, mostly for mid- to high-end consumers, so now you can get an affordable phone with 5G.”“
In China, Southeast China accounted for less than 10% of shipments, according to Qiu Luchuan, an analyst at research firm Canalys. He said the phone struggled against budget Android competitors and expressed doubts that the new version would do well in China.
“The 3rd generation iPhone SE may look like a huge hit in China due to Apple’s increased market share and 5G penetration,” he said in an email. “However, according to Canalys data, Chinese consumers are leaning toward phones with larger screens.”
In the US, the SE has been a gateway to the Apple brand for owners of less expensive Android phones. Last year, 26% of SE buyers previously had an Android phone, according to consumer surveys by Consumer Intelligence Research Partners. “The iPhone SE has become an entry-level iPhone, mostly because of its price point,” said Michael Levine, co-founder of Consumer Intelligence Research.
Apple may once again benefit from carriers eager to push their latest phones to customers, according to Cliff Maldonado, principal analyst at BayStreet Research, which tracks marketing efforts by wireless service providers.
Carriers are keen to move customers from 4G to the new, faster networks because it is cheaper for them to provide the same amount of data. Mr. Maldonado expects carriers to reach about 95% of 5G subscribers by mid-2024. 5G aims to improve communications for games and videos.
“Carriers will be happy to push the SE3 over the previous SE2 at roughly the same $400 price point because SE3 will allow them to support the phone at a lower cost on 5G than 4G LTE,” he said.
write to Tim Higgins at [email protected]
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