Apple is considered to be the state-of-the-art business enterprise in the world now.
It’s the business to which nearly all others look for guidance. The moment Apple reveals a forward thinking new design vocabulary or launches a fresh product, it generates ripples throughout the marketplace. All of a sudden, the whole industry is manufacturing items in Apple’s look and feel.
But to state Apple is only a trend-setter understates the organization’s position while arguably the figurehead of invention in consumer engineering. Apple isn’t just setting technology trends; Apple’s vision pieces precedents and starts actions that allow the trends to exist to begin with.
As great since it must experience to be Apple in this scenario - and as humbling since it must feel to be any of the many businesses copying Apple at every switch - it’s not all sunshine and rainbows. You can claw your way to the very best of a mountain, but there’s not a lot of stable floor up there. One wrong step as well as your toppling back down the mountain, undoing years of the hard work needed to get right up there.
We do not want to discount Apple’s successes in 2018: Apple Pencil program for ipad device was a great addition; iOS 12 has given new lease of life to iPhones as aged as the 5S; Apple Watch Series 4 generally is saving lives; and that’s simply a few highlights. Searching back again, though, 2018 was a fairly tough year for Apple as certain missteps ended up affecting the company’s important thing.
Among Apple’s most controversial techniques in 2018, there’s one I needed to point out for a significant reason: Without second-generation iPhone SE in sight, it seems Apple has exited the budget flagship market.
The truth is, I’ll take it one step additional: I’m positive Apple will not be delivering any more budget iPhones, and here’s why.
Apple’s product collection is varied. The company generates revenue from services like iTunes and Apple Music to accessories like AirPods and the Magic Key pad, from home entertainment devices like Apple Television 4K to personal computing products like the MacBook Pro. But product sales for most of these aren’t that impressive (though Apple’s profit margins certainly are).
It’s essentially the iPhone that makes up about nearly all Apple’s income. Since its debut in 2007, iPhone has pushed Apple’s income to such incredible heights that the company is among the most first trillion-dollar organization in history. With so much of Apple’s revenue riding on the game-changing device, you can wager there will be a significant drop in Apple’s income if people starting buying less iPhones.
And that’s exactly what we are seeing.
After a modest 4th quarter, income for Q12019 - which, to be very clear, is comprised of October, November, and December, encompassing the vacation shopping season - was much lower than Apple originally planned. With the expense of fresh iPhones rising, revenue would’ve increased even if unit sales had only remained continuous, but there were fewer iPhone units sold through the period. The implication is that demand has waned, or it’s feasible there wasn’t very much demand for Apple’s costly new iPhones to begin with.
The earliest indicator of challenges was in 2017, the year iPhone X premiered. At a starting cost 50 percent greater than the previous year’s baseline model, iPhone X unit sales were reportedly flat although Apple’s revenue improved. How? Because even though Apple sold approximately the same number of systems as the year before, the average cost of an iPhone had elevated. When you sell the same quantity of products but tag up the price, you still visit a bump in product sales.
Of program, it’s not merely the iPhone that is become more costly. Apple has elevated price levels across practically all the company’s stock portfolio. But with the iPhone driving profits, the implication can be this: In the event iPhone sales remain toned or start to fall, Apple will have to keep raising the cost of the iPhone every year to maintain year-over-year income gains. As you can plainly see, it’s not really a coincidence Apple has decided to stop reporting iPhone unit sales publicly.
Actually if 2017 was an outlier, the launch of fresh iPhones in the fall is meant to give Apple a shot of revenue adrenaline in the ultimate stretch, allowing for a solid finish as the business crosses the monetary finish line. But for the second calendar year in a row, that didn’t come up. Doesn’t it seem reasonable, if improbable, that increasing the costs for brand-new iPhones has resulted in lower demand?
About a week ago, Apple CEO delivered a notice to shareholders. You can browse the document for yourself on Apple’s web-site, nonetheless it warns traders that Apple’s 1Q2019 revenue will become $9 billion lower than was originally projected.
The letter generally blames China’s economy for the vast majority of the year-over-year iPhone revenue decline although also indicating that individuals remain adapting to the extinction of carrier subsidies.
In a recently available interview Cook explained most of the same concerns to describe lower-than-expected iPhone gross sales.
Besides slowed growth in developing markets and the lack of subsidized pricing through service providers, Cook suggested to iOS 12 and the $29 battery substitution program while having encouraged users to preserve their outdated iPhones instead of choosing new ones.
As you may remember, Apple launched the battery alternative program in late 2017 in hope of hiding the stench of the battery hot debate, which had garnered claims of designed obsolescence.
As outlined by Cook, many with old iPhones decided not to upgrade mainly because they could get brand-new batteries for inexpensive. This would remove the performance caps that Apple had imposed to them, restoring their iPhones with their previous glory, specially when paired with iOS 12. In fact, Apple went to lengths to make sure that iOS 12 would make older iPhones faster, so Cook is most likely correct in hoping the battery replacement program and iOS 12 factored in to the weaker sales of 2018 iPhones.
Nevertheless, Cook declared that challenging trade relationships between your US and China was ultimately the biggest factor. China represents a huge amount of untapped sales potential for Apple, so there’s probably some truth compared to that, too. You can view the full interview in the video below if you would like to listen to more of what Make must say about it.
In the mean time, critics and analysts have suggested poor iPhone sales are a indication of market saturation; at this time, most people who want an iPhone curently have one, and that’s a hard hurdle to overcome, specifically with customers replacing much less frequently.
It’s also certainly likely that Apple listed the 2018 iPhones from the developing markets the business claims to end up being targeting.
After all, if you live in China and want to buy a new cell phone, will you buy an iPhone XS for $1,000 (¥6800) or even more, or will you get the most recent Vivo or Xiaomi Android smartphone that’s produced locally and may do basically anything iPhone XS can do at a fraction of the price?
And in addition, Cook mainly sidestepped this issue of ballooning iPhone prices - a burden that we have seen across most of Apple’s products for that situation - which has been among the primary criticisms of brand-new iPhones.
Brand-new Asking Price Hikes
Price raises for the iPhone used to end up being pretty rare. Actually, after carriers stopped providing subsidized pricing on cell phones, forcing us to start paying full MSRP if we wanted to buy fresh iPhones, we're able to at least depend on a constant starting price from year to year.
That starting cost used to be $649. With the discharge of iPhone 8 in 2017, it jumped to $699, a discouraging gain, but it was not too alarming.
It had been only a $50 boost after generations of a constant price, so many people gave Apple a pass. And, actually at the higher price, iPhone 8 seemed positively inexpensive when compared to $999 price tag on the new iPhone X.
But reportedly, the price increase for iPhone 7 set a precedent because in 2018, the purchase price jumped again.
Matching the boost from iPhone 7 to iPhone 8, the 2018 iPhone collection started out at $749 for iPhone XR. You would argue that iPhone XR is a much better device than iPhone 7 and justifies the extra $100, but value is subjective. While some might say iPhone XR will probably be worth its $749 beginning price, especially in comparison to Apple’s more high quality versions, many customers will fixate about how each new generation of iPhone is more costly compared to the one before. And at this point, is it possible to blame them?
To make matters even worse, as iPhone XS, iPhone XS Max, and iPhone XR were being unveiled about stage during Apple’s fall 2018 event, iPhone SE had been discontinued. So not merely are iPhones getting more and more expensive, but Apple has eliminated the only spending budget option we had.
So if you’re looking to get a new iPhone in 2019, there’s very little choice anymore. Customers are mainly being forced to accept Apple’s higher beginning price in the absence of a true budget iPhone. Naturally, consumers and critics alike are receiving more vocal within their demands an iPhone SE successor.
Outstanding Unforeseen Benefits
Apple announced the iPhone SE , which means Particular Edition, in March 2016 in a particular spring event.
Both for customers and the industry at large, iPhone SE was an extremely un-Apple device for Apple to release. The iPhone 6 had just jumped in size and received a completely new style from the previous generation. Then iPhone SE premiered, featuring a smaller, compact form with its design virtually indistinguishable from the previous-generation iPhone 5.
Even more surprising was the actual fact that iPhone SE remarkably featured the majority of Apple’s up-to-date, flagship-level technologies regardless of the reduced starting price; for $399, you got the same custom made A9 processor as iPhone 6S and a 12 MP camera with 4K video documenting and a bigger battery.
Actually, the only significant compromises were the lack of 3D Touch and the use of first-generation TouchID rather than the faster second generation. But, again, taking into consideration its low starting cost (which ultimately settled to $349), the iPhone SE offered uncharacteristically great worth for a product made by Apple.
The problem was that iPhone SE did not become a top-selling iPhone. In the course of its life-span, its defining characteristic was that it provided an affordable point of entry to the iOS ecosystem although it eventually gained somewhat of a cult following among particular Apple fans.
Naturally, after iPhone SE have been the baseline of the iPhone lineup for two years, customers were ready for the customary refresh. Although iPhone SE offered a great cost-to-performance relation in 2016, a refresh would link the overall performance gap that developed as iPhone SE’s A9 processor chip was followed and changed, initial by the A10 Fusion chip in iPhone 7, then again by the A11 Bionic in the iPhone 8, iPhone 8 Plus, and iPhone X .
Patiently Waiting for Apple's New Product launches
Affirmed, we heard that Apple was focusing on a new version of the budget iPhone.
Details varied, but the iPhone SE successor - alleged to be named possibly iPhone SE 2 or iPhone X SE (with suffix and modifiers meticulously arranged)- appeared to have the same purpose as the initial, which was to be a compact, low-cost iPhone offering great overall performance and most of the latest features.
Much of the disagreement surrounding the naming theme for the iPhone SE 2 was due to contradictory stories concerning whether the gadget would keep its iPhone 5-era style or whether it would embrace the new iPhone X aesthetic.
Some insisted (or possibly hoped?) iPhone SE 2 would look like an iPhone X from the front with a nearly bezel-less, edge-to-edge display. These stories were mainly informed by supposed designs for display screen protectors and instances; if genuine, the implication was that iPhone SE 2 could have a bezel-much less, notched display identical to iPhone X, iPhone XS, iPhone XS Max, and iPhone XR.
Of training course, the notch would become one of the defining features for 2018 smartphones overall as its was imitated by almost every smartphone manufacturer following the iPhone X debuted in past due 2017; however, for Apple’s reasons, the notch only exists to house biometric sensors for Apple’s proprietary FaceID. So the implication was that iPhone SE 2 would feature FaceID although the high price of FaceID components made it an unlikely inclusion in virtually any budget iPhone.
Following these reports, renders were made to show the way the device might look if it turned out to be real.
Assuming the case styles and resulting renders had been accurate, iPhone SE 2 would’ve been a really fascinating device, the lovechild of the bygone iPhone 5 and the more futuristic iPhone X.
Provided Apple can keep creation costs and, by expansion, the MSRP down, iPhone SE 2 could’ve easily outsold the initial iPhone SE, possibly becoming a top seller like the original iPhone SE never could.
These weren’t simply the pipe dreams of iPhone SE followers and anyone who wanted cheaper iPhones; reports from Apple’s own suppliers all but verified plans for iPhone SE 2, offering estimates for possible creation schedules and ship dates.
In early August 2017, Wistron Corp. - a low-volume manufacturer based in Taiwan that Apple recruits when iPhone demand is usually high - was working on expanding its creation base to accommodate a fresh compact Apple smartphone, which many presumed to become an updated iPhone SE.
Then came a tentative ship date: In late November 2017, Economic Daily Information in Taiwan reported Apple had been eyeing a release date in the first half of 2018 for the iPhone SE 2, which would’ve been consistent with the spring release of the initial iPhone SE.
January 2018 brought another report of iPhone SE 2 launching in 2018. Shortly thereafter, there was a rumor iPhone SE 2 would feature a glass rear panel, suggesting the addition of the wireless charging capabilities that the iPhone has already established since 2017.
Just as rumors pointed to Apple gearing up for the release of a next-generation iPhone SE, Ming-Chi Kuo, an analyst with KGI Securities who is known for predicting Apple’s products with uncanny accuracy, planted among the initial seeds of doubt.
In late January 2018, Kuo reported iPhone SE 2 had hardly any chance of being released because Apple had exhausted its resources on the three flagship models to be released in 2018. Of training course, those three models ended up being iPhone XS, iPhone XS Max, and iPhone XR.
However, rumors persisted - though at a slower pace - in spite of Kuo’s question.
For instance, there were specifications and other information on the iPhone SE 2 reported in April 2018. Relating to these leaks, Apple intended to keep creation costs (and, by extension, the eventual retail cost) down by omitting the 3.5mm headphone jack and using iPhone 7’s A10 Fusion chip instead of the A11 Bionic chip found in iPhone 8 and iPhone X.
For all intents and reasons, the axe was decisively dropped in July 2018 as BlueFin Research told MacRumors that Apple had nixed all programs to proceed with iPhone SE 2.
We’ll probably never find out for sure whether iPhone SE 2 was ever actually in the pipeline; however, even if it had been planned primarily, it’s unlikely that we’ll ever obtain an iPhone SE 2 at all.
It’s been four a few months since the release of the 2018 iPhones, an event that coincided with iPhone SE being taken off Apple’s lineup, which, in and of itself, allegedly happened because Apple retired its A9 processor. So apart from Apple quickly unloading the last iPhone SE units at a discounted $249 price, which took just a day, iPhone SE is fully gone from Apple’s catalog, and anyone waiting for a next-generation iPhone SE has little cause for hope.
If you ask me, the writing is on the wall structure: Apple won’t be building another budget iPhone.
No More Budget iPhone?
Spending budget smartphones, or smartphones that price roughly $300 or less, are pretty common nowadays. In some cases, these budget devices offer great value for your money. Some of the more recent notable examples include the Moto G6 for $240, LG Stylo 4 for $250, Huawei Mate 20 Lite for $290, and, of course, the impressive Pocophone F1 for $299.
When you have a tad more to invest, you can find a used or refurbished Samsung Galaxy S8 for just barely over $300. Or you can get the brand new Nokia 7.1, an Android One device with the look and nearly all of the features that top-shelf Android flagships possess for the discount price of $350.
I’m not sure where the term originated, but I completely agree: “Good phones are getting cheap, and cheap cell phones are receiving good.”
Of course, you might’ve noticed that the smartphones mentioned above are Android smartphones. What about iPhones?
When carriers did away with subsidizing smartphones, we'd to begin paying full retail price for new smartphones. So Apple’s decision to create the iPhone SE was very timely: Rather than paying $649 or more, you could buy an iPhone for under $400 without making a ton of compromises. Suddenly, people who preferred iOS to Android had their very own Pocophone.
From September 2016 to its discontinuation in September 2018, iPhone SE was never a top-selling iPhones. Even at its peak, iPhone SE under no circumstances accounted for a lot more than 11 percent of iPhone sales as the third-best-selling iPhone, and just by a slim margin. Meanwhile, both iPhone 7 and iPhone 7 Plus almost tripled the sales of iPhone SE during that period, accounting for 28.5 percent and 29.5 percent of iPhone sales, respectively.
After September 2017, iPhone SE sales dropped substantially, remaining somewhere between 5.5 percent and 8 percent before device was pulled in fall 2018.
Suppose you’re Tim Cook seeking at these figures. Everybody has been asking for a second-generation budget iPhone, but sales numbers display that whenever a lower-cost option is available, the majority of customers keep purchasing the more costly iPhones. If clients are prepared to pay more for high-end iPhones, does it seem sensible to make a cheaper device that, at best, only about one in ten consumers will be interested in buying?
With some context, positioning the iPhone more as an extravagance item starts to create sense. Like voting on a ballot, Apple’s consumers have already been casting their votes on higher-end iPhones, so we can’t really blame Apple for leaving budget smartphones that do not sell well.
If you’re miffed about the loss of life of iPhone SE 2, there are, actually, cheaper iPhones available for people on a budget. But you’re not going to see them in shops.
Current Market Conditions
Apple gave customers the lower-cost iPhone they’d always been asking for, but many of them didn't buy it. Therefore if you’re Apple, do you create a second era knowing the first generation didn’t sell well, or do you ditch the budget-iPhone idea altogether?
It seems Apple find the latter. Nevertheless, it doesn’t eliminate from the fact that spending budget iPhones are already available, not forgetting plentiful. Specifically, I’m discussing used iPhones available.
The gray market identifies the buying and selling of used iPhones on the secondhand marketplace. It’s comprised of the many people selling their used gadgets after upgrading, which essentially creates an unofficial market of budget iPhones. Therefore all those listings for iPhone 6S, iPhone 7, and iPhone 8 on eBay, the Amazon Marketplace, solutions like Swappa, and yard-sale applications like LetGo will be the gray market for iPhones.
Apple doesn’t need to spend money on R&D, sourcing parts, manufacturing, and distribution for a budget iPhone because we already have access to all of the discounted iPhones we're able to ever want in the secondhand market. And each year when brand-new iPhones are released, millions more iPhones will revitalize the secondhand marketplace as users who update to new iPhones sell their outdated ones.
Plus, any post-2016 iPhone models in the gray market will have better specifications than iPhone SE, and a few of these used iPhones would be cheaper than buying a new iPhone SE from Apple for $349.
Basically, Apple doesn’t need to sell a budget iPhone since the current-generation iPhones purchased at complete retail cost today become budget iPhones as consumers use them and finally sell them to on the gray marketplace when they upgrade. And more devices are detailed on the gray market every day, so as long as Apple is selling smartphones, the gray marketplace is a renewable resource for budget iPhones.
Of course, the gray market isn’t the only method to get an iPhone on the cheap. Depending about how you consider it, Apple actually offers new spending budget iPhone options every year.
With the official unveiling of new iPhones every year, the MSRP of each preceding generation still in creation is decreased. For example, when iPhone 8, iPhone 8 Plus, and iPhone X were announced in the fall of 2017, iPhone 7 and iPhone 7 Plus became previous-generation products, which warranted price cuts.
The iPhone SE was still in production when iPhone 7 got its price cut, if you wanted a fresh iPhone but didn’t want to invest $699 or even more for iPhone 8 or iPhone X, you could choose iPhone SE from $349, iPhone 6S from $449, or iPhone 7 from $549. Though $349 isn’t precisely chump change, it’s certainly more palatable than iPhone X’s thousand-dollar starting cost.
With iPhone SE discontinued, the least expensive iPhone available is iPhone 7 for $449, meaning the least expensive iPhone on the market is $100 more than last year.
To be fair, iPhone 7 was a great device at release, and it’s still a compelling option today, especially for the cost. Though it was divisive as Apple’s first iPhone without the apparently requisite 3.5mm headphone jack, iPhone 7 is otherwise a full-presented flagship. But if you’re shopping for a fresh iPhone on a budget, which would you rather purchase: a 2016 iPhone for $449 or an iPhone SE 2 with the latest A12 Bionic processor for $100 less?
Regarding iPhone SE 2 not materializing, maybe understanding what could’ve been is definitely what makes this thus disappointing for some. Even though the data suggests a limited audience for spending budget iPhones, there will always be situations in which a low-cost iPhone with current-generation functionality hits the sweet spot.
Where Should Apple Go From Here?
It’s a great time to become a lover of tech, particularly mobile tech as spending budget and mid-range flagships are slaying in the Android smartphone market. Though priced greater than a $349 iPhone, the OnePlus 6T is a prime example of how to offer flagship-level specifications, design, and performance at a lower life expectancy cost.
For better or worse, Apple seems to have evacuated the budget smartphone sector after just one attempt. Granted, Apple has never actually catered to budget-minded customers with almost all the company’s equipment starting at $1,000 or even more and a shrinking amount of devices, like iPods and iPads, priced lower than that. That is why it had been so unusual for Apple to make a budget iPhone to begin with.
The problem is that it seems Apple is now trying to close a door that probably the company never should’ve opened in the first place. After all, when you’re offering this inexpensive iPhone on the lineup, all the flagship iPhones appear that much more expensive by comparison.
Whether there’s a new iPhone SE later on, the prices mounted on Apple’s products are climbing. In lots of markets, Apple is coming dangerously close to pricing the iPhone in addition to the majority of Apple’s other items out of reach. For customers who can’t (or don’t need to) pay such exorbitant prices, the fact that Apple offered inexpensive options during the past but no longer offers those options now will certainly leave a bad taste in people’s mouths, nearly like biting right into a rotten apple.

Honestly, I hope I’m wrong concerning this, but if Apple really wants to curb the decline in iPhone demand and for product sales to resume an upward trajectory, 1 of 2 things will need to happen, and sooner instead of later.
Apple must either lower the margins on iPhones to create them more affordable (or even just less costly), or there must be a new budget option so customers at least have the illusion of choice. Because as the amounts show, most buyers go for the premium iPhones in any case, but if Apple puts a spending budget model on the table, at least they won’t feel just like they’re being forced to pay out the ever-growing Apple tax.
Apple’s current pricing structure gives consumers only high- and higher-priced models to select from. But it appears buyers are needs to understand there’s still one other choice, which is usually to save themselves the trouble, and potentially some buyer’s remorse, by not buying fresh iPhones at all.