While Apple's iPhone shipments currently struggle in emerging markets, the iPhone SE's upcoming pricing could be a game changer
Apple is without a doubt the premium smartphone leader in the world with little competition to speak of, especially in terms of profit. As the premium smartphone leader, Apple has traditionally never been a player in emerging markets. While Apple's iPhone shipments in India grew 34% in Q4, for example, Apple couldn't come close to cracking India's top 5 smartphone players in 2021.
In Latin America (LATAM), we learned this week that Apple was overtaken by ZTE in 2021 for fourth spot, leaving them in the fifth position, as presented in the Counterpoint chart below. Although Apple was the premium smartphone leader in LATAM, according to Counterpoint's latest report, their chart is based on "volume shipments" where Apple is traditionally weak by not participating in smartphones under $300. ZTE's success, for instance, was in delivering 44% growth due to selling phones in the $100 range; a market Apple will never be tempted to touch.
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With Apple competitor Xiaomi predicting that they'll take on Apple in the premium space in the next three years, Apple may decide to invade a new smartphone pricing tier that could cut in Xiaomi's strengths. And this is where Bloomberg's Mark Gurman's dream comes into focus today.
In Mark Gurman's latest edition of his Power On newsletter, he partly dreams while making his case why Apple could decide to lower iPhone SE pricing into game changing territory of just $199. While the new iPhone SE model coming March may sell for below $399, Apple could sell last year's SE model for $199.
Gurman states that "Third-party resellers are already distributing the current iPhone SE at under $200, and refurbished models are plentiful. If Apple offers its own $199 device, the company could have a hot seller in developing markets. It would also provide an option to shoppers who don’t care about 5G service—and aren’t interested in a $1,000 iPhone 13.
By expanding its user base with a $199 iPhone, Apple could create more long-term services revenue and add people to its ecosystem. Those people may then be more willing to try AirPods, an Apple Watch or—later on—a higher-end iPhone.
The move would also give Apple an easy answer to its iPod touch conundrum. Over the years, the iPod touch has been a popular alternative to an iPhone—and Apple still sells the device, its last remaining iPod—but the product hasn’t been updated since 2019. The current model has an outdated 4-inch screen and a slow A10 chip from 2016.
The iPhone SE, on the other hand, has a 4.7-inch screen, an A13 chip and more modern internal components. If the iPhone SE matched the iPod’s $199 price, Apple could finally discontinue the iPod line."
Gurman believes that Apple could justify the lower entry price point by selling services and perhaps accessories could make up for the profit crunch that a $199 iPhone would bring.
While the $299 price point is likely where the SE pricing could be heading, Gurman's makes a logical case for Apple to get aggressive in emerging markets at the $199 price point. With new smartphone competition entering the market every year, putting pressure in the $199 market tier could stunt the growth of many of these low-ball competitors.
The bottom line is that we'll know the verdict of Apple's new iPhone SE pricing next month.
Gurman's letter also touched on the a rumor by Ross Young about a foldable MacBook for 2026 or 2027. Yet Apple has been working on patents for this since at least 2015. Yet to be fair, one of Apple's original patents on foldable devices seemed to have been focused on a foldable smartphone.
Then in March 2021, Patently Apple posted a continuation patent report that revealed that the foldable device, according to Apple, could be a "laptop." In fact, Apple's total new 20 patent claims were all about the folding device being "A Laptop," period. Below is simply the first claim presented.
Claim #1: "A laptop, comprising: first and second housing portions coupled by a hinge; a foldable display that overlaps the first and second housing portions and extends across the hinge; and a rigid transparent cover layer through which the foldable display presents images, wherein the rigid transparent cover layer has a groove that extends parallel to the hinge."
So while the rumor mill may now be catching up to Apple's possible intentions of developing a foldable MacBook, our fan base was made aware of Apple's original intentions as early as March 2021 via their continuation patent filing.