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Is the Strategy behind Apple's smaller iPhone SE Paying Off?

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It was surprising to read this morning that "Apple's refurbished iPhone 6 program rolled into Korea this week." While we had reported on the fact that Apple is preparing to enter that market with a refurbished line of iPhones, Korea wasn't on anyone's radar screen. So Apple's ambitions to extend this program to foreign markets is likely larger than first estimated. There's a hunger for young consumers in certain countries to own an iPhone, even it's a polished, repackaged and refurbished one.


On the flip-side, Apple's iPhone SE is aiming at another niche iPhone market: Those who want an iPhone with current technology but designed for smaller hands or those who love to control their smartphone with one hand. Not everyone wants a a big phablet for reading news and watching videos or playing a game with a large display. And in certain countries, mainly China and India, the SE seems to have hit a nerve. So is Apple's strategy for its new iPhone paying off? A new report by Quartz tends to think it is.


Quartz noted in one of their latest reports that "In the past, a new iPhone has been cause for celebration, spurring long queues of people, sometimes camping overnight, in front of Apple Stores on launch day so they would be among the first to get their hands on the device.


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The iPhone SE, though relatively cheap at $399 to $499 in the US, was underwhelming. This was essentially the innards of the iPhone 6S jammed into the body of the now-dated 5S. While many were clearly disappointed, Apple saw the device as a way to capture a larger share of the lower-priced smartphone market. The strategy seems to be paying off.


According to a June 15 report from Credit Suisse, the market for $500-plus phones has narrowed in recent years, comprising a smaller share of smartphones globally.


The iPhone SE is Apple's ticket to seizing greater market share of cheaper devices. Of smartphones priced at $300 to $500, Apple's share is projected to grow to 17% globally in 2016 from 8% last year.


With the iPhone SE, Apple, a luxury brand that has been hesitant to lower its prices, is now targeting price-sensitive customers in two markets with the biggest potential for growth: India and China."


The Quartz report further noted that "analysis of Apple's web traffic following the iPhone SE's unveiling showed that visits from India and China had spiked 160% and 150%, respectively, far above the 80% average jump globally. "


Last month we posted a report titled "Taiwan Supply Chain Claims that Apple has increased iPhone SE Chip Orders." While it's definitely positive to read about increased orders and web traffic notes, we hope to hear more about the success of the iPhone SE from Apple when they hold their next financial conference call sometime next month. While Apple is unlikely to breakdown the new iPhone sales specifically, Apple's CEO could provide us with colorful commentary on the success of this iPhone entry if it's warranted.


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