Later this year Tim Cook will take to the stage to reveal ‘the best iPhone we’ve ever made’. Whether there will be an invited audience in front of him remains to be seen, but the launch of Apple’s iPhone 12 family is a key moment; packing in 5G, a laser-powered camera, a faster processor, and a refreshed design.
Unfortunately the one phone that could derail Apple’s ambitious launch is already here.
The iPhone 12 killer is the iPhone SE.
I’m only going to touch briefly on the iOS/Android debate here so I can acknowledge that for many there is an intense loyalty to their chosen platform. Those that cross the divide do so in both directions, but most are deeply entrenched, be it though brand loyalty, platform lock-in, or everyone else in their social circle has made the same choice.
Like many of the leading smartphones, the iPhone 12 handsets have been heavily leaked. Even though we are roughly five months away from the launch, the broad strokes are already known, with many of the other details now available (such as the Lidar scanner on the camera). The iPhone 12 will be the equal of flagship Android devices, but there will be no standout feature that will force a change of loyalty.
Instead the big differences can be found within the iPhone family itself. The biggest of those is going to be price.
The iPhone SE is on sale at $399 for the entry-level model. The current iPhone 11 retails at $699 and I see no reason for Apple to change that for the lowest iPhone 12. That is going to be perceived by many as the iPhone 12 being double the price of the iPhone SE (because $6 is twice as many as $3, and most consumers will ignore the trailing …99). For those on a budget – and given the potential direction of the world’ economy over the next six to twelve months that’s going to be pretty much everybody – a half price iPhone is going to look pretty attractive.
Will the iPhone 12’s features be enough to tempt people up from the budget option? Or will people decide that they want an iPhone ‘that just works’? In the same vein, will those improved iPhone 12 features be enough for consumes to want to stay at a higher level, or will they decide that they’d rather save their bucks than buy some Buck Rogers?
Let’s not forget that the iPhone SE will be more disruptive than the iPhone 12. The September handsets are going to be matched up avians the likes of the Samsung Galaxy S20s, the Huawei P40s, and the OnePlus 8s of the world. There’s not a lot of difference in terms of capability, price, or form.
Into this comes the iPhone SE, making a confident land-grab for the mid-range market. Yes, Apple has had handsets at this price before, but they have always been hand-me-down handsets from higher in the range. While the geekerati realise the iPhone SE is an iPhone 8 with an updated chipset, the general public see a new phone with the same power as the flagship.
The iPhone 12 is the luxury while the iPhone SE offers consumers a better price, similar functionality, and Apple’s illusion of magic. The SE is the phone for everyone else.
Apple is doing its best to restrict the impact of the iPhone SE on the iPhone 12. By choosing to run with the iPhone design that first appeared in 2014 on the iPhone 6, 2020’s iPhone SE will not be seen as a new phone in terms of fashion and desirability. It has been launched as far away from the September as possible to keep the iPhone 12 as much clear air as possible. And it decided to release the handset virtually in the middle of a pandemic which has reduced the publicity around the launch.
But the iPhone SE still needs to be sold. It’s a product in its own right and Apple is still pushing the budget iPhone through its website. The question now is if the SE will bring in a significant number of new users to the platform, or if it will cannibalise the existing audience looking for an upgrade.
If it’s the former then Apple will have grown its market share and the iPhone 12 can launch as the flagship later this year. Apple’s faithful will be ready for the cutting edge handset, and the general public engaging with the iPhone platform in the mid-range for the first time in years.
If its the latter, then the question becomes one of margins and turnover. If you assume the iPhone SE remains in the same rough window of profit that the iPhone has historically achieved, then the gross take is going to drop, turnover is going to drop, and the iPhone 12 is going to face a much smaller potential audience.
So then, iPhone SE, which are you? Royal assassin or the Kingmaker?
The iPhone SE can make or break the iPhone 12.