BEIJING (CAIXIN GLOBAL) - Apple is making a concerted push into the midrange-to-budget smartphone market, analysts say, with a new 5G-enabled handset that will go head-to-head with next-generation devices produced by China's market leaders.
At a virtual event on Tuesday (March 8), the California-based company unveiled the third-generation iPhone SE, the latest version of its smallest and cheapest iPhone, which is intended to woo consumers who may be reluctant to pay top dollar for a 5G-enabled iPhone 13.
The phone has a nearly identical design to its previous version introduced in the spring of 2020, with the same relatively small display size of 4.7 inches measured diagonally across the screen. It will go on sale on March 18 at a starting price of US$429 (S$585), slightly more than its previous version which started at US$399.
But consumption habits in the fiercely contested Chinese market could hold back the phones from achieving success there, according to Will Wong, a phone market analyst at research firm IDC.
"The launch of the lower-cost 5G iPhone is a good strategy (by Apple) in targeting broader consumer segments," Wong said, adding that he expected the new device to attract budget-conscious consumers who want to try 5G, as well as "female consumers who prefer a better one-hand-friendly form factor."
But he said the screen size could be a setback. "In 2020, the iPhone SE only accounted for nearly 4 per cent of Apple's shipments in China, while it accounted for almost 14 per cent in the rest of the world. This is because Chinese consumers tend to prefer a phone with a larger screen size even at lower pricing."
Apple had a rollicking year in China in 2021, where it ended the fourth quarter with a record smartphone market share of 20.6 per cent, driven mostly by lower starting prices for its larger iPhone 13 series, the impact of US sanctions on Huawei and its expanded sales channels, according to IDC. That was an increase of 3 per cent year-on-year to a total of 17.2 million smartphones.
It came as total sales in China's smartphone market fell 3.5 per cent year-on-year in the fourth quarter to 83.4 million devices.
When it comes to the markets outside of China, the iPhone SE could help Apple expand its clout in the nonpremium markets of India and Central and Eastern Europe, where smartphones priced below US$400 accounted for 90 per cent and 78 per cent of the smartphone sales in India and Central and Eastern Europe last year, according to IDC.
In India, where the smartphone market has been led by China's Xiaomi for several consecutive quarters, it remains to be seen whether Apple will benefit from a tougher government stance on Chinese tech and device firms that has come amid mounting geopolitical tensions between the two countries.
In the fourth quarter of 2021, Xiaomi retained its crown as India's largest smartphone seller with a market share of 21 per cent, despite a drop in shipments, according to another market researcher Canalys.
"I would say that India is a market that is too big to be ignored by smartphone makers, though there (are) political and regulatory risks in the country," Wong said.
Despite the lower price tag, the iPhone SE uses the same A15 processor as its iPhone 13, and the firm is also touting longer battery life and an improved low-light camera system to win customers.
At the Tuesday event, Apple also introduced a new custom processor called the M1 Ultra and a new desktop computer, the Mac Studio, which uses it. The M1 Ultra chip can be seen as a renewed effort by Apple to reduce its dependence on Intel-developed processors.
This story was originally published by Caixin Global.
