Apple has discontinued the iPhone SE and launched the iPhone 16e, raising its entry-level model price from US$429 to US$599, a significant hike of US$170. This strategic move presents a key test for Apple's iPhone lineup in a market dominated by mid-range Android devices.
The substantial price increase raises questions about whether former iPhone SE users will be willing to pay the extra US$170 for the iPhone 16e, despite its new Apple Intelligence features.
At US$599, the iPhone 16e comes in at a price point higher than expected, clearly positioning it above the budget segment. This pricing strategy reinforces Apple's focus on maintaining profit margins rather than competing in the budget smartphone market, consistent with its traditional brand identity.
According to The Wall Street Journal, this elevated price could potentially limit its appeal to cost-sensitive buyers and affect overall sales, particularly in today's sluggish market.
The timing of this launch is notable, as Apple reported a near 1% drop in iPhone revenue for the first quarter of fiscal year 2025. Adding to this context, analysts at Visible Alpha predict a nearly 3% decline in iPhone sales for the fiscal year ending September 2025.
While targeting the low-end market presents risks, Apple remains committed to maintaining its premium image and preserving high-profit margins, as evidenced by its luxury product offerings, including an 18K gold Apple Watch priced at up to US$10,000.
The company's commitment to innovation is reflected in its research and development spending, which reached nearly US$32 billion in 2024, almost double the amount from five years prior, while revenue rose by 48%.
According to 9to5mac, Apple intends to use the iPhone 16e to encourage iPhone SE and older model users to upgrade while also enticing Android users to join the Apple ecosystem.
However, the iPhone 16e's higher price point reflects Apple's focus on maintaining profits, as shown by its smaller discount margins than other product lines. This pricing strategy may limit its appeal in the high-end smartphone market. Additionally, the iPhone 16e's camera specifications and the absence of features like a smaller screen and Home button could deter users seeking these particular attributes.
Article edited by Jerry Chen
