US Insights

The strategy behind the SE

Elizabeth Wilner

US Editor

Mobile 03.21.2016 / 21:45

Apple phones in boxes

With its latest iPhone launch, Apple looks to refresh and grow its user base

“Overall, I think Apple’s product launch today points to a mature ecosystem in which Apple must continue to focus on attracting new users while, as importantly, make sure its current user base stays fresh and is exposed to the latest software and features such as Apple Pay,” says Carolina Milanesi of Kantar Worldpanel ComTech. We did a quick Q&A with Carolina, ComTech's chief of research and head of US business, to gain insights into the specifics of the event.

Q: Apple was one of the last brands to join the move toward big screens. Why come back to a smaller iPhone? 

CM: Two main reasons. One, there are portions of the consumer base who do not like the larger phones, from not being able to reach across the screen to wanting the phone to fit in their pockets. Some consumers just like small. Two, and even more important, is price. With a smaller form factor Apple can achieve a very competitive price without cannibalizing its main products as most early adopters like larger screens.        

The iPhone SE is very different from the iPhone 5c. First and foremost, its more affordable price point fits very well with the new data plan rolling out in the US and other markets. Second, the name itself, or better, what the name implies is quite different. Although Apple never said the “c” in 5c stood for “cheap,” this is how the press talked about the device and how many consumers perceived it, whereas now with the special edition - although once again, Apple did not confirm what the meaning of "SE" actually is - “SE” on the market, an SE buyer can think he or she is buying a fashionable retro product.

The launch timing is also different to avoid direct competition with the flagship products and spread sales throughout the year. At $399, the iPhone SE represents a very good upgrade opportunity for users of older-generation iPhones, allowing Apple to put features like Apple Pay in the hands of many new users. Beyond the iOS ecosystem, the SE is a good lure for featurephone users and Android users who are in the Android ecosystem not because they like it but because they want the lower price point.

iPhone installed base by model Jan 2016

 

Q: So who are the competitors for the SE?

They are the same as for the rest of the market, but within the Samsung family, the SE is competing with older flagships and mid-priced products, not necessarily the Galaxy s7. At the end of the day, most users who will find the iPhone SE appealing will be those who lag technologically or love small form factors which are not trendy at the moment.

Q: How is Apple doing with the new iPad Pro line? Where are they with iPad in general? 

iPad is still the number-one tablet, but sales have been slowing for quite some time now and Apple needed to bring to market something that will be a tempting upgrade both for users who have been holding onto older products as well as users who have been keeping up with upgrades and are now on an iPad Air 2. While the iPad Pro was well-received, sales barely made a dent in the installed base with less than 1% in the US, China and EU5 by January 2016. With iPad Pro 9.7, Apple has a very strong product that brings so much more than Apple Pencil and a keyboard to the product, making it very compelling for consumers and enterprises alike.

The iPad Pro screen size is not for everybody, especially if you are a user who is not yet ready to give up your PC or Mac. The new Pro, at 9.7”, adds to your product portfolio more easily, especially considering the lower price point.

 

iPad installed base by model Jan 2016

 

Q: We didn’t see a new Apple Watch today. Do you think we will ever see a newer model?

It may be a little soon to introduce new hardware, but the new Apple Watch price point of $299 certainly puts pressure on competitors and, more importantly, makes it easier for mass-market consumers to justify the investment. The new bands also help position the watch more as a piece of jewelry than a piece of tech, which broadens the addressable market. 

 

Source: Kantar Worldpanel

Editor's Notes

Journalists, for inquiries or to speak with Carolina Milanesi, contact us. Follow us @Kantar and sign up for our alerts.

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