Apple’s new iPhone SE: What the analysts are saying

Excepts from the notes I’ve seen. More as they come in, new notes on top.

Gene Munster, Loup Ventures: Land with iPhone SE, Expand into Wearables & Services. Today’s release is a powerful reassurance that Apple is moving forward, releasing products in the face of dire predictions for production and supply chain disruptions. This is evidence of directional improvement in the supply chain and production along with a well-capitalized company. Apple is making product decisions to advance the long-term (win new customers with the less expensive SE and sell them wearables and Services in the future).

Harsh Kumar, Piper Sandler: The Right Phone at the Right Time. We see the new, lower cost offering as a great way to preserve its customer base given 1) the increasing competitive pressure in China from 5G phones and 2) the consumer may feel their wallets pinched in the current economic environment. Maintaining its customer base is incredibly important as the company looks to sustain services growth. In addition, we feel the launch corresponds perfectly with U.S. customers who may be receiving their stimulus checks over the next several days. Overweight. $300.

Samik Chatterjee, J.P. Morgan: Announces iPhone SE to Leverage Mass Market Volume Opportunity. We continue to see the iPhone SE as a replacement of legacy models, such as the iPhone 8, as Apple continues to look to penetrate lower price tiers of the smartphone market, with particularly significant growth opportunities in emerging markets like India and China. Our most recent shipment forecast, which was revised on April 8th (see our report here), embeds iPhone SE volumes of 25 mn in CY20, including 5 mn in C2Q, 12 mn in C3Q and 8 mn in C4Q, followed by 14 mn in CY21 and 10 mn in CY22. Overweight. $335.

Amit Daryanani, Evercore: Momentum for Better Q/Q Growth in June. The low price point should help Apple regain some of the share it has lost in more price sensitive markets like India and China. The move effectively doubles the addressable market in both India and China. The new phone could also encourage replacements in developed markets, particularly among iPhone owners who have held on to their phone for 3+ years. Outperform. $325.

Daniel Ives, Wedbush: iPhone 9 Ready to Hit Market–20 million Units The Initial Sales Bogey. While launching a mid-cycle budget/entry-level smartphone into the backdrop of a consumer global lockdown and unprecedented pandemic will be head scratcher to some, we note that Apple is viewing this as a low volume, low touch release with little fanfare as the phones are already ready to ship. Outperform. $335.

Carolina Milanesi, ThinkTank: The Purposeful Nature of the iPhone SE. Considering that today’s phones are as big as 6.7 inches, it clear that as cute as it is, a 4inch screen would have been too small for most people. I also think it is important to consider the type of customer who would be drawn to the updated iPhone SE because if there is a model that, in my view, has been designed with a purpose, it is this one.

Neil Cybart, Above Avalon: Apple Unveils a New iPhone SE. Success for the iPhone SE will likely end up being defined more by what it ends up doing to entice iPhone upgraders and Android switchers than by sheer unit sales volume… Once September comes around, new flagship models will quickly become the best-selling models.

8 Comments

  1. David Emery said:
    > Considering that today’s phones are as big as 6.7 inches, it clear that as cute as it is, a 4inch screen would have been too small for most people

    That’s a very -curious- quote. Does she have -any basis- for asserting preferences on the part of “most people?” Or is this just “I wouldn’t want one, so you shouldn’t want one, either.”?

    (I have an iPhone 8, and I like that size device. But I have no interest in viewing videos or doing email on a phone. That might put me in a minority, but I suspect that’s not a -small minority-.)

    1
    April 15, 2020
    • Ralph McDarmont said:
      I have a couple of iPads and two ancient desktops for the “big view.” But for texts and conversation I want the smallest profile possible. For a decade or more the industry aimed toward small and light. What happened? I do not want to hold a laptop to my ear. I just want to make a featherweight phone call. Sign me as a 25-year AAPL long and very happy about that.

      1
      April 15, 2020
    • Dan Scropos said:
      As of September of last year, the 3 most popular iPhones in world use were the iPhone 7 (first place), the iPhone 6S (second place), and the iPhone 8 (3rd place). If you consider the top 5, the iPhone X comes in at #4 and the iPhone 6 comes in 5th place. This phone should potentially appeal to 4 of the top 5 iPhones in worldwide use. It’s going to be a smash hit.

      0
      April 15, 2020
    • Fred Stein said:
      Good catch on the bias question. Is she projecting her preference? Or is she still trying to compare to Android phones?

      Regardless Apple’s goals seem clear and smart. 1) Start migrating the IB to more modern chips – a multi-year process. 2) Offer a great low-priced iPhone (one that budget buyers can own for four years.)

      Note also: Used iPhones amply address the sub-$400 market.

      1
      April 15, 2020
  2. Greg Boyd said:
    In regard to Apple’s decision to deaggregate iPhone data, the long term strategy is coming into focus as the company moves into the higher margin services arena. Viewed in terms of lifetime value of the customer, the important aspect, with the continued growth of services, is to simply get the customer into the ecosystem. At some point the iPhone could become free with the purchase of a bundle of services.

    2
    April 15, 2020
  3. Gregg Thurman said:
    That’s a very -curious- quote. Does she have -any basis- for asserting preferences on the part of “most people?” Or is this just “I wouldn’t want one, so you shouldn’t want one, either.”?

    The truth in that statement is in the unit volume sales numbers. On launch the original iPhone SE did quite well, but then volume dropped off rapidly in its 2nd quarter, which is why Apple never updated it.

    The original iPhone SE was an iPhone 5 on steroids, but not near as powerful as an iPhone 6/7. People that bought the SE weren’t looking for screen real estate, processing power or the latest camera tech. They just wanted a phone with Apple’s ease of use, security and rudimentary (included) apps, and to replace seriously aging (read battery) iPhone 4’s.

    The target market of this iPhone SE is all of the above plus emerging markets like India. I wouldn’t be surprised to learn it is being manufactured in India.

    2
    April 15, 2020
    • Ralph McDarmont said:
      I hope a billion phones are manufactured in India.asap. That doesn’t mean inferior, it means smart outsourcing. A Tim Cook specialty.

      0
      April 15, 2020
  4. Romeo A Esparrago Jr said:
    Hi David,
    I interpreted Carolina Milanesi’s comment to be about the reason why Apple went 4.7” instead of the much smaller 4” form factor.

    I felt her more insightful comment is
    “ I also think it is important to consider the type of customer who would be drawn to the updated iPhone SE because if there is a model that, in my view, has been designed with a purpose, it is this one.”

    Meaning what others have said – the price point for a phone with the the same CPU as today’s iP11Pro may be part of Apple’s strategy to (for once?) to gain market share in the lower tiers to gain share in Services, Wearables, new/switcher buyers, etc as well as providing families to affordably standardize their devices for Comms in this quarantine period we’re in. We’ll see…

    4
    April 15, 2020

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