But even when the lockdown ends, Apple will enter a market where many people are jobless, and consumer spending is low. People will be in constant fear of another lockdown or job losses if coronavirus cases increase. In such times, upgrading a phone would be the last thing on a consumer’s shopping list. Apple understands that, so it has launched a $399 iPhone SE 2, which is an iPhone 11 in the body of the iPhone 8. The new iPhone doesn’t burn a hole in the pocket and brings more people in the Apple ecosystem.
Apple’s IPhone Sales Struggle During The Pandemic
The iPhone SE launch comes two months after Apple CEO Tim Cook acknowledged that the coronavirus outbreak in China would impact both the supply and demand of the iPhone. Cook didn’t specify the magnitude of the impact but said that the company would not be able to meet its fiscal Q2 2020 revenue guidance of $63 billion. Apple earns 55% of its revenue from iPhones, and global supply constraints suggest the impact would be significant.
SE Shows Apple’s Desperation To Boost Sales
Apple was struggling to boost iPhone revenue before the pandemic. It faced intense competition from Android phones that offered premium features for a lower price.
In 2019, Apple reduced the entry-level iPhone 11 price, which increased its smartphone revenue by 7.4% year-over-year in fiscal Q1. The next item on the list was bringing back its mid-range iPhone SE. Apple is increasingly focusing on its service segment to boost revenue. With the new iPhone SE 2, Apple could effectively target a broader mid-range smartphone market. As more people come under the Apple ecosystem, it will be able to offer services like Apple TV Plus and Apple Pay to a broader audience. To lure people into buying iPhone SE, Apple is also offering a one-year subscription of Apple TV Plus for free.
The sales of iPhone SE will be reflected in the company’s fiscal Q3 2020 earnings. Its upcoming fiscal Q2 2020 earnings call on Apr. 30 will likely reflect the highest impact of the coronavirus pandemic.
What’s Apple Thinking Launching Its iPhone SE 2 During a Pandemic?, CCN, Apr 16