Can a smaller iPhone change the world?

Apple is a company that doesn’t mind a little hyperbole. In its advertisements, the California tech giant has always claimed that its phones, and technology, are as revolutionary as it gets. It is undeniable that Apple gadgets enjoy cult status. Apple fans queue up outside stores days in advance ahead of a new product launch.

However, these very fans may have been left a tad underwhelmed on Monday when Apple confirmed what was possibly the worst-kept secret in the history of the company – the launch of a new, smaller iPhone SE that looks like the iPhone 5S but has specifications largely similar to the current flagship 6S. The SE targets the constituency Apple has never really paid attention to – the-not-so-well-to-do.

Apple’s products are mostly priced for those who make a fair amount of money (or are willing to spend it), and their placement as premium devices in advertisement campaigns worldwide helps firm up that image. Its strategy of only targeting the rich, however, appears to be giving diminishing returns – Apple recently forecast a decline in sales for the first time in more than a decade.

Though sales are rising in India, which happens to be one of the largest markets for the iPhone, this can be attributed to a heavy increase in marketing by the company. The launch of a cheaper iPhone, therefore, indicates some amount of desperation within the company that is eager to expand its user base in order to continue having a dominant share of the market.

However, this gamble might not pay off, at least in India.

The Tata Nano effect

Aimed at markets where customers are super price conscious (like India), the iPhone SE packs the punch of the 6S in its features but is housed in a much smaller 4-inch body.

In 2013, Apple had tried a similar strategy with the launch of the cheaper iPhone 5C. At that time too, its aim was to lower the cost for a customer – who would ordinarily be looking to buy an affordable phone – to enter the Apple ecosystem. The 5C had a plastic back and other features from the iPhone 5, but failed to make a mark, especially in markets like India and China. It was not upgraded in the following years and was eventually quietly withdrawn. In India, the 5C continues to sell for as little as Rs 20,000 online, but customers still seem more interested in the 5S and even the older iPhone 5.

Many believe this could be the Tata Nano phenomenon at work where even price-conscious consumers don’t end up buying a cheap luxury good if it is marketed as such. Even Ratan Tata, the former chairman of Tata Sons, admitted that it was a mistake for Tata Motors to market its Nano as a cheap car.

Price to pay

Apple’s vice president Greg Joswiak revealed during the launch of the SE that Apple had sold more than 30 million new iPhones that had 4-inch screens in 2015. That perhaps makes the company upbeat about the sales of the SE, but the sale of super-sized phablets are also increasing, at least in India.

So even if one believes Apple’s claims that the iPhone SE is the fastest phone in its size, it remains to be seen whether a 4-inch phone will be able to entice many buyers in India.

This is because India is already among one of the most expensive places in the world to buy an iPhone. For instance, the SE is priced at $399 in the US (on contract), which roughly translates into Rs 26,000. But in India, it will be sold for around Rs 39,000 – a price similar to that of the iPhone 5C, and more expensive than some of Apple’s larger, older phones. The iPhone 6 is also available for as little as Rs 33,000 on online shopping sites where even the latest iPhone 6S can be bought for close to Rs 40,000.

Reflecting this, BGR – a site that specialises in news about technology and consumer gadgets – described the new phone as the one “you don’t care about at all”. It added that “Apple’s new iPhone SE is without question the least exciting new iPhone Apple has ever unveiled, but it’s a middle reliever, not a starter or a closer.”

The article added that it is aimed at a different segment of users altogether. “It’s not for you, it’s for your mom. Or your grandfather. Or your uncle. Or maybe your friend with really, really small hands,” it said.