Why Apple needed the iPhone SE, and needs it to succeed

Apple needed a new 4-inch iPhone because the device is critical in bringing new customers into the ecosystem.

At the official unveiling of the iPhone SE, Apple went out of its way to highlight why it needed this device, and it offered up some very interesting statistics as to how the iPhone 5S has been selling.

First up, Apple has sold over 30 million 4-inch iPhones during 2015.

Why Apple needs the iPhone SE, and needs it to succeed

Now that's a very interesting figure. Last year Apple sold 231.5 million iPhones, and 30 million accounts for about 13 percent of that figure. In the context of overall Apple sales, it's a drop in the ocean, but it still represents a lot of unit sales.

Apple is clearly hoping to move the needle with the revamped, faster, cheaper iPhone SE, and that's going to put the crush on mid-range Android handsets.

Next interesting statistic was that about a third of new iPhone customers buy 4-inch devices.

Why Apple needs the iPhone SE, and needs it to succeed

This means that despite the glitz and glamor of a new handset, a lot of iPhone newbies arte coming to iPhone via not just a device that has a 4-inch display, but also a device that's long in the tooth. Not the greatest idea if you want to push at them new stuff such as Apple Pay.

The third revelation was that the Chinese love the 4-inch iPhone, with fully two-thirds of those new to the iPhone coming to it via the smaller device.

Why Apple needs the iPhone SE, and needs it to succeed

Again, the small iPhone is a huge user magnet. And, given the popularity of Apple Pay in China, making the entry device compatible with this service must have been a high priority for Apple.

So why does Apple need the iPhone SE to succeed? Well, that should be pretty obvious. If the analyst predictions are correct and iPhone sales are going to weaken, Apple not only needs a more compelling piece of hardware to draw in new users, but it needs that device to be as cutting-edge as possible in order to get owners into the habit of using Apple Pay and sending Live Photos to grandma. Why? So that they're hooked and keep on buying iPhones.

Then there's the opportunity to sell an upgrade to existing iPhone users running old hardware. According to a research note sent out by IHS, of iPhone models in active use, 29 percent are iPhone 5 models with 4-inch screens, and 23 percent are even older iPhone models with screens sized just 3.5-inches.

IHS also see the iPhone SE as allowing Apple to differentiate itself further from the Android crowd, since hardware makers are choosing to put slower processors and poorer cameras into their smaller handsets.

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