iPhone SE: Why Apple's latest handset could be a sleeper hit

Consumers with three-year old iPhones may not be rushing out to buy the iPhone SE at launch but watch this space says one analyst.
Written by Liam Tung, Contributing Writer
iPhone SE Tech specs

The Apple iPhone SE.

The iPhone SE didn't make a huge splash in opening sales, but there's still a huge number of slow upgraders in US who may be strongly motivated to buy it, according to one mobile analyst.

Firstly, the appeal of the iPhone SE's lower price tag is more apparent today than two years ago, when carrier subsidies and two-year contracts kept the upfront price of an high-end smartphone at $200.

Kantar mobile analyst Lauren Guenveur points out that due to this shift, US consumers are now more keenly aware of the true cost of owning an iPhone. For example, in the three months ending February 2016, consumers spent $494 on an iPhone compared with $211 during the same period in 2014.

Guenveur believes that by lowering the cost of an iPhone to $399 and delivering better battery life, the iPhone SE could be an appealing option for the 58 percent of iPhone owners who own a 5S handset or older. In other words, consumers who don't mind smaller screens and haven't felt compelled to upgrade phones that are on average more than three years old.

"When the last four-inch iPhone was released, the US market was a significantly different environment from what it is today- not only in terms of which phones were being sold, but how they were being sold to the consumer," said Guenveur.

These iPhone owners are also different to post-iPhone 6 owners, just over half of whom were motivated to upgrade by a larger screen. By contrast, pre-iPhone 6 owners were more keen on reliability and durability, according to Kantar research.

But while pre-iPhone 6 owners may be slow to upgrade -- hence, no big bang at the opening weekend -- according to Guenveur, 49 percent of this group plan to change phones in the next year, and of them 84 percent plan to stick with Apple.

One hitch is that only 11 percent of those planning to upgrade are willing to spend more than $300 on their next device. Still, $399 isn't far off the mark and perhaps their expectations are shaped by contracts that aren't the norm anymore.

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But by other preferences, the iPhone SE appears to have the right traits. Of these consumers 68 percent say battery life is the most important factor, followed by durability, reliability and camera quality. Only 54 percent of owners of four-inch iPhones saw screen size as the most important factor.

Last week analytics firm Slice Intelligence also reported that, based on electronic receipt data, the iPhone SE was appealing to consumers who don't upgrade within the usual two year cycle.

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