You like the iPhone. You currently own one with a 4-inch display, but you haven't upgraded because you find the jump to 4.7-inches to be too much for your pocket (literally, or metaphorically). You're excited about the fact that Apple is expected to unveil a new iPhone with a 4-inch display.
How much is it worth to you?
When it comes to any new Apple product, it's the question on everyone's minds. And while Apple might want to avoid the pricetaggery as much as possible, it always comes down to the dollars and cents.
First, the landscape into which the new iPhone will be born into. A 16BG iPhone 6s retails for $649 and costs Apple an estimated $211 to manufacture, while a 16GB iPhone 6s Plus retails for $749 and costs an estimated $236 to manufacture.
Put that another way, consumers pay a $100 premium for the bigger display and battery, while the components only cost Apple some $25.
Now, all the rumors suggest that the new iPhone - let's carry on calling it the iPhone SE until we know different - is going to feature the guts of an iPhone 6/6s in a smaller shell. The smaller shell means a smaller display and smaller battery, but don't expect those savings to amount to much compared to what it costs Apple to make the iPhone 6s with a 4.7-inch display. Thinking it might cost $100 less to make? Get real. The saving is probably closer to $25, and may be less than that.
So what does Apple write on the price tag?
Analysts are expecting the new 4-inch iPhone to retail for anywhere between $350 and $450. At even $450 (which is what Apple currently charges for an iPhone 5s), a 4-inch iPhone with the guts out of an iPhone 6/6s would represent tremendous value for money. At $350 the thing would be a total steal.
Pricing the new 4-inch iPhone is going to be tricky. Price it too low and Apple risks hammering its average selling price, while pricing it too high might put a roadblock in the way of users pulling the trigger on the upgrade.
Another dilemma facing Apple is how good to make the iPhone SE. Make it too good and people will buy it over the more expensive versions. Make it too much of a poor relation and it'll wither and die on the vine much like the iPhone 5c did. Remember the iPhone 5c? This was Apple's attempt at convincing consumers to get excited over old hardware in a shiny polycarbonate shell.
It didn't work out, and Apple will be keen not to repeat this mistake with the iPhone SE.
It's also important to remember who Apple is selling this iPhone to. It's not aimed at people who have made the jump to the iPhone 6 or iPhone 6s. This 4-inch iPhone is being aimed at upgrade laggards who are holding on to their old hardware for one reason or another, whether that be the size increase, price, or whatever.
My bet is that Apple isn't expecting the 4-inch iPhone to cannibalize sales of the higher-priced units. Instead it's a way to sell a device to existing iPhone users who aren't showing any interest in buying a new one.
Better they buy an iPhone and put money into Apple's coffers than buy an Android device.
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