Apple 2022 event: New low-end iPhone should have 5G service

Apple Inc.

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brings 5G cellular connectivity to cheaper iPhones, a move some on Wall Street say will continue to fuel record sales this year as concerns persist over demand for the more expensive versions.

The Cupertino, Calif.-based tech giant is expected to unveil the third-generation iPhone SE in a virtual event on the company’s website on Tuesday, starting at 1 p.m. ET. Apple is also expected to unveil an updated iPad Air with a faster processor as well as 5G, and new computers with faster chips, according to a person familiar with the plans.

The iPhone SE was one of Apple’s early pandemic darlings. Sales of the device approached 25 million, or 12% of the company’s estimated global smartphone shipments, in 2020, according to researcher IDC. Apple does not break down results by iPhone model.

The lower-end model, which starts at $399 and comes with the smallest 4.7-inch screen size, fared less well last year with the arrival of Apple’s flagships. These include the iPhone 12 range, which introduced super-fast 5G to the company’s smartphone offerings for the first time and has been boosted by price cuts from carriers keen to bring customers to the new networks. cellular.

Sales of high-end devices helped propel iPhone sales to a record $192 billion in fiscal 2021 and contributed to the year’s record profit of nearly $100 billion. Meanwhile, shipments of iPhone SEs lacking 5G fell about 40% in 2021 compared to 2020, according to IDC.

“Obviously some of the phones that Apple launched were very expensive, mostly mid to high end consumers, so now you’re getting an affordable phone with 5G,” Samik Chatterjee, analyst for JP Morgan,

said in an interview.

Mr Chatterjee raised his earnings estimate for the financial year due to expectations for the iPhone lineup, including his confidence in the potential of the SE model to attract price-conscious buyers looking for 5G. He predicts the SE version could have 30 million units sold in its first year and help push global iPhone shipments to a record 250 million.

“That’s what will give investors confidence that Apple can continue to grow iPhone revenue,” he said.

Starting in February, US mobile carriers will begin shutting down 3G. The WSJ’s Joanna Stern ran an old iPhone 3G and iPhone 4 on the old network, to remember all it did to shape the smartphone revolution. Photo illustration: Preston Jessee for the Wall Street Journal

The iPhone 12 and iterative versions of the iPhone 13 introduced last fall have helped rekindle interest among Chinese consumers. The iPhone’s strength was helped by the collapse of Huawei Technologies Co.’s smartphone business amid US government sanctions. Sanctions deprived Huawei of the ability to use Alphabet Inc.

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Android operating system. In the last three months of last year, the iPhone regained the top spot as the top-selling smartphone in China. Mr Chatterjee said the SE model could benefit from Chinese momentum and the country’s interest in 5G phones.

Other analysts also seem interested in Apple’s potential this year. As recently as late last year, the average estimate from analysts polled by FactSet predicted flat iPhone sales for the current fiscal year, which ends in September, amid fears that iPhone appeal only peaked in the year after the big upgrade with 5G. Technology.

In recent weeks, optimism about the company’s prospects has grown, helped by stronger than expected results for the last three months of last year. Analysts now expect iPhone revenue to grow 5% this fiscal year, after climbing 39% in fiscal 2021.

When the first SE model debuted in 2016, some analysts said the device could help Apple in markets outside the US where the iPhone, which can cost over $1,500, is out of reach. . Instead, the top three markets for the cheaper device last year were the United States, Japan and Western Europe, according to IDC.

“Some of the phones that Apple launched were very expensive, mostly for mid-to-high end consumers, so now you’re getting an affordable phone with 5G.”

— Samik Chatterjee, analyst at JP Morgan

In China, SE accounted for less than 10% of shipments, according to Chiew Le Xuan, an analyst at research firm Canalys. He said the phone was struggling against budget-focused Android rivals and expressed skepticism about the new version’s success in China.

“The third-generation iPhone SE may appear to be a hit in China due to Apple’s growing market share and 5G penetration,” he said in an email. “However, according to Canalys data, Chinese consumers are inclined towards phones with a larger screen.”

In the US, the SE has been a gateway to the Apple brand for owners of cheaper Android phones. Last year, 26% of SE buyers previously had an Android phone, according to consumer surveys from Consumer Intelligence Research Partners. “The iPhone SE has become something of an entry-level iPhone, primarily because of its price,” said Michael Levin, co-founder of Consumer Intelligence Research.

According to Cliff Maldonado, principal analyst at BayStreet Research, which tracks the marketing efforts of wireless service providers, Apple could once again benefit from carriers eager to bring its latest phones to customers.

Carriers are eager to move customers from 4G to the new, faster networks because it’s cheaper for them to provide the same amount of data. Maldonado predicts carriers will reach around 95% of 5G subscribers by mid-2024. 5G aims to improve connections for games and videos.

“Carriers will be happy to push the SE3 over the previous SE2 at roughly the same $400 price point, as the SE3 will allow the carrier to support the phone cheaper on 5G than on 4G LTE,” did he declare.

Write to Tim Higgins at [email protected]

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