Would Apple's rumored 4-inch 'iPhone 5se' be a premium or value-priced smartphone?

Something seems to be missing from the reports that Apple will introduce a value-priced iPhone in March.

Apple rumor 4-inch iPhone 5se features pricing announcement March event

Recent reports at 9to5Mac claim Apple plans to introduce a 4-inch iPhone 5se at its event on March 14. Would an iPhone 5se replace the entry-level $450 iPhone 5s, or would it be a full-featured, full-priced member of the iPhone family?

Considering this rumored iPhone alongside what's selling, and in light of Apple's product history, suggests the company would favor releasing a premium, albeit smaller-sized, iPhone.

Let's start with the features that 9to5Mac has told us about:

  • Elegant, smooth rounded edges and form like the iPhone 6 and 6s.
  • Same color options as the 6s line: silver, space gray, gold, and rose gold.
  • Same 8-megapixel rear camera and 1.2-megapixel front camera as the iPhone 6.
  • Support for larger panoramas and autofocus for video recording.
  • Barometer for tracking elevation in the Health app.
  • An NFC chip for Apple Pay.
  • The A8 and M8 chips from the iPhone 6, or possibly the A9 with integrated M9 from the 6s.
  • Bluetooth 4.2, VoLTE, and 802.11ac Wi-Fi chips.
  • Live Photos
  • Always on Siri

What would iPhone 5se pricing look like?

The iPhone 5se could just be a refresh of the iPhone 5s with the smooth-rounded design of the iPhone 6 and 6s, but priced at $450. Right now, Apple sells the best iPhone, the 6s, for $650; the one-year-old iPhone 6 for $550; and the two-year-old iPhone 5s for $450. An iPhone 5s refresh would position the new phone as the value-priced bottom end.

The reported 5se features are identical to last year's iPhone 6, except for its size. Repackaging the iPhone 6 into a 4-inch form factor would harmonize the design of the new iPhone with the iPhone 6 and 6s. The iPhone 6 has moved very far down the manufacturing learning curve, so an iPhone 5se could be priced lower than the 5s and remain profitable, making it more competitive against lower-priced Android phones.

The iPhone 5se will also fill the 4-inch screen size gap. For some people, a small screen is a desirable feature. People with smaller hands need a smaller phone for one-handed use. Others prefer a smaller phone that is easier to stow in a pocket or purse.

How pre-owned iPhones could compete with lower-priced Android phones

A newly designed, low-cost iPhone doesn't ring true with Apple's history. Apple experimented and failed with the value-priced iPhone 5c, which its loyal fans seemed to regard as "not really an iPhone."

Apple does, however, need a lower-cost iPhone option to compete with the lower-cost Android phones that are often available at a 40% discount to the iPhone. BMW and Mercedes wouldn't compete with low-cost imports by building a value-priced Chevy.

Instead, Apple could match less-expensive Android alternatives with lower-priced, refurbished iPhone 6s phones that it gets in return from customers who signed up for its new one-year upgrade plan. It could be similar to the BMW or Mercedes certified pre-owned automobile program.

One-year iPhone upgrade plan could be key

The introduction of one-year upgrade program would make this kind of approach work brilliantly. During the first year, the consumer pays $324, half the retail cost of the iPhone 6s. The reconditioned returns could be resold for $450, $200 less than the newest iPhone.

Apple will effortlessly sell millions units of the iPhone 7, when it eventually releases it, to customers who have signed up for it sight unseen, through the one-year upgrade plan. Apple will simply notify them to roll-over to another two-year installment-purchase agreement and renew the one-year upgrade option, giving them the choice of shipment or pick-up at an Apple store.

Why Apple may announce a full-priced iPhone 6se in March

A couple of small tweaks to the features that 9to5Mac reported paints an entirely different picture, though.

If Apple designed the iPhone 5se with an A9 processor, a fingerprint sensor, the 12-megapixel 1.22µ pixel camera, and 3D Touch (all from the iPhone 6s), it could offer the new, 4-inch phone that it could sell at full-price. It might more aptly be called the iPhone 6se instead of 5se.

Introducing an entry-level, low-priced phone cuts across Apple's grain. The real need for an entry-level iPhone will be met with discounted new production of older models and certified pre-owned iPhones.

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