Apple CEO Tim Cook stands next Sofia Leyva at the Fifth Avenue Apple Store (Photo by Alexi … [+]
This week, we should see the launch of the new iPhone SE. As Apple returns to the mid-range market for the first time since 2022, what impact will the smallest and cheapest iPhone have on the rapidly changing smartphone world?
Why The iPhone SE Must Change Apple
First of all, the iPhone SE needs to change the iPhone. Apple saw its global market share in the smartphone market fall by five percent in the last quarter of 2024. Given this is directly after the launch of the iPhone 16 family, Tim Cook and his team will have been expecting more from the first iPhones designed for Apple Intelligence.
The iPhone SE is a chance for Apple to boost sales across the iPhone range in 2025. It is a mid-range handset with a brand reputation that focuses on matching the power of the leading iPhone line but at a cheaper price. That makes the iPhone SE an attractive starting point for someone joining the ecosystem or looking to bring a relative into Apple’s world. While the iPhone SE may not be as big a seller as the main line, as the first new iPhone in the mid-range since 2022 it can bring a new demographic to the iPhone.
Yet the practical switching costs are high, especially if a user is heavily invested in an app ecosystem or a specific cloud-based service. Android handsets in the expected price range do not have a performance deficit to the main iPhones, let alone the iPhone SE.
If performance is no longer a differentiator, if the price is no longer a deciding factor in the purchase, and the switching costs are too high, Apple will need to change the conversation in the market to move the iPhone SE away from “for the faithful and their friends” to “the first choice of everyone at this price point.”
Why The iPhone SE Can Change The Smartphone Market
The iPhone SE is expected to be priced between $479 and $499 for the entry-level model (depending on Apple’s storage choice). Android has the run of the market that sits in this $450-$550 price range, with Google’s launch of the Pixel 6a in the summer of 2022, a few months after the then-current iPhone SE 2022 model, leading the charge.
The competitive nature of the space has seen significant advances in all areas. Many handsets come with flagship-leading chipsets, multi-lens cameras, fast refreshing displays, long battery life, and the latest software advances. Yet every Android manufacturer follows the same path. Where is the disruptor that can stand up and say there is a different way of thinking about this price point?
That would be the iPhone SE.
Putting the numbers in a straight head-to-head with the Android competition, the iPhone SE will lose in each category. Yet Apple has rarely sold any of its hardware purely on price or value for money. It has offered something different, be it in a philosophical approach to design, practical choices over connectivity, and fanatically addressing security concerns.
Android manufacturers cannot ignore Apple’s decisions with the iPhone SE hardware. With the tight integration of iOS and the hardware, Apple can offer more stability to end users with an extended support window. The iOS user interface remains stripped back, with almost no options to customise away from Apple’s solitary vision. And Apple’s fanatical and public focus on security can change the conversation in ways no other manufacturer can.
The iPhone SE will get a lot of attention over the next few months because it is the latest iPhone and due to every mid-range Android smartphone needing to be compared to something different… which will be the iPhone SE. The name and capability recognition of the SE is going to be significant.
How the likes of Google, Samsung, Honor, OnePlus and others address these differences will change the market. Whether it consolidates around Android’s view or Apple’s view remains to be seen.
How The iPhone SE Can Change Artificial Intelligence
AI techniques have been used across the smartphone and mobile computing market for decades. The introduction of generative AI techniques to process large data sets to effect change in the user experience is a fundamental change in what a smartphone can deliver. Since Google launched the Pixel 8 series as the first AI smartphones in 2023, there have been rapid advances in the quality of options available for consumers and the quantity of software choices on offer.
Can Apple step into the market and impose its view on how things should be done?
It is perhaps too late for a wholesale change to happen in the market. Apple is late to this market, only announcing its plans in June 2024 at its Worldwide Developer Conference. The awkwardly backronymed Apple intelligence debuted one month after the launch of the iPhone 16, and the first generation software suite is not expected to be complete until the launch of iOS 18.4 in late March 2024.
The majority of Android manufacturers are rolling out completed second-generation AI software on their latest smartphones. Apple is late to the party with an inferior product. So, how can Apple use both the iPhone SE and Apple Intelligence to impact the direction of generative AI?
Apple’s approach to AI makes a fundamentally different choice to Android, prioritising local processing data. Android has a broader remit driven by the capability of cloud-based servers for more intense calculations and a wider range of apps and services. It will be easier for Apple to change track and expand into the cloud if needed in the future. Still, if the conversation can be driven to focus on personal data not leaving a phone, the Android manufacturers will need to consider making similar choices around local processing.
Apple must also decide if staying with a smaller on-device only approach will leave it behind. Currently, there are areas where Apple has ceded the functionality to OpenAI’s ChatGPT service (and by endorsing ChatGPT, it gives OpenAI a clear victory against other AI providers, solidifying its place in the market).
As generative AI’s scope and power increase, smartphones will need to improve their capability to deliver. Yet the iPhone SE—assuming it follows previous models—will likely stay on sale for many years without any hardware upgrades. As AI expands, Apple may find that the most significant impact of the iPhone SE will be on itself. As the specs are superseded, Apple may be forced to move more in-demand AI features into the cloud to allow its mid-range phone to stay relevant.
The Impact Of The iPhone SE
The iPhone SE is a series of small steps that may not add up to much individually. But small steps can take Apple great distances. Apple will be hoping that it can bring the market closer to Apple’s ideals and, in turn, bring more customers to Apple over the next few years. There is also a danger that pushing to make the iPhone SE relevant over the next few years could drag Apple closer to the current market and weaken its unique offering.
The iPhone SE is going to change the smartphone market. The question is in which direction?
Now read about the three new features that will help the iPhone SE stand out to consumers…
