Tuesday, May 17, 2022

Apple has reportedly already cut production plans for iPhone SE by 20 percent

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While luxury electronics like the PS5 and graphics cards are still sold out left and right, the demand for easier-to-make budget offerings may not be as great. According to a report of Nikkei AsiaApple will make 20 percent fewer iPhone SEs than originally planned in the next quarter and 10 million fewer AirPods for all of 2022. Noted analyst Ming-Chi Kuo specific numbers specified in his note on SE demand, in which he says he expects Apple to ship 15 to 20 million SEs by 2022, as opposed to his previous estimate of 25-30 million (that’s somewhere between a 22 and 66 drop). percent for the year).

The reports do not point to supply chain problems or chip shortages, which have plagued much of the electronics industry, as a reason for Apple to roll back its production plans. Instead, they cite lower-than-expected demand for Apple’s latest budget phone.

There are many factors that can make people less interested in the iPhone SE. Nikkei mentions the fear of the war in Ukraine and inflation, while CNBC mentions COVID lockdowns in China, making it physically more difficult for consumers there to get a new phone. And speaking from personal experience, people who buy iPhone SEs aren’t necessarily the type to run out and upgrade as soon as a new model is available. They may also be significantly less likely to do this when gas is somewhere between $4 and $6 a gallon.

The phone itself also costs more – the new-gen SE costs $30 more than the previous one, ostensibly thanks to 5G. That cuts the cost between, say, an iPhone 12 or 13 Mini (and the Mini lineup is already what the iPhone SE should be).

Sure, looking at the retail price, the Mini is considerably more expensive, but the monthly prices are a bit of a different story. At Verizon, the SE costs $11.94 per month for the 64GB model. You can get a 64GB iPhone 12 Mini for $16.66 per month or a 128GB iPhone 13 Mini for $19.44 per month. That price difference will matter to some, but there are also probably plenty of people who think, “What the heck, it’s only $5 a month extra.” And more budget-conscious consumers may see the higher price and decide to stick with what they have for a few more months.

All this means that this does not automatically mean that the new SE is a flop. Still, 20 percent is a big drop in production and could help set the benchmark for SE sales over the phone’s (probably multi-year) lifecycle. And while it’s too early to say what this might mean for future generations of the SE, that discussion is probably already underway within Apple – if I’m hopeful, a lukewarm reception may prompt the company to adopt a Mini/Max approach to try for the next SE.


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