I keep hearing a lot of chatter that Apple’s new 4” iPhone SE won’t be updated on an annual basis like the flagship iPhones. From a financial perspective that doesn’t make any sense to me.
It’s true that upgrading components in products takes additional investment and usually adds significant cost. So Apple likes to keep components in production for as long as they can in order to recoup their investment. However, the iPhone SE is a parts bin phone that probably doesn’t trigger any significant additional investment. I don’t see why they couldn’t upgrade their SoC and camera next year, or every year, at relatively no impact to it’s gross margins. The flagship iPhone is already paying the bill for the fancy new components.
All component upgrades have a cost/benefit ratio that is measured by the financial analysts. Not only would putting in the latest camera and SoC from the flagship iPhone every year boost sales of the SE, it would also make the component cost cheaper for the flagship iPhone by spreading tooling costs over larger volume. It’s a win-win scenario for both product lines.
And what further makes me think that the iPhone SE will be upgraded every year is that it spreads iPhone sales to the typically seasonally low April – August months. If I worked for Tim Cook I’d be actively creating presentations showing that the benefits of updating the SE clearly out weigh the costs.
Companies hate seasonality. Anything you can do to normalize volume over the course of the year is worth it’s weight in gold. Laying off workers and training new workers is a pain in the butt. Getting your logistics providers to allocate massive capacity for you only a few months out of the year is much more expensive that being able to operate on a steady schedule. And on and on I could go. The iPhone SE isn’t going to be the cure-all for iPhone seasonality but the timing of a spring launch is perfect for offsetting the usual lull. Also, any manufacturing kinks for new components will have long been ironed out by now.
If I was a betting man, I’d lay money that the 2017 iPhone SE will see at least the latest camera and SoC. Probably 3D Touch as well. Getting the 4” crowd to start upgrading their iPhones on an annual basis with relatively little investment makes all the sense in the world.
All component upgrades have a cost/benefit ratio that is measured by the financial analysts. Not only would putting in the latest camera and SoC from the flagship iPhone every year boost sales of the SE, it would also make the component cost cheaper for the flagship iPhone by spreading tooling costs over larger volume. It’s a win-win scenario for both product lines.
And what further makes me think that the iPhone SE will be upgraded every year is that it spreads iPhone sales to the typically seasonally low April – August months. If I worked for Tim Cook I’d be actively creating presentations showing that the benefits of updating the SE clearly out weigh the costs.
Companies hate seasonality. Anything you can do to normalize volume over the course of the year is worth it’s weight in gold. Laying off workers and training new workers is a pain in the butt. Getting your logistics providers to allocate massive capacity for you only a few months out of the year is much more expensive that being able to operate on a steady schedule. And on and on I could go. The iPhone SE isn’t going to be the cure-all for iPhone seasonality but the timing of a spring launch is perfect for offsetting the usual lull. Also, any manufacturing kinks for new components will have long been ironed out by now.
If I was a betting man, I’d lay money that the 2017 iPhone SE will see at least the latest camera and SoC. Probably 3D Touch as well. Getting the 4” crowd to start upgrading their iPhones on an annual basis with relatively little investment makes all the sense in the world.
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