Apple's New iPhone SE Strengthens Its Mid-Range Position as Consumer Spending Slumps

The new iPhone SE has much in common with the now-discontinued iPhone 8. But it also has a faster processor and a better camera experience than the iPhone 8, along with a starting price that's $50 lower.
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Apple  (AAPL) - Get Report is shoring up the low end of its iPhone lineup at a time when a lot of consumers are likely more price-sensitive than they were a few months ago.

On Wednesday, following a slew of reports indicating a new low-cost iPhone was on the way, Apple unveiled a second-gen, 4.7-inch, iPhone SE. 64GB models will sell for $399 when pre-orders start on Friday, while 128GB and 256GB models will go for $449 and $549, respectively.

Simultaneously, Apple is discontinuing the 4.7-inch iPhone 8 and 5.5-inch iPhone 8 Plus, which launched in 2017 and (following price cuts) had starting prices of $449 and $549, respectively. The original SE, which had a 4-inch display and was launched four years ago, was discontinued in Sep. 2018.

In many respects, the new iPhone SE has a lot in common with the standard iPhone 8. In addition to having the same display size, the phones have similar designs/builds, use LCD display panels, sport Touch ID fingerprint sensors rather than Face ID systems and have a single, 12-megapixel, rear camera and a 7-megapixel front camera.

But there's one key hardware difference between the phones: Whereas the iPhone 8 is powered by Apple’s A11 Bionic system-on-chip (SoC), the new iPhone SE runs on the A13 Bionic SoC found inside Apple’s 2019 iPhones. It also supports higher 4G download speeds and packs a Wi-Fi 6 radio.

Also, though their camera sensors have much in common, the new SE should offer a better camera experience, thanks to its ability to leverage the A13’s image processor and the software/machine learning advances Apple has delivered over the last two years. Among other things, the new iPhone SE supports Apple’s Portrait Mode and Portrait Lighting features, as well as its Smart HDR technology for boosting a photo’s dynamic range.

The second-gen SE is launching amid growing signs that global smartphone demand is falling sharply, as the COVID-19 pandemic takes a heavy toll on both retail activity and discretionary consumer spending. A number of reports have indicated that demand for Samsung’s Galaxy S20 line, which launched in early March and starts at $999, is well below last year's demand for Samsung’s Galaxy S10 line.

Along with weakening smartphone demand, the new iPhone SE will have to contend with competition from mid-range Android devices that sport 6 inch-plus displays and two or more rear cameras. Samsung’s $349 Galaxy A50, which has a 6.4-inch OLED display and three rear cameras, is one popular phone that fits this description.

But for cost-sensitive consumers who are fans of Apple’s broader hardware/software/services ecosystem and can accept (if not prefer) a relatively small display size, the second-gen iPhone SE has an attractive value proposition.

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