An iPhone SE 2 will not stop the decline of the Apple iPhone

Apple's iPhone revenues declined in another quarter according to the latest business results, which means that revenues are falling.

This is not surprising: the sluggish performance in China and the global slowdown in the smartphone market complicate Apple 's task enormously, at a time when spending on the purchase of smartphones is taking place. a new phone are considered with more attention than ever before.

People keep their smartphones longer because they are still performing well – they were not cheap when they were bought a few years ago and the high end features are still performing well.

This means that Tim Cook and co. will probably scratch his head, wondering how to turn the tide. Could the answer be the iPhone SE 2, so prevalent and supported by fans?

Cook said in his April 30 media call that the decline in revenues had slowed somewhat towards the end of the quarter as a result of lower iPhone prices in some markets. A reduction in the price of the iPhone XR in China has resulted in a sales increase of 20 million. he still has a significant trade deficit in the region.

So, could new cheaper handsets be the solution to revive the business of Apple handsets?

To date, Apple has refused to place itself under the premium category of the smartphone market and, although the iPhone XR is more affordable than the iPhone XS and the iPhone XS Max, its price remains high, which keeps it out of reach for many people.

However, before you feel embarrassed by the prospect of a new mid-range and compact iPhone SE 2, realize that this is very unlikely to happen.

There is an image to defend

Apple has built its reputation on producing high-end products and gives consumers the confidence they need to buy because they know that they will have a high-end device.

Francisco Jeronimo, associate vice president of IDC for Devices, told us "by launching a mid-range handset [such as an iPhone SE 2] It would be good for the short term interest, but it will not help the brand in the long run because the image of Apple is premium … it is better to sell devices at a reduced price older and refurbished as this keeps the group of Apple at a high level. "

Apple is one of the few manufacturers to be able to integrate refurbished devices into a successful business model, as iPhones generally retain their value because of their exclusive high-end existence.

That's why Apple offers its recovery service. Jeronimo thinks that he will continue to put pressure, because it not only offers a way for customers to upgrade the latest phone earlier by reducing the initial costs of the new device, but also Apple makes a second margin on an old phone by repairing and reselling it.

To buy a new smartphone, it is essential that the old model does not work as well or that the latest device is so attractive that it is impossible to upgrade it.

As the first point is less common and the latter is becoming more difficult to offer from all major brands, it is a difficult turning point for Apple.

So, to compensate for this, every time Apple launches a new iPhone series, it reduces the price of the previous generation, placing handsets at a more average price, rather than producing dedicated devices at the price that should way , compromise on the premium aesthetics of Apple.

So, even if you choose to buy a "cheaper" iPhone, you will still have a handset that once stood at the top of the pile.

Apple still sells the iPhone 7 and 7 Plus – launched as flagship products in 2016 – through its website, and at a cost less than half that of the new iPhone XS and XS Max, they provide a Clear entry to point to the ecosystem for the narrower users. budgets.

The recovery is offered on all iPhones currently sold, which also allows you to reduce the cost of cheaper and older handsets.

The 5G solution and services

Jeronimo told TechRadar that he sees short- and long-term solutions to enable the company to convert its growth into growth, without having to launch a midrange phone.

According to him, some of the short – term action is the recovery service offered by Apple, but that 's what is available on your iPhone, which saves a lot of money quickly.

That's why the brand even hosted a standalone event for the first time in its history earlier this year, with the goal of unveiling non-hardware products, such as Apple News Plus, Apple TV Plus and Apple Arcade.

Service revenues now account for nearly 50% of iPhone revenue, growing significantly with Apple Music, Apple Pay, and the App Store, and new additions will only strengthen that momentum.

By forcing more and more iPhone users to subscribe to these services, Apple will no longer have to worry about pushing consumers to switch to the latest iPhone, as they will be able to generate substantial revenue from these services, regardless of their model. in the hand of a person.

As Jeronimo says, this is 5G, which could be another important driver of iPhone revenue.

"The 5G will have an impact on the motivation to replace your phone, but it will not happen this year because it will cost a lot and the [network] the coverage will not be so high.

This is something that Cook has hinted at at the recent earnings conference. When he was asked about the addition of the 5G to the iPhone, he mentioned the high cost of the components, and was considering adding a new technology only.

"The 5G will have a strong impact [on the upgrade market] when consumers who bought an iPhone in 2018/2019/2020 are ready to upgrade to the next version [to a 5G phone] in 3-5 years, "added Jeronimo.

If rumors suggest that we will not have iPhone 5G before 2020 or 2021 at the earliest, Apple will not withdraw any short-term gain from the fifth-generation network, but at least by the time an iPhone 5G emerges , the networks will be more mature. and the services offered are more robust, which means that the Cupertino brand is likely to resist until the improved connection offers real material benefits.

It remains to be seen if the combination of upgrades, renovations and a buffet of services will recover lost income from Apple. It will still take a few years for the real impact of these models to be fully taken into account, but for the moment Apple fans should cry the iPhone SE 2: this affordable, compact and modern iPhone, who has never been.