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Apple's small iPhone strategy aims to reclaim stuck customers

Gregg Keizer | March 22, 2016
Will expand portfolio with new 4-in. iPhone to boost sales during traditionally slow stretch.

The iPhone 5, for instance, lacked a Touch ID fingerprint scanner, and so is ineligible for Apple Pay.

Apple's timing was also an object of discussion by the analysts.

If Apple does trot out a smaller iPhone today -- most rumors have pegged its moniker as "5SE," a nod in nomenclature to 1987's Macintosh SE -- it will be departing from its usual summer or fall new iPhone launch windows. Since 2012 and the iPhone 5, Apple has kicked off that year's models in September; prior to that it was October (2011), July (2008) or June (2007 and 2010).

So why now?

Apple's Q2 and Q3 sales "are typically off by about a third from sales in Q4 and about 25% from sales in Q1, so boosting sales in this quarter would help even out the seasonal variability," said Jan Dawson, principal analyst at Jackdaw Research, in analysis published March 10 on Tech.pinions.

By adding a new iPhone to the lineup card now, Dawson argued, Apple creates an opportunity to boost sales during its traditionally slow stretches, when the initial shine has worn off the latest models.

"The off-cycle is becoming more and more critical to them. Apple wants to spread sales throughout the year," agreed Milanesi, pointing to the sales bulge in a new iPhone's first six months.

A March debut also avoids the mistake made with the iPhone 5C, the plastic-cased smartphone that launched in September 2013 alongside the iPhone 5S. The 5C was almost a marketing afterthought, with any buzz for it swamped by the hype over that year's new flagship. Apple learned from that, and so gave this new, smaller device its own time in the limelight.

If Apple debuted the iPhone 5SE in September, as has been its practice, "it would get buried in the noise" by the next flagship, the iPhone 7, said O'Donnell.

"I suspect the reason [why Apple is launching a new iPhone now] is the 5C sold well during just this time of year, when sales of the flagships were down," said Dawson, asserting that the iPhone 5SE fills that role this year. "If that's part of the intent, then why not launch it into this window, when it can gain the most attention and feel new and different, rather than getting overshadowed by brand-new top-of-the-line phones?"

Apple will live-stream its presentation today starting at 10 a.m. PT (1 p.m. ET), from its website. Users can view the event from an iPhone, iPad, or iPod Touch; a Mac running OS X 10.8.5 or later; a Windows 10 PC with Microsoft Edge; or a second-, third- or fourth-generation Apple TV.


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