On Monday, Apple (AAPL) proved that to dazzle consumers, bigger is not always better.
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At an event in Cupertino, Calif. on Monday, the tech giant unveiled a slew of new product offerings including a much-anticipated smaller version of its popular iPhone. The device, called iPhone SE, features a four-inch screen, comes equipped with a 12 megapixel camera, new image signal processor, and is 50% faster than the similarly-sized iPhone 5s.
Angelo Zino of S&P Global Market Intelligence said the new product is seen as a way for the company to continue to move into lower-cost emerging regions where the company has smaller market share to that of its competitors.
“Given the saturation and slowing growth within the smartphone space and Apple’s already dominant position in the high-end market, we believe expanding its offerings to capitalize in higher-growth regions will help support iPhone unit growth over the next 12-18 months,” he explained.
Further, Zino said he does not expect sales of the smaller device to cannibalize sales or price points of Apple’s larger-screen gadgets sold in the U.S. and Europe. The new iPhone SE will be offered in two sizes and prices: A 16 gigabyte (GB) version will retail for $399, while a larger-capacity 64 GB version will sell for $499.
“Apple’s current price point for the iPhone 6S and legacy iPhone 6, coupled with the strengthening U.S. dollar over the past 18 months have just made its products too expensive to realistically compete in markets like India,” Zino said. “We expect Apple’s lower-priced devices to be high-end offerings in emerging regions.”
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Zino also said with the new, smaller and cheaper device, Apple is likely also attempting to tip the scales in its favor as more consumers make the switch to Apple from Android.
Still, even if consumer response to the iPhone SE is positive, the odds the company will rollout smaller versions of its other popular products is unlikely.
“Historically, Apple’s spiel has been manufacturing or developing the best product and not having the greatest market share. It’s interesting because with this announcement, you almost think they’re attempting to gain share. But I doubt they’ll be looking to go further down on the pricing scale and get aggressive on the low-end of the market…it doesn’t jive with what they’ve said in the past,” Zino said.
Alongside the new iPhone, Apple also took the wraps off a new iPad Pro with a 9.7-inch screen. The device, according to the company, will feature a 25% brighter screen that is also Apple’s least-reflective. The new iPad weighs in at less than one pound and has an entry price point of $599 for a 32-GB version. The 128 GB model will sell for $749, while a brand new 256 GB version will be available for $899.
The company’s Apple Watch also made headlines at the start of the Monday event. The wearable device saw a price cut from $349 to a starting price of $299. Apple CEO Tim Cook said nearly one-third of all Apple Watch wearers regularly swap out their bands, and because of that, the company unveiled new options for customers including a space black Milanese loop, a new sport band, and a woven nylon option.
Cook also took the opportunity to briefly discuss the controversy between Apple and the FBI over data encryption. He said America needs to collectively “decide how much power the government should have over our privacy,” and expressed gratitude for support the company has received.
“We believe strongly that we have a responsibility to protect your data. We will not shrink from this responsibility,” he said.
Cook told FOX Business Network’s Jo Ling Kent he was “optimistic” ahead of Tuesday’s federal court appearance in which both Apple and the FBI will participate in a hearing that could advance a months-long debate over encryption. Following the December San Bernardino terrorist attack, the FBI requested assistance from Apple to hack into an iPhone used by one of the shooters. Apple has said it will not comply with the request, citing privacy concerns.
Shares of Apple bounced along the flat line following the Monday product unveiling. Ahead of the event, the company’s stock price was up 0.55%.