Apple says farewell to low-tier iPhones
Apple last week announced its much-anticipated affordable iPhone, the 16e. The new iPhone 16e features a design similar to the iPhone 14 boasting a 6.1-inch Super Retina XDR OLED display, but adds a customizable Action Button and a USB-C port for universal charging. Powered by Apple’s latest A18 chip, which also powers the iPhone 16, the new 16e is Apple’s first iPhone featuring the in-house C1 modem offering enhanced battery life. Thanks to the new A18 chipset, the mid-tier phone also supports the Apple Intelligence features such as generative custom emojis and advanced photo/video editing. The new phone has a main 48-megapixel single telephoto lens camera and a smaller 12-megapixel front camera for selfies. Priced at $599, the iPhone 16e replaces the SE series as Apple’s new “affordable” segment iPhone.
The Circana Take:
- Apple's unveiling of the 16e marks a significant shift in its iPhone product mix as the phone’s rich feature set and price tag sets it apart from the low-tier SE series designed to attract the Apple brand aspirers in lower income segments. Apple is getting a lot of criticism for the $170 price hike from the 2022 SE model, but the market positioning of the iPhone 16e is entirely different than the low-tier SE series. Apple will continue to serve the low-tier market with its N-3 and N-4 generation iPhones, which will continue to be extremely popular when subsidized by prepaid carriers.
- The new iPhone 16e’s in-house cellular modem is worthy of mention as Apple has been working on its modem silicon since the acquisition of Intel’s modem business (and all intellectual property) for $1 billion back in 2019. The company has since been working to design its own modems to cut ties with the silicon giant Qualcomm, which powers the latest generation of iPhones. Apple claims that the performance of the in-house modem coupled by the additional real estate creating space for a larger battery allows the 16e to provide up to 20% improvement on battery performance over the newly released iPhone 16. The C1 modem’s commercial test performance on the 16e will scale Apple’s efforts to integrate the in-house modems to all upcoming iPhones going forward.
- The $599 tag on the new iPhone 16e should foster U.S. postpaid carriers to rethink about their stance on subsidies in the form of trade-in discounts. All carriers have been offering unrealistically high amounts of rebates to convince users upgrade to a new iPhone (and upgrade to a higher plan to qualify for the discounts). The new iPhone 16e will be a strong option to convince customers using an older generation iPhone (especially those customers with non-5G iPhones) upgrade to a new model without the harsh upgrade requirements.
- The new 16e’s impressive feature set including the Apple Intelligence support and relatively affordable price tag will cannibalize the iPhone 16 as the 16e’s camera deficiencies are offset by the longer battery life (which is a top driver for upgrades). The phone’s 48-megapixel single-lens camera can be considered mediocre even in the mid-tier segment, but users upgrading from an iPhone XR, 11 or 12 will be highly pleased with the imaging performance. Users looking for enhanced imaging capabilities will continue to favor the Pro versions, which happen to outperform the regular iPhone thanks to carriers’ strong subsidies.