Will the New iPhone Attract First-Time Users?
Analyzing the Latest News, Updates, and Trends Impacting Apple
Apple competes in the $400 segment
Technology giant Apple (AAPL) is competing in the $400 smartphone range for the first time ever with the launch of its most affordable new iPhone model—the iPhone SE . The iPhone is priced at $399 for an entry level 16 GB (gigabyte) model. According to Wall Street analysts, the new iPhone could result in 17 million additional sales in 2016 alone.
According to J.P. Morgan (JPM) analyst Rod Hall, the smartphones in the $400–$450 price range generated 43 million total sales in 2015 with an average selling price of $426. As stated earlier, this is the first time Apple is competing in this market. Hall also stated that Apple could make a “splash” resulting in incremental sales.
Can Apple successfully penetrate the market?
Apple has been competing in the $450 and above price range where the iPhone has a 65% unit share. Hall estimates that Apple can easily take 40% of the $400–$450 smartphone market with the iPhone SE.
Apple is also offering a 64GB version of the iPhone SE priced at $499. The iPhone SE is ~$250 less than the iPhone 6s. A customer can also opt for “carrier financing” the device starting at $13.3 per month. As a result, it’s possible that Apple will attract first-time iPhone users with the help of the iPhone SE.
Apple accounts for 15.8% of the Technology Select Sector SPDR Fund (XLK). The other top holdings of the fund include Microsoft (MSFT) with 10%, Facebook (FB) with 5.6%, and Google (GOOG) with 5.1%.
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