Apple chose its screen sizes wisely, but its launch of a premium 4-inch iPhoneand a downsized iPad Pro must be followed by bolder moves to turn around lagging iPhone growth and declining iPad sales, analysts said.
Apple yesterday unveiled the 4-inch iPhone SE and 9.7-inch iPad Pro along with reduced prices on the Apple Watch.
The iPhone SE taps an underserved segment by offering a premium smartphone with the latest technology in a small screen size, analysts said. That niche has been abandoned by other smartphone makers who pack their lower-priced smartphones with lesser capabilities, they pointed out.
Twenty percent of consumers prefer a 4-inch phone, a December survey by Piper Jaffray found.
Apple will also expand its addressable smartphone base by hitting a new iPhone opening-price point of $400, down from $450 on the older, to-be-discontinued 4-inch iPhone 5s.
For its part, the launch of the 9.7-inch iPad Pro complements the six-month-old 12.9-inch Pro and brings Pro capabilities into the mainstream 9.7-inch size. That lets Apple tap into demand for a mainstream-size tablet and provides a chance to push tablets deeper into the corporate segment, analysts said. The launch also acknowledges the popularity of the two-in-one tablet with detachable (though optional) keyboard, they add.
Eventually, however, Apple will have to offer a 2-in-1 Macbook laptop that runs Apple’s full Mac OS computer OS, as Windows 2-in-1 tablets run the full Windows 10 OS, said Frost & Sullivan analyst Todd Day. “Eventually, with the continued advancement of processing power and device capabilities, the Apple product library will start to integrate cross-platform applications and capabilities,” he said. “However, over the next several years, the product applications will vary between tablet (iOS) and Macbook (Mac OS).”
Here’s what a variety of analysts had to say about the introductions:
Ian Fogg, IHS: “Apple has a significant opportunity with the new smaller screen iPhone SE because the majority of iPhone models in active use are models with small screens. Of iPhone models in active use, 29 percent are iPhone 5 models with 4-inch screens, and 23 percent are even older iPhone models with screens sized just 3 1/2 inches.
“With the iPhone SE, Apple is choosing to aim at an underserved segment of consumers that prefer small screen smartphones and have been reluctant to upgrade. Importantly, Apple’s competitors have chosen not to target the premium compact smartphone market.
“The iPhone SE increases the differentiation of the iPhone portfolio from Samsung, LG and other Android smartphone makers because it offers high-end smartphone experience and camera in a compact design. By contrast, all of the leading Android smartphone makers choose to pair their compact smartphone designs with slower processors, slower LTE network support and lower performing cameras.
“The sole Android smartphone maker to persist with premium compact designs, Sony, has moved away from this approach with its just announced X series model because all three upcoming models offer a relatively large five-inch screen…
“iPhone SE is not about offering a cheaper iPhone. Instead, Apple benefits from placing its latest technologies in more consumers hands, including those who prefer a small smartphone. These buyers will now enjoy Apple Pay, access to the very best latest apps and games, and so will increase the addressable market for Apple’s partners and drive Apple’s ecosystem forward. But in one area Apple has saved costs, by including only category 4 LTE support, rather than the faster category 6 in the iPhone 6S, or the category 9 in some of the latest competitor flagship models….
“Apple must make bolder moves to boost the iPhone business.As a result, IHS continues to expect iPhone shipments to decline in 2016 by 7 percent year on year….
“Like all smartphone makers, Apple must find ways to trigger all current smartphone owners to upgrade from their ‘good enough’ existing smartphones. The iPhone SE will help to do this for a part of the installed base, but Apple needs bigger bolder ideas to drive a significant uplift in iPhone shipments and accelerate the upgrade cycle.”
Neil Mawston, Strategy Analytics: “The iPhone SE is an evolution, not revolution, for Apple. The iPhone SE will help Apple to grow slightly this year, and bridge the gap until the next ‘iPhone 7’ launch in H2 2016, but it is not a revenue blockbuster for the company.
“The iPhone SE formalizes and replaces the legacy iPhone 5 to 6 models with 4-inch screens that have been selling globally already for the past several years. This is a shrewd move by Apple. Apple is repackaging prior smartphone models and engines at new price-points.
“The iPhone SE will certainly help Apple to penetrate deeper into emerging markets, like India, China and Indonesia.”
As for the 9.7-inch iPad Pro, “Apple is shifting the iPad Pro to cheaper price-points and new screen sizes to try and reignite growth in its tablet division and fend off rising competition from Windows.
“A smaller, cheaper iPad Pro gives Apple a new product to sell in the valuable enterprise segment. A smaller, cheaper iPad Pro gives Apple a chance to push tablets deeper into the midrange corporate segment…
“Apple iPad Pro 9.7 is addressing the high-growth 2-in-1 tablet market that has been popularized by Microsoft Surface 3 and others. The global 2-in-1 tablet segment is growing relatively fast, and Apple cannot afford to ignore it.”
Todd Day, Frost & Sullivan: “The new iPhone should help boost sales for Apple. Since the announcement of the original iPhone in 2007, Apple’s iPhone sales numbers have spiked after each release of new iPhone models.”
Thomas Husson, Forrester Research: “Not all consumers favor phablets and larger screens, which have been particularly popular in Asia, and there is still demand for smaller devices. It’s time to progressively phase out the iPhone 5s and, given slower growth in the high-end smartphone segment, to launch a more affordable device…
“The new compact iPhone with the powerful features of the iPhone 6 at a more affordable price should help Apple hit volume goals until the release of a more disruptive new device a couple of months after its developer conference…
“[The announcements] demonstrate Apple’s ability to successfully manage its product portfolio. The reason why so many brands will continue to invest in Apple’s ecosystem to engage its customers is because Apple will continue to offer reach among most mobile-savvy consumers while staying far away from Android’s fragmentation. The key stat shared [at Apple’s launch event] is the fact that 90 percent of Apple devices run with iOS9.”
Frank Gillett, Forrester: “Apple will cut and paste much of the technology from the iPad Pro to the now mid-sized iPad. Even though unit sales have declined, the iPad will not fade away because many buyers of early iPads will likely start replacing them, causing tablet and iPad sales to stabilize.”