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Opinion: Why Apple’s releasing an iPhone 5se, not a 4-inch iPhone 7

IPhone-lineup-2016

Holdouts awaiting a modern 4-inch iPhone have a lot to look forward to with the expected iPhone 5se next month. A mix of iPhone 6 and iPhone 6s technology in a one-hand friendly, iPhone 5-sized case.

It sounds compelling enough that I’ve already considered parting ways with my giant iPhone 6s Plus megaphone and returning to the days of easily pocketable iPhones next month. But based on what we know now, the “upgrade/downgrade” depending on how you look at it would mean losing 3D Touch and a 128GB storage option. That’s not a huge deal for me, especially with Live Photos as an expected feature, but dropping from the 6s cameras back to the 6 cameras really sours the deal for me.

While 4-inch iPhone fans will likely be plenty happy with the iPhone 5se next month and the mid-cycle release is an interesting new strategy, a 4-inch iPhone 7 released in the fall alongside the expected 4.7-inch and 5.5-inch upgrades with comparable specs would simplify the buying decision for me. Here’s why I don’t think that will happen anytime soon (and how Apple could pull it off).

It’s all about average selling price, and Apple has found itself cornered.

For years now, iPhones have sold with similar pricing structures. Without factoring in contract subsidies and financing plans, $649 gets you the base model flagship iPhone, spend $100 more to increase your storage or another $100 to increase it further.

Apple had this pricing structure in place for the 3.5-inch iPhone 4 series, maintained it for the 4-inch iPhone 5 series, and kept it again for the 4.7-inch iPhone 6 series. From one generation to the next, Apple increased the screen size without increasing the $649 base price.

That’s the corner Apple created and trapped itself in.

As a way to address the mid-tier smartphone market, Apple’s also offered versions of year-old iPhones for $100 less, so $549 new, and the iPhone 5c demonstrated this same technique only using a colorful plastic shell versus a more costly aluminum casing.

iphone-5c

The first major shakeup to Apple’s strategy in recent years came with the iPhone 6 Plus. Apple introduced two new modern iPhone models at the same time, pricing the larger screened Plus model $100 above the iPhone 6 with the same storage capacity and features (aside from optical image stabilization).

By offering a new, higher-priced base model iPhone, Apple was able to pull off increasing the average selling price of an iPhone which previously required pushing customers to higher capacity models.

Assuming Apple doesn’t part from its pricing structure or display sizes for iPhones, the iPhone 7 will cost $649 for base model storage and the iPhone 7 Plus will cost $749 with the same storage capacity. A truly new 4-inch version of the iPhone 7 would need to cost less than $649, like be priced at $549, and have the side effect of lowing the entry level price for a brand new flagship iPhone.

Maybe Apple could pull it off as a private company, but Wall Street would surely have a fit if Apple intentionally lowered the iPhone’s average selling price. It’s under enough pressure now to combat forecasted year-over-year iPhone sales without growth in the current global economic climate.

iphone-lineup

So the compromise we get is a 4-inch iPhone 5se, not an iPhone 7 mini or iPhone 7 Air (or whatever you’d call a smaller than standard iPhone 7), with a mix of iPhone 6 and iPhone 6s hardware. It’ll be pretty modern to start, but the iPhone 7 will date it further later this year.

Of course if there was a massively huge demand for 4-inch iPhones (and most people stopped buying larger iPhones), Apple could price a 4-inch iPhone 7 at $649, raise the price for the 4.7-inch iPhone 7 up $100, and increase the starting price for the 5.5-inch iPhone 7 another $100 on top of that.

But I imagine this approach would have plenty of side effects. People would be upset that the larger iPhone prices increased while competitors offered larger screens at lower prices. That’s a particularly tricky one.

Another strategy would add further complexity to the iPhone lineup, but I think customers could handle it. Offer both the 4-inch iPhone 7 and 4.7-inch iPhone 7 for $649 each, but only offer the 4-inch version in the increased storage capacity to offset the difference.

For instance (and I’m just pulling these optimistic numbers out of thin air):

  • 4-inch iPhone 7 (64GB) $649
  • 4-inch iPhone 7 (128GB) $749
  • 4.7-inch iPhone 7 (32GB) $649
  • 4.7-inch iPhone 7 (64GB) $749
  • 4.7-inch iPhone 7 (128GB) $849

Add another $100 to each Plus model just like now and you complete the picture.

IPhone_5S_main_camera

Instead, it looks like Apple’s taking an even more complex approach by mixing the iPhone 6 and iPhone 6s hardware into an iPhone 5-sized casing and using a particularly interesting label (5se) that probably has the added benefit for Apple to highlight the newness of the iPhone 7 in the fall.

Don’t pay any attention to the old 5se, this is the year of 7 is my first guess at understanding the marketing approach later this fall. We’ll see next month how most of this plays out.

While I’m pleased to see Apple invest further into the 4-inch iPhone design since it has obvious benefits like one-hand use and being pocket friendly, I do hope for a time in the future where Apple can balance the business needs with customer desire and ship a 4-inch iPhone model with nearly the same specs as the larger iPhones we have now.

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Comments

  1. To much confusion, IMO. They should stick to a 3 device strategy: mini, normal, plus, which would be similar to their iPad convention minus the use of the word “air” and “plus” instead of “pro”

    • uniszuurmond - 8 years ago

      Cannot agree more.

    • r00fus1 - 8 years ago

      Agreed. 5SE invokes shades of the era of the mismanaged Apple decade (87-97).
      I like the product, but why couldn’t they just offer it as the “mini”?

    • dailycardoodle - 8 years ago

      Too

    • Srv Rungta - 8 years ago

      I made an account on 9to5Mac just so that i could agree with your comment, Bruno Fenandes…..THANK YOU!!!!! I have been thinking the same since the days apple released the iphone 5s and 5c….. I mean Apple should keep true to itself…. which is SIMPLICITY!!

      All their products have the ability to be harmonious in nomenclature….
      1. Three Macbooks
      2. Three iPhones
      3. Three iPads
      All named along the lines of mini, normal and plus!

  2. modeyabsolom - 8 years ago

    I still think the name 5se is odd. Just call it 6c (for compact) and be done with it.

    • cdm283813 - 8 years ago

      What is wrong with mini? From what I can tell adding a “C” to the end of the iPhone 5 did not make it a hit. I consider that phone to be the worst idea since the iPhone’s introduction.

    • Branko Maksimović - 8 years ago

      Okay, stop with that 6C crap. Think about it. The high tier model will be the iPhone 7, mid range will be iPhone 6s and entry would be the iPhone 5se. It makes a lot of sense. They would keep the 5se even when 7s comes out, but when iPhone 8 gets its turn, they will introduce iPhone 6se as a new 4 inch model with iPhone 7s SoC that would last another two generations. At that time the product range will look like this – iPhone 8, iPhone 7s, iPhone 6se… And so on. Why not get the fact – based on what is already in effect – that 4 inch model will be upgraded every 2 generations, just like iPod Touch was meant to last 4 years. It might happen with some iPads too…

    • Okay, stop with that 6C crap. Think about it. The high tier model will be the iPhone 7, mid range will be iPhone 6s and entry would be the iPhone 5se. It makes a lot of sense. They would keep the 5se even when 7s comes out, but when iPhone 8 gets its turn, they will introduce iPhone 6se as a new 4 inch model with iPhone 7s SoC that would last another two generations. At that time the product range will look like this – iPhone 8, iPhone 7s, iPhone 6se… And so on. Why not get the fact – based on what is already in effect – that 4 inch model will be upgraded every 2 generations, just like iPod Touch was meant to last 4 years. It might happen with some iPads too…

  3. cdm283813 - 8 years ago

    “Why Apple’s releasing an iPhone 5se, not a 4-inch iPhone 7″

    Because Tim Cook does not know what the fu@k he is doing?

    People want 32GB to be the starting memory option at $649 (which is still too damn expensive in this day and age). Not some gimped 4″ phone. I could understand if the phone had the exact same guts as a 6S/7 but what’s the point? Just man up and get the 4.7″ which is not a large phone compared to what’s out there. I’m seeing soccer moms with 5.5″ iPhones vs my 4.7″ model and I’m a big dude.
    At the bare minimum don’t give the 4” model lower spec’s including the ancient iPhone 5 resolution. You’re just going backwards.

    • Dafty Punk - 8 years ago

      4.7″ is too big.

      • taoprophet420 - 8 years ago

        Plenty of devices with a 4.7″ screen with a footprint close to what the iPhone 5 is.

    • Trent Larson - 8 years ago

      They won’t offer 32GB because Apple wants a hundred more for the 64GB model. They know hardly anyone will buy the 16GB model. I saw that the other day and a girl had just bought a 6S with 16. It only had 6GB left and she had hardly loaded anything on it. She took it right back and got the 64GB model. As long as there is demand Apple will sell their devices with extreme margins.

      • cdm283813 - 8 years ago

        Apple can’t continue to make 16GB the starting option for a flagship every single year. Eventually they will have to give in. Just look at the way they caved in by making the iPhone plus models which is damn near destroying the tablet market.

      • Jassi Sikand - 8 years ago

        Clearly enough people are buying the 16gb version and/or paying for higher tiers to not need to bump up the storage.

  4. Great article. However – to echo the other commentators – the use of the “se” suffix is just terrible.

    As is the continued use of the 5. It creates 2 different levels of fragmentation.

    This should be called the 6 Mini, or the 6 Nano.

    Ideally, letter suffixes describe what is IN the phone. Word suffixes (i.e., Plus, Mini) describe its size. That can be understood by consumers.

    Here, we have words to describe the size of the Plus, and letters to describe the speed of the S models, and the size of the SE. Mixed metaphors.

    I’d say that this kind of miscue is “un-Apple-like”. Except – it’s VERY Apple-like. You just have to back to the Sculley/Amelio years, when every Mac came with 5 different unintelligible suffixes.

  5. just-a-random-dude - 8 years ago

    The growth isn’t sustainable, the iPhone market is starting to experience a longer upgrade cycle like the iPads already reached a year or two ago. The only way you can keep people upgrading is to do something like the Upgrade iPhone Plan or sell cheaper iPhones.

    Prior to iPhone 4/5 generations, a lot of people I know were happy to upgrade because the performance gains were worth it. However, since 4/5, no one I know cares about upgrading their iPhones, as also pointed out by Apple in their last earning calls, 65% did not upgrade from before 6. Frankly, I’m not going to upgrade from iPhone 5S for several years (even if its battery dies, I’d get a battery case to keep it going).

    iPhones have reached the point where it is fast enough for all you need it to do. I’ve played with iPhone 6S and I don’t see any huge jump in anything like performance or usefullness, not enough for 650$. It is not even worth 200$ to upgrade from my iPhone 5S, so I’ll wait until iPhone 5S dies before I’d consider upgrading but I will never ever buy an iPhone again for anything above 400$.

    • Greg Kaplan (@kaplag) - 8 years ago

      well said.

    • Jassi Sikand - 8 years ago

      65% didn’t buy a new phone. That doesn’t mean that they didn’t get a newer version from a family member or something. We don’t have evidence of a longer upgrade cycle.

    • rahhbriley - 8 years ago

      Just a random comment, but don’t go for a battery case when the battery craps out. Batteries are only like $10 on Amazon for a 5s and it’s the easiest thing you can replace in the phone. Like under 5 minutes easy.

  6. Apple will price themselves into extinction. No distortion field can spin that.

  7. rymc02 - 8 years ago

    Apple is quickly approaching their lineup of 1997. There is way too much confusion in models and names and it’s rapidly getting worse. Someone needs to “Steve Jobs” their product line quickly.

  8. DAVID - 8 years ago

    How about we wait until they actually release something before we start caterwauling? My God, more people whining about an imaginary device I have not seen recently.

  9. Eli Matar - 8 years ago

    Hey Zac,
    Will it have 3D Touch (Force touch)?

  10. Joseph Frye - 8 years ago

    Don’t care for any more speculation. Waiting for hard facts once it is released.

  11. dailycardoodle - 8 years ago

    A whole article that misses the names most people are suggesting! No one thinks they’ll call it a 7 mini before the 7 and 7+ are out! The logical name is 6c or 6mini or 6something!

    If it’s curvy and had 6 components released soon (along side the 6 and 6s) it’ll be called 6something

    If it’s a 5s with improved internals it’ll so boring no one will care.

  12. taoprophet420 - 8 years ago

    With carriers switching to installment plans in the US and have ditched the traditional 2 year contract with various lengths of subsidy plans the price of the phones are less important. Apple prices the iPhones close to what the non contract phones of other companies are.

    Zac you lost me on why you are spending so much time listing the prices. Why would it matter what the 4″ phone is called it will still have the same pricing as current structure. The 5s is priced at $450 currently and whatever the 4″ model will be called will probably be $550.

    I for once agree with Gene Muster that that a new 4″ phone makes no sense and what smirked Apple plans on targeting with this. Is it mostly for India? In China and Japan they love the larger iPhones for handwriting since it gives them room ample room to draw characters.Shrink the bezels like many companies have and you get 4.7″ device with a footprint very close to the iPhone 5.

    Why have developers keep supporting 4″ models when Apple can make a smaller 4.7″ device and keep using updated a series chips.

  13. tohaklim - 8 years ago

    Because #$@& you, that’s why, they need those sweet margins. A pity, I was hoping to replace my 5

  14. taoprophet420 - 8 years ago

    Releasing an iPhone with a 5 in the product name makes no sense 6 months before a 7 is coming out. Especially when the said 4″ phone has the body style and guts of the 6 or 6s.

  15. I wonder if it has anything to do with the production of A9 chip
    I mean, Apple want to start preparing for 4s users to move up to the new chips and services, but A9 just doesn’t scale that good (two manufacture + not in Apple TV 4 (It’s lifespan suppose to be more than two years)? You do the math)
    If they don’t do anything, users are going to either go with a 3 years old phone, or one of its competitors in the upcoming upgrade season. (Beside, iPod Touch has more powerful chip than 5s)
    My guess? iPhone 7 mini come with 4″ this September. Everyone who bought 5se got screwed, but Apple Watch and Apple Pay number got high enough.
    (Just like the time when iPad 2 is not retina, so they come up with half ass iPad 3 for 6 months, and screw its users with iPad 4 with AirDrop. )

    • ericisking - 8 years ago

      The main reason that Apple launched an iPad 4 so quickly was in order to get all its products moved to the new Lightning connector. Otherwise, they would have waited. There’s no obvious reason why they would need to do something similar with the 4″ phone, unless they are preparing to make some big change like remove the headphone jack….oh wait.

  16. Eye Mc (@sonofcormac) - 8 years ago

    Theres no way they will stick with that ‘SE’ name, too long and uncool for Apple :) http://www.iphone6tutorial.com

  17. I just bought my first iPhone 5S ($199 Cricket new), and I’m amazed at the number of people commenting to me how they like it better than the (or THEIR) iPhone 6/s/+. I like it ok, but battery life is not what I wanted. Had to scale back. My 4S seemed more energy efficient. So, the 5SE, with newer chip might be (even more) power hungry?

  18. J.Johnson - 8 years ago

    I don’t see why people care so much about a phone they don’t plan on buying. Who cares what it cost or what it’s called if you don’t want it. Everyone is trying to figure out the strategy and compare it with the market and a whole bunch of other mumbo jumbo. For the most part you’re a consumer. But what you like and keep it moving.

  19. RP - 8 years ago

    Love my current 5s. I will upgrade because for me, the less I carry in my pockets the better. So the smaller the better.

  20. Robert Wood - 8 years ago

    Very simple. The 4″ iphone 5SE or 6SE will have mixed internals from iphone 6 and 6S and look like them. Price for base model will be $549. Than in 2017, Apple will update 5SE to 6SE and price will be the same $549. Apple may not ask $649 to pay for 4″ iphone.

  21. mytawalbeh - 8 years ago

    I think they call it “5se” , so you will always remember that iPhone has the specs of iPhone 5s but with a little improvements.
    So that you’ll always think about iPhone 7 in term of Flagship phone.

  22. “but dropping from the 6s cameras back to the 6 cameras really sours the deal for me”? Wait! Only 4 months ago you said something different about the camera: http://9to5mac.com/2015/09/28/iphone-6-diary-camera-test/

  23. ロハン増進 - 8 years ago

    Brace yourself. Scully 2.0 era has begun. Too many models for the same products with lots of confused range. Once, why iphone was iphone? Because it was just one ‘iphone’. If someone says “iphone”, they can imagine everything about its specifications, features, model, range, color etc. It had its own unique identity. But now its about “iphones”. Just like android they have lots of variate of iphones. So, its no more a premium one image branded phone . . Its same with ipad, watch and they started playing with macs as well. Apple is trying so hard to gain market share, make money, grow profit margins and big sales numbers using dirty cheap business tactics. Instead of playing with iphone chain so hard, why dont they start giving iphone with base model 32 GB? It will automatically consider as primary entry level phone with lots of features. Anyhow you are wasting lots money in production of a whole new failure iphone generation(5c). 32GB base model will give immense boost to iphone sales by any class of user. Instead of trying to loot $100 more with current variants and flopped trial of cheaper iphone, why dont you give users what they want! as simple as that. Instead of making a whole new category of affordable iphone, make affordable the current iphones. It will save your whole lots of efforts and production money that they are wasting for a unnecessary category!

    • lkalliance - 8 years ago

      I don’t think this is the case at all. Back in the 1990’s, the problem wasn’t simply “too many models,” it was that there were too many models whose differentiation was unclear. Quadra or Performa? LC or IIci or IIcx or IIsi? The specs on these products were awfully similar…with a slight lean one way or another. The average user at the time wouldn’t be able to evaluate the overall benefit of one vs. the other vs. the next.

      This isn’t the case here: between the rumored 5se, 6S, 6S Plus, 6 and 6 Plus are clear differentiators:

      –Size: the 5se is (will be) 4″, the 6 and 6S are 4.7″, the 6 Plus and 6S Plus are 5.5″.
      –Chip: the 6 and 6 Plus are A8, the 5se, 6S and 6S Plus are A9.
      –Camera: the 5se and 6 have a lesser camera, the 6S has a better camera. The 6 Plus and 6S Plus have OIC.
      –Price: No matter what the 5se price comes in as, it’ll be obvious: “This phone is $100 less than that phone.”

      These are all clear value propositions. “Do I want it bigger or smaller?” “Do I want to spring for the better chip?” “Do I want to spring for the better camera?” “How much am I willing to spend?”

      Back in the day you had to weight processor speed, processor architecture, L1 and L2 cache, bus speed, floating point processor…what are the value propositions of these things? What do I get if I trade off some cache for a better FPP? What is the value of a newer processor architecture: is a slower clock speed on a newer architecture as good as a faster clock speed on an older architecture? These are not nearly as clearly defined as the direct questions posed by the phone.

      • ロハン増進 - 8 years ago

        Technical users care about more and more specs, variations of models and features. They wont be happy even there are 10 different variants for same phone. Non-technical users like mom, dad, aunty, uncle, grandma, grandpa etc care about the product which just works. They even don’t care aluminium body or plastic body, 8 megapixels or 12 megapixels, 1 gb ram or 2 gb ram, HDR or non-HDR. Their maximum concerns could be size ,space, or color. Having variants in size, space or color is not differentiating whole iphone lineup. But having a complete different generation of phone confused a lot to non-technical users and they may also hesitate to make a decision of purchasing it. My point is, since Apple is already making iphone with having everything in it which satisfies technical and non-technical users, Personal and consumer users, for all class of users, All they have to do is give their current finished product with 32GB space on price of 16GB. Just as they gave 64GB phone on price of 32GB phone! And if size really bothers a lot to their sales, just make existing 6s with 4″ variant as well. iphone with 3 different sizes. What else can be simpler than this for Apple and for buyers as well?

  24. jchudson1970 - 8 years ago

    I agree with comments here. Apple should offer three sizes of its smartphones. I believe that a.bezel-free 4.7-inch iPhone 7 min, the same size as the 5s, would be a good idea.

    Make it feature rich. Start the price out at $649 for the 4.7″ mini, sized smaller than the 5s thanks to better screen-to-chassis ratio, $699 for the 5.2″ iPhone 7, smaller than the 6s, and $759 for the 5.7″ iPhone Plus, smaller than the 6s Plus. Memory could start off at 64 GB for all models.

    • ロハン増進 - 8 years ago

      They have excellent technical reason for not making bezel free phone and that’s absolutely understood. Reason is, bezel free screen may sounds cool but its not in real time use. While holding your bezel free phone, there are always chances of unnecessary touches of top portion of your first, index or middle fingers on the screen while holding it with one hand and it will result into unwanted inputs on the screen. To hold a good grip you need to fit your phone nicely in your palm and that is not possible with bezel free screen. Another technical reason is, bezels will differentiate contents on your screen with objects or your palm around screen borders, that will give nice visualization to your view on the screen . That will give you comfortable visulization view on screen rather than mixed up view of your screen and contents around bezels

  25. jchudson1970 - 8 years ago

    :-)

  26. bb1111116 - 8 years ago

    Maybe there are technical reasons why all the iPhone 6S features cannot be put into the 4inch screen case.

  27. Nick James - 8 years ago

    They should have went back to the 4 case, perfect compact size and most attractive model with the glass backing. The 5 is too long and looks weird.

Author

Avatar for Zac Hall Zac Hall

Zac covers Apple news, hosts the 9to5Mac Happy Hour podcast, and created SpaceExplored.com.