Predicting iPhone 16e Market Reception
The new iPhone SE was introduced last week, and it turned out to be the new iPhone 16e. This surprise has immediate implications for the iPhone lineup and is spurring conjecture among Apple fans and analysts alike. Based on the iPhone SE’s historic market share, the iPhone 16e might not be a critical player in the lineup. Yet, based on its features and positioning, it might do better, at the expense of other iPhone models.
The iPhone 16e form factor and specs are incredibly close to the well-received flagship iPhone 16. It has the same processors and a similar, if slightly limited camera. It also supports Apple Intelligence, just like the other iPhone 16 models. Magsafe charging and accessories are notably absent.
The entry price of $599 is a significant increase from the iPhone SE’s $429 starting point, putting it more in line with the “number phones”. It is only $200 less than its iPhone 16 sibling and $100 less than its iPhone 15 cousin. It matches the price of the two-year old iPhone 14, forcing that model into retirement.
It appears that “e” phones may be part of the program going forward. Following the core iPhone 17 model launches in September, we expect Apple to announce an iPhone 17e around this time next year. That would mimic Google's introduction of “a” models in its Pixel line months after the annual Spring launch of their flagship and Pro models in recent years.
We have two iPhone analogs to look at as we start predicting the iPhone 16e’s reception. Clearly the iPhone SE experience is relevant. We can also go far back into CIRP data to see how the iPhone 5c performed back in 2013, too. The modest iPhone SE market share in recent years compared to the early market acceptance of iPhone 5c may have motivated the 16e repositioning.
The iPhone SE accounted for an average of about 7% of iPhones over its lifetime, peaking at 12% in 2020 and dropping to 5% in 2024 (Chart 1).
Chart 1: US iPhone SE share of total iPhone sales
In contrast, the iPhone 5c accounted for more than one-quarter of iPhone sales in its first few selling quarters in 2013-2014. There are significant reasons why the iPhone 16e may deviate from both of these historic analogs, however.
The comparisons with SE quickly break down:
iPhone SE models were updated sporadically and were absent from the market for almost two years.
Each time Apple introduced a new iPhone SE model, it included close to the latest features, but on a legacy form factor device.
The technology was not a compromise and part of the appeal was a smaller, easy-to-hold size, as the flagship iPhones were getting bigger.
As another generation or two of “number phones” was introduced, the old iPhone SE fell behind technologically.
The cycle repeated a couple of times - and brought us to today.
One thing was consistent: iPhone SE models were much cheaper than the other iPhone choices, and that appealed to a certain set of customers. One theory was that they were a point of entry for first-time iOS buyers who were switching from Android phones.
As for iPhone 5c, it started out strong, yet things were very different in 2013-2014:
Apple only sold two models at a given time, instead of the wide range of models today.
Mobile carriers subsidized the price of a new phone with a two-year contract for service. iPhone 5c started at $99(!) and the premium iPhone 5S sold for $199(!). There were no installment payment plans, so the 5c provided a 50% savings.
Since there were so few models available compared to today, it was almost inevitable that iPhone 5c would have a 25% share of sales. We note one interesting similarity to today. When Apple released the iPhone 5c, it immediately retired the would-be-similarly-priced iPhone 5, contrary to the then-existing protocol.
How did the iPhone 5c story end? The next year Apple introduced the iPhone 6 and 6 Plus with a new look and feel, and they were incredibly well-received. With five models available at once, the iPhone 5c faded and its share fell to less than 10%. There never was another “c” and in 2016 the iPhone SE took over as the low-price model.
If the iPhone 16e follows either of these patterns it will be a major disappointment. We don’t think that will be the case, however. Its higher price, firm location in the technology and feature hierarchy, and presumable annual releases make the iPhone 16e a different animal with a definite path to sustained market acceptance. We will be surprised if it is an iPhone mini reprise!