Who is Going to Buy an iPhone 16e? Probably Not iPhone SE Owners
It would have been straightforward to estimate how an updated iPhone SE might sell. For its entire existence the iPhone SE accounted for 5-10% of iPhone sales. A new iPhone SE, similarly positioned at the low end of the iPhone lineup, would probably have sold similarly.
Yet, Apple transformed the old iPhone SE into the newly positioned and higher priced iPhone 16e, firmly placed in the hierarchy of latest models. This is uncharted territory and confounds efforts to predict how it might perform. We thought we’d look at the profile of previous iPhone SE buyers, specifically what phone they owned before their new iPhone SE to see if that might shed some light.
The iPhone SE appealed to Android switchers, first-time smartphone owners, and especially to existing SE owners. Overall, it appears iPhone SE buyers stayed with a low-price, minimal feature phone, rather than upgrading from an iPhone SE to more expensive models.
Specifically, in 2024 19% of iPhone SE buyers switched from an Android phone, compared to 14% of all other iPhone buyers (Chart 1). Another 9% of iPhone SE buyers were getting their first smartphone, either upgrading from a basic or flip phone or buying their first phone of any type. For comparison, only 2% of the rest of the iPhone buyers were buying their first smartphone.
Chart 1: Previous phone of iPhone SE buyers and other iPhone buyers (12 months ending December 2024)
Perhaps most interesting, 26% of SE buyers previously had … another iPhone SE. When it was time for these iPhone SE owners to replace their phone, they did not think it necessary to upgrade beyond the latest iPhone SE. They bought a newer iPhone SE. In fact, only 3% of buyers of all other iPhones upgraded from an iPhone SE.
The largest percentage of SE buyers (45%) previously had a “number” model iPhone and effectively traded down. For comparison, 82% of buyers of all other iPhones previously had a “number” model iPhone. This is the largest cohort of iPhone owners and likely to account for the most iPhone 16e buyers, though it is unclear to what extent.
The iPhone SE buyers, who seemed to be attracted to the aggressive $429 price, do not appear to be a ready market for the new $599 iPhone 16e. It is not clear what the relatively small base of iPhone SE owners will do when they need to replace their current phones. More importantly, it looks like the iPhone 16e is going to need to build its own base of customers, perhaps by cannibalizing would-be sales of the newest or recent legacy iPhones.