Will Apple Ever Figure Out How to Sell a Starter Phone?

It’s not entirely clear where the new iPhone 16e fits into the iPhone model lineup. On the timeline, it replaces iPhone SE, which served as the low-price, entry-level phone since its introduction in 2016. In the iPhone model lineup, it is in an entirely different place, perhaps more comparable to the ill-fated iPhone 12 and 13 minis.

Apple designates the new phone as one of the latest iPhone 16 models and prices it considerably higher than the old iPhone SE. Though still the lowest priced iPhone, this suggests Apple wants the iPhone 16e perceived as a lower-priced version of the latest models, rather than an absolute entry-level phone. An entry-level phone like the iPhone SE might appeal more to Android switchers or first-time smartphone buyers. The iPhone 16e target customer is not as easily identified.

To understand the iPhone 16e challenge, we looked at how new iPhone models below the baseline flagship have sold in recent years. While the introduction of Pro and Pro Max models has been a big success, Apple has had a difficult time selling cheaper, simpler smartphones.

Apple reintroduced iPhone SE in April 2020. Since that year, all of the models introduced below the basic numbered iPhone, account for under 20% of total sales in any quarter and have dwindled to 5% in recent quarters (Chart 1).