Will Apple Keep the Old iPhone SE Around at a Lower Cost?

Apple is rumored to be introducing an upgraded version of the iPhone SE as soon as March 8, the prospective date of the company's first event of 2022. The new iPhone SE is expected to be priced at $399 and it will be replacing the current iPhone SE, but will Apple keep the older model around and drop the price as it sometimes does when new iPhones come out?

In his most recent "Power On" newsletter, Bloomberg's Mark Gurman suggested that Apple could potentially keep the 2020 iPhone SE around, dropping the price to somewhere around $199. At this price point, Apple would be able to capture market share in places like Africa, India, and South America, where people gravitate toward lower-cost Android devices.

Apple has never had a sub-$200 iPhone before, with the entry-level $399 iPhone SE positioned as the cheapest iPhone that's been released to date, but as Gurman suggests, component costs are low enough that Apple might be willing to consider an even more affordable iPhone option.

Bill-of-material estimates from two years ago pegged the hardware cost of the iPhone SE at around $200, meaning a $199 price tag would be a money-loser. But time and economies of scale have probably made that cost much lower by now. Would the cost be low enough for Apple to earn its typical profit margins? No, but the chance to sell services and other products to big new markets could make up for that.

Most of Apple's focus is on its flagship devices, with Apple never seriously targeting the low-end smartphone market, but Apple is known for keeping older iPhones around and offering them at more affordable price points when introducing new devices. With the iPhone 13, for example, Apple dropped the price of the iPhone 12 and kept it around. 2019's iPhone 11 is also still available for purchase, and at $499, is Apple's most affordable device next to the iPhone SE.

Gurman argues that if Apple does end up keeping the old iPhone SE around and selling it for a ~$199 price point, Apple could see notable sales in developing markets and create long-term services revenue while growing the iOS ecosystem.

Such a device would also allow Apple to replace the long outdated iPod touch, which has gone several years without an update. The iPod touch has seen no updates since 2019 and is still using an A10 Fusion chip. Apple sells the 32GB iPod touch for $199, so a $199 iPhone SE would be a solid replacement.

Gurman has confirmed that there is no sign that Apple actually plans to keep the older iPhone SE around as a lower cost alternative, but it's clear there's incentive. Either way, Apple is poised to bring us a new iPhone SE that features the same general design but chip upgrades and 5G connectivity.

Well-respected Apple analyst Ming-Chi Kuo has said that the 2022 iPhone SE will be Apple's cheapest 5G iPhone to date, bringing faster connectivity to millions of people at an affordable price point.