Apple Has a Chance to Launch an iPhone Costing Just $199

Apple is planning to unveil a 5G iPhone SE in March—but the big news could be a price drop for the current model. Also: Amazon’s Astro robot remains elusive, and it was a wild weekApple Stores

Last week on Power On: Apple is readying an end-to-end overhaul of its Mac lineup this year.

The Starters

For years, the technology industry has been clamoring for a low-cost iPhone aimed at emerging markets. 

A device priced at $200 could make inroads in regions like Africa, South America and parts of Asia that are currently Android strongholds. That would let Apple Inc. sign up more customers for services, potentially making a low-end iPhone quite lucrative for Apple in the long run. But so far, the company has steered well clear of that approach.

In 2013, when carrier subsidies began to disappear and demand for a lower-cost iPhone grew, Apple executives said they wouldn’t release a cheap model just to blindly chase market share. It did put out the lower-end SE in 2016, but the phone was $399—well above the level of many Androids—and the price never came down over the following five years. The company has stuck by Steve Jobs’s “don’t ship junk” ethos.

But when Apple introduces a 5G version of the iPhone SE, which could come as soon as early March, the company has a great opportunity to make a change. 

I suggest Apple continue to sell the older iPhone SE at a new, lower price—namely, $199. 

Third-party resellers are already distributing the current iPhone SE at under $200, and refurbished models are plentiful. If Apple offers its own $199 device, the company could have a hot seller in developing markets. It would also provide an option to shoppers who don’t care about 5G service—and aren’t interested in a $1,000 iPhone 13. 

By expanding its user base with a $199 iPhone, Apple could create more long-term services revenue and add people to its ecosystem. Those people may then be more willing to try AirPods, an Apple Watch or—later on—a higher-end iPhone. 

The move would also give Apple an easy answer to its iPod touch conundrum. Over the years, the iPod touch has been a popular alternative to an iPhone—and Apple still sells the device, its last remaining iPod—but the product hasn’t been updated since 2019. The current model has an outdated 4-inch screen and a slow A10 chip from 2016. 

The iPhone SE, on the other hand, has a 4.7-inch screen, an A13 chip and more modern internal components. If the iPhone SE matched the iPod’s $199 price, Apple could finally discontinue the iPod line.

But what would this mean for Apple’s famously fat profit margins? When it comes to hardware, the company likes its margins to be in the 30%-to-40% range.

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.  

Such a device could help Apple greatly in India. The company once talked up the country as the next China, but the iPhone has struggled to gain much of a foothold.

Research data suggests the iPhone has less than 5% of the market in India, but a $199 device could change that. According to estimates, the average phone sales price in the country is now $196, up $40 from 2020. 

A $199 phone would also be a hot seller in the U.S., allowing Apple to make money on services and beat out cheaper alternatives from the Android world by touting its fit and finish. 

It’s unclear if Apple will ever actually take this step, but there may be no better time than the release of the 5G iPhone SE next month. 

The Bench

We tracked down one of the world’s only Amazon Astro robots. Amazon.com Inc. introduced a home robot called Astro last September, a move that was supposed to help usher in a “Jetsons”-like era. But about six months later, the device remains elusive. I’m told the company has only shipped a number between 50 and the low-100s. That being said, I tracked one down near Orlando, Florida. The owner of the Astro loves that it can follow him around and help him communicate with his dog remotely, but he didn’t find any game-changing features that would make the device worth $1,449. 

Add a giant foldable iPad/MacBook hybrid to the list of future Apple devices. Apple is working on a foldable device with a roughly 20-inch screen, according to Ross Young at Display Supply Chain Consultants, who cited supply-chain checks. There’s been speculation over how Apple could adopt such technology: The company could go with a foldable 20-inch screen attached to a physical keyboard or just have one side of the display serving as a virtual keyboard. I’m told Apple has indeed been exploring a dual-screen, foldable MacBook/iPad hybrid that would take the second approach. It would trade in the physical keyboard and trackpad for a fully touch-screen base (the Lenovo model above gives you a sense of what that might look like). The device has been in development for the past couple of years, but will it see the light of day? According to Young, the company is targeting a release around 2026, which would put in the same time period as an Apple car and its long-anticipated AR glasses.

A hostage situation erupts at Apple’s Amsterdam store over millions in crypto. Some very scary news out of Amsterdam this past Tuesday: A robbery gone wrong at Apple’s flagship retail store turned into a hostage situation. A gunman held a person in the Apple store for several hours before the hostage was able to flee and local police apprehended the suspect. Police later said the suspect asked for millions of dollars worth of cryptocurrency. Apple stores already have pretty tight security, but I wonder if the company will increase its precautions following the incident. 

Apple again drops retail mask mandate as in-store classes begin returning. Stores in U.S. cities without local mandates have stopped requiring the use of masks by customers. However, masks will still be provided and recommended inside of Apple’s retail locations. In another indicator that Covid-19 is moving in the right direction—at least according to Apple’s analysis—in-store classes are returning across the country between the end of this month and early March. That’s perfect timing for Apple, given it likely has new products coming next month.

The Schedule

March 4: Apple’s annual shareholder meeting. These gatherings don’t typically produce much news, and Apple shareholders usually follow the company’s suggestions for voting. But this will be the next time we get to hear comments from Chief Executive Officer Tim Cook, so stay tuned for live coverage of the proceedings. 

March 8: Apple set to unveil a new phone and tablet. The company is planning to launch an updated iPhone SE with 5G and a faster processor, an iPad Air and at least one new Mac. The products are expected to be unveiled at a presentation around March 8, though Apple hasn’t announced the date yet. The event is likely to be one of many in 2022—with iPhone 14Apple Watch Series 8 launches set for later in the year.

Post Game Q&A

Do you think there will be a new MacBook Pro in March?

What are you expecting from the Apple Watch this year?

Do you think WWDC will be virtual again?

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