Apple could release lower cost iPhone SE 2 in 1H18

Alfred Osborne
November 22, 2017

Both large format chain store owners and small retailers are claiming that the company makes profit from a massive margin but does not want its retail partners to benefit, according to a report in The Economic Times. The current generation iPhone SE has been particularly popular in emerging markets like India, where consumers like Apple's premium branding, but likely don't have the money to drop $800 to $1,000 on a flagship iPhone. And, looking ahead, the firm expects Apple to grab an even higher percentage thanks to the increased cost of the X, which starts at $999.

"Apple gives the least margins".

Apple declined to comment on the margin cuts and supply issues in India.

Companies like Samsung and Xiaomi, on the other hand, offer more than double the margin, or 12 to 15 per cent, compared to what Apple offers. Oppo and Vivo followed them to keep up with the competition, but Apple has refrained from increasing its margins for retailers.

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While some retail chains have stopped stocking iPhone Xs across their stores in India, those in the unorganised trade are also complaining about Apple's move to cut margins when supply is already low.

It is also expected that Apple will use the same A11 Bionic chip as used in iPhone 8 and iPhone X but this might be overkill for smaller devices, and in the second option Apple can use A10 Fusion CPU as used in iPhone 7.

According to ET, a retailer was supposed to receive 400 units of iPhone X after three weeks of launch, however, he received far less than expected. Analysts at Counterpoint cautioned that the company may lose the plot in India if it waits too long for regulatory, policy or business certainty or the time when it can extract most value at minimum risk.

"They (Apple) will have to start now because if they lose a window of opportunity in next two years to be on mind of the growing smartphone user base, it would be somewhat hard to grow faster in the world's second largest smartphone market", added Neil Shah, research director at Counterpoint Research.

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