Why Has Apple Increased the Price of its ‘Budget’ Handset?

Apple’s first iPhone SE was a huge hit, so when they decided to wait another four years to release a successor, it left the community scratching their hands. Thankfully, the wait for the SE 3 wasn’t as long, with the new iPhone SE released just two years later with a bunch of new features, and a $30 price increase.

Some have criticised Apple for the price hike, or consider the cheapest brand new iPhone to be less of a bargain than previously. So why has apple decided to increase the price of its ‘budget’ handset and is it justified?

The iPhone SE design:

The iPhone SE 3 looks the same as the 2020 model, which was actually designed off the iPhone 8 – from 2017. That means the latest device has a rather traditional look, which some might consider ‘out-dated’.

It’s available in three colours: black, white and red

Specs:

Other areas that have also remained the same include the 4.7in Retina HD display, Touch ID and a home button – which also means no Face ID. However the device is now coated top to bottom in apples “toughest glass in a smartphone” – so you’re protected from heavy scratches.

The latest iPhone SE has received the latest iPhone processor – the A15 Bionic CPU, which you’ll also find in the iPhone 13 which you can buy from just £570 if you get it refurbished from reboxed. 

The A15 Bionic provides more computational photography functions to the camera, making it more entertaining to use and potentially extending battery life. 

Plus, the SE has a 16-core Neural Engine, a six-core Central Processor Unit (CPU), and a four-core Graphics Processing Unit (GPU). All of this translates to increased speed, strength, multitasking ability, and, most importantly, longevity.

It seems the A15 Bionic CPU and the addition of 5G connection are the two major new features in the iPhone SE (2022), which were announced during Apple’s Peek Performance spring event. 

5G is a major step up from the last model, and might be the main reason for the increase in price. The addition of 5G brings apple in line with its Android competitors like OnePlus Nord, Motorola Edge and Realme 7 5G, all of which are considered ‘budget’ phones.

The impact of 5G

Some would argue that all feature upgrades outside of 5G are minimal and not worth the price increase, rather placing all the blame on the 5G. Price increases for 5G phones are common – we’ve seen it before in the iPhone 11 to iPhone 12 jump. Estimates from researchers show that 5G added $34 to the bill of materials compared to the 4G-only iPhone 11. It’s said to be the most expensive component in Apple’s iPhone 12 lineup.

So when looking at the iPhone SE price increase, we can assume that $30 is the premium Apple has to pay to put 5G in the devices and it’s as if Apple is passing the additional cost directly to customers.

Unfortunately, it’s not like Apple has a lot of choices when it comes to 5G modems. Supplier, Qualcomm is the only real option around, and everyone knows it.

Economic factors

There are other entirely different reasons why Apple’s increased the price this year, including the semiconductor shortage impacting various components like rising inflation or supply chain issues.

Or Apple may have simply noticed that buyers were unfazed by the $30 price rise between the iPhone 12 and iPhone 13 and thought that it could easily charge $30 more for the SE as well.

However, the facts remain: historically, adding 5G to an iPhone has been a substantial cost factor for Apple, and 5G is the single most significant difference between the 2020 and 2022 iPhone SE models.

The silver lining is that Apple might move away from Qualcomm’s modems and create its won, meaning the price could drop again in the future. What will be interesting to watch is if Apple does in fact reduce prices to reflect cost or bag the extra $30 for themselves.

Releated