What it is: The iPhone SE is Apple’s rumored iPhone that sports a 4-inch screen.
At one time, the iPhone screen measured 3.5 inches, then 4 inches, then 4.7 and 5.5 inches. The trend was towards creating bigger screens in a category known as a phablet because it combined the features of a tablet with a smartphone. Back in those early days, Samsung was one of the first manufacturers to offer such phablet designs and they made a lot of money right up until Apple introduced their own large screen iPhones. Then Samsung smartphone sales plummeted rapidly and Apple iPhone sales skyrocketed.
Now Apple is rumored to be readying a 4-inch iPhone tentatively dubbed the iPhone SE. One reason Apple may be offering a 4-inch screen is because many people still prefer this screen size because it creates a smaller smartphone that easily fits in a pocket or purse. A second reason Apple may be offering the iPhone SE is because it costs less to make, which means Apple can sell a new iPhone for much less as well.
Since the growing smartphone market is now centered in countries such as India and Brazil, cost may be a factor in keeping people away from the iPhone. Yet if a new iPhone is less expensive, that will likely convince more people to buy an iPhone rather than opt for a cheaper Android phone. Android phones already can’t compete with the iPhone in the high-end market so an iPhone SE will likely hurt Android phone sales in the low-end market. That will force Android manufacturers to compete in the bottom of the market where their only hope is to sell smartphones in volume and make minimal profits on each smartphone.
Apple already earns 94% of the smartphone market profits, so an iPhone SE will only further cement the iPhone as the most profitable smartphone in the market. That means companies like Samsung will be forced to compete with lower-priced Android phone manufacturers such as Huawei, which can only further erode Samsung’s smartphone profitability.
With the iPhone capturing most of the smartphone market profits, Android manufacturers will be forced to struggle and compete against each other for the remaining scraps of the market. By making minimal profits, these Android manufacturers will find it increasingly harder to match the latest iPhone features, which will keep hurting Android sales even further in a vicious circle.
The future looks bright for Apple. The future looks increasingly dim for Android manufacturers, despite Android’s dominance in the smartphone market. Dominance means little if profits don’t follow and that’s precisely the dilemma Android manufacturers find themselves in with no hope of escape. Good luck to them.