Apple hopes small is big again as iPhone SE debuts

Tue Mar 22, 2016 1:04am EDT
 
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By Julia Love and Noel Randewich

CUPERTINO, Calif. (Reuters) - Apple Inc (AAPL.O: Quote) on Monday launched its least expensive iPhone, the $399 iPhone SE, filling a hole in its product lineup with a small-screen model that targets new customers in emerging markets and fans of smaller phones as the company tries to reverse falling phone sales.

The low-key launch, held at the technology company's Cupertino, California campus rather than its traditional splash at a much larger venue in San Francisco, did not wow tech experts or investors.

But the new mid-range model was seen as necessary to counter the dominance of cheaper phones running Google's Android system.

"There are people who want that smaller screen size," said Bob O'Donnell of TECHnalysis Research. "You do a price cut when you need to drive the market a bit more," though he questioned if the price was low enough to generate significant demand.

Apple is hoping the cheaper model will stimulate overall iPhone sales, which it expects to decline this quarter for the first time since it essentially created the smartphone market nine years ago.

The new model did not allay investor concerns that Apple, which celebrates its 40th birthday on April 1, has no obvious blockbusters in its pipeline.

“Apple is so big now that nothing seems to be earth-shaking anymore, and the strategy seems to be turning to offering complementary products like watch bands so they can maintain their sales momentum,” said Skip Aylesworth, portfolio manager of the Hennessy Technology Fund.

The company showed off new wristbands for the Apple Watch and a new iPad Pro tablet at Monday's event, and a robot called Liam to take apart old iPhones and reuse the materials.   Continued...

 
Apple Vice President Greg Joswiak introduces the iPhone SE during an event at the Apple headquarters in Cupertino, California March 21, 2016.  REUTERS/Stephen Lam