Apple launches $399 budget iPhone after coronavirus delay

TAIPEI/PALO ALTO, U.S. — Apple has introduced its long-awaited budget iPhone model on Wednesday after the production schedule and expected release of the new device were delayed by about a month due to the deadly coronavirus outbreak.

The updated version of the iPhone SE comes in three colors — black, white and red — and will be available for pre-order beginning April 17, starting at $399.

Mass production of the device was supposed to start in late February but had to be pushed back to late March due to supply chain disruptions, multiple sources told the Nikkei Asian Review, adding that the release was originally expected in mid-March.

Most iPhone suppliers’ production facilities are located in China, and in mid-February they were scrambling to reopen their factories as travel restriction across the country made it extremely difficult to secure both workers and components. The need to keep their manufacturing sites virus-free only added to the pressure, Nikkei earlier reported. Suppliers were gradually able to recruit sufficient workers and returned to normal operation at the end of last month, sources familiar with the matter said.

The Cupertino tech giant had high hopes that this cheaper-priced iPhone would help keep sales momentum strong during the first half of the year ahead of the launch of its premium lineup in the fall — including the first-ever 5G-capable iPhones.

Apple has already suffered two consecutive years of shipment declines since 2018 for its iconic iPhones, though the device still accounted for around 50% of its sales, and the company lost its No. 2 position in the global smartphone market to Huawei Technologies last year. Apple’s two-pronged strategy of releasing both a more affordable iPhone and a powerful 5G model at almost the same time is aimed at reversing that downtrend.

The global smartphone market, however, is forecast to decline for a third straight year to COVID-19, according to IDC. In late February, the research company predicted a 2.3% fall in total shipments, and the number could be trimmed further now that the outbreak has evolved into a global pandemic.

The newly released model is seen as an updated version of the iPhone SE that Apple introduced back in March 2016 with a starting price of $399, but it also boasts several improvements. It has a 4.7-inch screen, similar in size to the iPhone 8 released in 2017, and shares some advanced components — such as the core mobile processors — used in the latest iPhone 11 range released last September with a starting price of $699.

“Apple is viewing this [new iPhone SE] as a low volume, low touch release with little fanfare as the phones are already ready to ship. … Apple faced a tough decision to make and ultimately decided to release and green light this smartphone to the market in hopes of gaining contained success out of the gates,” said Dan Ives, managing director at Wedbush Securities.

“That said, based on underlying demand and the prior SE cycle, we believe shipping between 20 million to 25 million iPhone 9/SE2 units in the first six to nine months is a realistic target,” he added.

Other analysts say demand for the new device remains to be seen given the current situation. The coronavirus outbreak has killed more than 126,000 and infected nearly 2 million people globally, and business closures have become widespread.

“The budget iPhone mainly targets consumers who have relatively less income, but those people and their families are badly affected by the coronavirus outbreak. … It’s hard to predict and build inventory under these circumstances. No one knows what exactly the market demand will look like in Europe and the U.S.,” a person with direct knowledge of the latest iPhone launch told Nikkei.

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