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If this report pans out, Apple will have a big winner with the new iPhone SE


This coming Friday, Apple will release the second-generation iPhone SE. The “budget-priced” model starts at $399 for the variant with 64GB of storage and is basically a refreshed version of 2017’s iPhone 8. That means it sports a 4.7-inch LCD display with a 60Hz refresh rate, a 750 x 1334 resolution, and an aspect ratio of 16:9. Instead of Face ID, Touch ID returns and there is a front-facing 7MP FaceTime camera. And the notch is nowhere to be seen.
There is also a 12MP single-camera setup on the rear, but with a new Image Signal Processor and the improved chipset (more on that in a second), Apple calls it the best single-camera system on any smartphone. Yes, Apple is taking a shot at the mid-range Google Pixel 3a series with that comment. The biggest improvement over the iPhone 8 can be found under the hood where the 10nm A11 Bionic SoC is swapped out for the 7nm A13 Bionic chipset. The former contains 4.3 billion transistors while the A13 Bionic, used in the iPhone 11 series, carries 8.5 billion transistors inside each chip. As we like to point out, the more transistors found inside an integrated circuit, the more powerful and energy-efficient it is. Apple also bumped up the amount of memory on the phone by adding 1GB of RAM to the 2GB on the iPhone 8. That’s a 50% hike.

Loup Ventures expects the new iPhone SE to be the second biggest selling iPhone this year

Venture capital firm Loup Ventures, home to well-known analyst Gene Munster, recently emailed us its thoughts about the new iPhone SE. Right off the bat, the firm says that the new phone should add to Apple’s market share, but only fractionally. But they point out that where the second-generation iPhone SE will really help Apple is with its ever-growing roster of Services and recurring subscription services it sells to active iPhone users.

One of the best moves made by Apple was its decision to start focusing on services following the 2015 peak in iPhone shipments. Apple has a goal of generating $50 billion in services revenue this fiscal year and last fiscal quarter, it achieved that goal on an annualized basis. As Loup Ventures notes, “…in the hands of new first-time Apple customers, the company will have new opportunities to cross-sell AirPods, Watch, and Services, adding to its base of 1.5B active devices. Ironically, on the day Apple announces a new phone, it’s important to note that Apple is no longer an iPhone story (51% of revenue down from its peak of 69%). The company’s diversified and tightly integrated hardware, software and services are the foundation of greater long-term revenue visibility.” The cross-selling includes subscriptions to Apple Music, Apple News+, Apple TV+, Apple Arcade, apps from the App Store and more.

Sales of the iPhone should rebound sharply next year says Loup Ventures

As for the phone itself, the report says that the second-generation iPhone SE represents the best value in the entire iPhone lineup. The original iPhone SE accounted for 13% of total iPhone sales last year according to Loup Ventures and the latter expects the new version will account for 20% of the total; that will make it the second biggest-selling iPhone after the iPhone 11. Based on the 153 million iPhone handsets it predicts will be rung up over the next 12 months, Loup’s analysts expect 30 million of the new iPhone SE will be sold over the same time period.

Apple, as Loup Ventures points out, is no longer just the company that makes the iPhone. The device itself will account for 51% of total revenue this calendar year as the firm calls for Apple’s handset sales to drop an additional 19% in CY 2020 after an 8% decline in CY 2019. A 22% rebound should take place in CY 2021.

The company’s fastest-growing unit is its Wearables division, which makes sense when you consider that it includes the most popular watch in the world and the top-selling AirPods wireless Bluetooth earbuds. This division will make up 9% of this year’s total top-line figure. After the revenue of this unit soared 53% last calendar year, Loup Ventures expects further gains of 17% and 33% for CY 2020 and CY 2021 respectively. The Services unit will contribute 18% of Apple’s total CY2020 revenue and this figure will grow 16% in 2020 and 14% the next year. Last year, Services revenue rose by 18%.

Some of the long term trends the analytical firm sees include the increasing availability of 5G leading consumers to upgrade their phones to compatible models, and the growing viewership of original content and subscription video on demand (SVOD). The analysts at Loup Ventures also expect to see health-related features geared more toward preventing illnesses. The data is collected by wearables, analyzed by AI, and sent to the consumer via software. And lastly, Loup Ventures sees Augmented Reality (AR) becoming the next big computing platform.

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