Will iPhone 7 Really Be an iPhone 6SE?

By Paul Ausick Updated Jan 13, 5:19AM EST · Published Jul 25, 10:50AM EDT

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Will iPhone 7 Really Be an iPhone 6SE? — © courtesy of Apple Inc.

When Apple Inc. (NASDAQ: AAPL) introduced the iPhone SE last March, most observers believed the cheapest iPhone Apple had ever released was primarily aimed at what is now the world’s fastest growing market for smartphones — India. But the phone has been an unexpected hit in the United States as well, and now AppleInsider cites sources who say Apple has begun producing packaging materials for an “iPhone 6SE,” indicating, perhaps, that the coming launch of what everyone expected to be an “iPhone 7” may not be as big an improvement as the company releases every two years.

The iPhone SE, with its four-inch screen, is basically the same size as the iPhone 5s, first released in September 2012. If an iPhone 6SE and 6SE Plus are released in September (as many expect, but not confirmed by Apple), does that indicate that we’re getting an incremental rather than a full update? AppleInsider explains:

Apple typically gives its smartphone a complete redesign every two years, while the in between years are “S” upgrades with mostly internal changes. However, leaked parts and reports strongly suggest this year’s handset will look largely the same as the two previous devices, the iPhone 6s and the iPhone 6, breaking the usual cycle.

And now, after identifying the “SE” designator as the lower-priced iPhone, can Apple expect to keep its lofty margins with a new device that carries its low-end brand? Even if Apple prices the new iPhone at the top of its price list, will consumers pay a premium price for it?

With the introduction of the SE, Apple made what may be a necessary move to address the largest and most price-sensitive market still left. In doing so it created a new sub-brand that is performing better than just about anyone expected. There have been significant numbers of iPhone users who have purchased the SE because they like the small size. According to a report at MacRumors, the iPhone SE grabbed a 16% share of the U.S. smartphone market in its launch quarter, and more than a quarter of those were iPhone 4s owners buying upgrades.

Would those consumers have purchased an iPhone 6s at a lower price after an iPhone 7 was introduced? Did the SE pick up sales Apple might have lost to cheaper smartphone makers?

We might get some idea of the answers to these questions when Apple reports quarterly earnings after the markets close on Tuesday. Analysts are looking for earnings per share (EPS) of $1.38 and revenues of $42.41 billion, compared with EPS last year of $1.85 and revenues of $49.6 billion.

From its 52-week high of $123.91, Apple’s shares closed down about 20% on Friday at $98.66. Shares traded down about 0.7% from there on Monday morning at $97.99. The 52-week low is $89.47 and the consensus price target is $122.73.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.