4-Inch iPhone: Slow and Steady May Win the Race

Apple appears to have experienced a lost weekend with the 4-inch iPhone SE failing to rack up significant sales.

When the period ended, the SE claimed only 0.1 percent of the iPhone market, Localytics reported Monday.

“The new phone was unable to take away the iPhone 5’s share, the model it most closely resembled, suggesting that small-screen lovers have not yet been convinced to upgrade from their 5 models to the new iPhone SE,” observed Localytics Marketing Research Analyst Caitlin O’Connell.

Without new bells and whistles to attract early adopters, the SE’s entry into the market was expected to be subdued, and it was.

“The new phone did not attract long lines this weekend, and many stores were reporting 90 percent availability of the new device,” O’Connell pointed out. “Because the features are largely the same as the previous two years’ models, the SE doesn’t exactly scream ‘Buy me now!’ Consumers who want the smaller SE phone may be waiting until their annual upgrade.”

Attracting New Customers

Despite slow sales, there are signs that the SE is bringing new blood into the Apple ecosystem.

Only 35 percent of SE buyers had purchased an iPhone online in the past two years, and16 percent of them previously were Android users, according to Jaimee Minney, vice president of marketing for Slice Intelligence.

That compares to 49 percent of iPhone 6s buyers who had purchased an Apple phone during the previous two years and 10 percent who previously had been Droid heads.

Other demographics also suggest the SE is attracting buyers from outside Apple’s fan boy mainstream, Minney noted.

For example, more than 20 percent of SE buyers are in the 45-54 age bracket, which compares to 18 percent for all iPhone buyers. Also, they’re heavily male — 77 percent, compared to 69 percent for all iPhone buyers.

Buyers of the SE tended to have less education than buyers of other iPhone models. Only 39 percent had a college degree, compared to 46 percent who purchased an iPhone 6 or 6s.

Modest Expectations

Despite a less-than-stellar first weekend performance for the SE, demand for the phone is strong, argued Tim Bajarin, president of Creative Strategies.

“There is serious consumer interest in the SE, especially in international markets,” he told the E-Commerce Times, “but this is the slowest quarter for all smartphones, and that impacts overall sales of all models — not only Apple’s — during this period.”

Other market watchers expressed less enthusiasm about the SE’s prospects.

“No one expects this thing to be a huge hit. There’s a limited number of people who want a smaller phone,” said Bob O’Donnell, founder and chief analyst of Technalysis Research.

“No one thought it was going to have a big weekend. No one thought is was going to drive lines,” he told the E-Commerce Times. “Its sale performance could also, perhaps, be indicative that we’re seeing some stalling in the phone market overall.”

Slow but steady growth is likely for the model, O’Donnell predicted, topping out at around 10 percent of the iPhone market.

Drip Effect

Early adopters and mobile enthusiasts can make phone sales rocket when a new iPhone is introduced, but that isn’t the case with the SE.

“The SE doesn’t cater to early adopters — nor are the buyers of these phones mobile enthusiasts,” said Patrick Moorhead, founder and principal analyst for Moor Insights and Strategy.

For that reason, “you have to expect sales to ‘drip’ versus what they’re like for the latest and greatest phones,” he told the E-Commerce Times.

“The target customers for the SE are more conservative and careful than consumers who buy new phones on a whim,” added Charles King, principal analyst at Pund-IT, “but if lackluster adoption persists, the SE could be in trouble.”

A recent Apple hiccup also could have dampened SE sales, he noted.

“The glitches plaguing Apple’s recent iOS update may have inspired consumers to stay home,” King he told the E-Commerce Times. “If that’s the case, sales of the SE should improve over the coming weeks.”

Apple did not respond to our request to comment for this story.

John Mello is a freelance technology writer and contributor to Chief Security Officer magazine. You can connect with him on Google+.

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