Apple Inc.

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provides 5G cellular connectivity on cheaper iPhones, and according to some on Wall Street, the move will continue to boost record sales this year as demand remains for more expensive versions.

The technology giant from Cupertino, California, has launched a virtual event on its website with CEO Tim Cook. During the event, the company plans to introduce the third generation iPhone SE. Apple is also expected to introduce an updated iPad Air with a faster processor as well as 5G, as well as new computers with faster chips, according to a person familiar with the plans.

The iPhone SE became a favorite at the start of the pandemic for Apple. According to an IDC researcher, in 2020, device sales approached 25 million, or 12% of the company’s global smartphone shipments. Apple does not beat the results on the iPhone model.

The budget model, which starts at $ 399 and comes with the smallest display size of 4.7 inches, did not do well last year when Apple’s flagship products appeared. This includes the iPhone 12 model line, which for the first time introduced ultra-fast 5G in the company’s smartphone offerings and received price increases from operators seeking to attract customers to new cellular networks.

Sales of high-end devices helped boost iPhone sales to a record $ 192 billion in fiscal year 2021 and contributed to record year-over-year profits of nearly $ 100 billion. At the same time, according to IDC, deliveries of iPhone SE, which did not have 5G, decreased by about 40% in 2021 compared to 2020.

“Obviously, some of the phones released by Apple have been very expensive for consumers, mostly mid-range and high-end, so now you’re getting an affordable 5G phone,” said Samik Chatterjee, an analyst at JP Morgan.,

said in an interview.

Mr Chatterjee has raised earnings estimates for the fiscal year because of expectations from the iPhone lineup, including his belief in the potential of the SE model to appeal to buyers who care about price and are looking for 5G. He predicts that the SE version could have 30 million units sold in the first year and will help increase the total iPhone supply to a record 250 million.

“This will give investors confidence that Apple can continue to increase iPhone revenue,” he said.

Starting in February, US cellular operators will start disabling 3G. Joanna Stern of the WSJ got the old iPhone 3G and iPhone 4 running on the old network to remember everything he did to shape the smartphone revolution. Photo illustration: Preston Jesse for The Wall Street Journal

The iPhone 12 and iterative versions of the iPhone 13, introduced last fall, have helped rekindle interest in Chinese consumers. The strength of the iPhone contributed to the collapse of smartphones from Huawei Technologies Co. amid sanctions by the US government. Sanctions have deprived Huawei of the opportunity to use Alphabet Inc.

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Android operating system. In the last three months of last year, the iPhone again took first place as the best-selling smartphone in China. Mr Chatterjee said the SE model could benefit from China’s dynamics and the country’s interest in 5G phones.

Other analysts seem to be warming Apple’s potential this year. Back late last year, an average estimate by analysts polled by FactSet predicted steady iPhone sales for the current fiscal year ending in September, amid fears that the iPhone’s attractiveness could peak within a year after a major update with 5G. technology.

In recent weeks, optimism about the company’s prospects has been growing, fueled by stronger-than-expected results over the past three months of last year. Analysts now expect iPhone revenue to grow 5% this fiscal year – after growing 39% in fiscal 2021.

When the first SE model debuted in 2016, some analysts said the device could help Apple in markets outside the U.S. where the iPhone, which could cost more than $ 1,500, is out of reach. Instead, according to IDC, the top three markets for cheaper devices last year were the US, Japan and Western Europe.

«“Some of the phones released by Apple have been very expensive for mid- and high-end consumers, so now you’re getting an affordable 5G phone.”


– Samik Chatterjee, JP Morgan analyst

In China, SE accounted for less than 10% of deliveries, according to analyst at research firm Canalys Chiew Le Xuan. He said the phone is struggling with Android’s budget competitors, and expressed skepticism that the new version would work well in China.

“The third generation iPhone SE may seem like a hit in China due to increased Apple market share and 5G penetration,” he said in an email. “However, according to Canalys, Chinese consumers are prone to phones with large displays.”

In the US, SE has become a gateway to the Apple brand for owners of less expensive Android phones. Last year, according to Consumer Intelligence Research Partners, 26% of SE buyers previously had an Android phone. “The iPhone SE has become a sort of entry-level iPhone, largely because of its price range,” said Michael Levin, co-founder of Consumer Intelligence Research.

According to Cliff Maldonado, chief analyst at BayStreet Research, which tracks the marketing efforts of wireless service providers, Apple could once again benefit from operators seeking to promote their latest phones to customers.

Operators are trying to move customers from 4G to new faster networks because they are cheaper to deliver the same amount of data. Mr Maldonado predicts that operators will reach about 95% of 5G subscribers by mid-2024. 5G was aimed at improving connectivity for games and videos.

“Operators will be happy to push the SE3 to the previous SE2 at about the same price of $ 400, because the SE3 will allow the operator to maintain the phone cheaper in 5G than in 4G LTE,” he said.

Write Tim Higgins at Tim.Higgins@WSJ.com

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