Apple as a company is doing great, pulling in billions of dollars every quarter. And the engine that drives that growth is the iPhone.

Smartphones

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But success can itself become a burden. And for Apple, that burden is to continue to drive growth in a smartphone market that's both saturated and cut-throat when it comes to pricing.

Apple is a company that's been highly optimized to make and sell millions of iPhones every year, along with launching a fresh iPhone lineup each fall. Sure, the company banks a lot of cash from other products and services, but the iPhone is the biggest cash cow by far.

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But there's a problem of scale.

What can Apple do when its main iPhone launch is becoming saturated?

Add a new release that's offset roughly 6-month from the big launch.

This is what the iPhone SE accomplishes.

It's a new iPhone that appeals to a different market to the main lineup.

Or, to put that another way, it's cheaper.

Because when you can't grow upwards, it's time to expand the base.

Now, to keep from falling into a trap where a "budget" iPhone is cannibalizing the sales of the more expensive line, Apple needs to be clever.

The iPhone SE is a balancing act. It must be fresh enough to attract attention but bland enough and outdated enough so it looks and feels like a second-class choice.

This is the challenge facing Apple with the long-awaited third-generation iPhone SE.

And remember, ultimately, people aren't buying an iPhone SE for how it looks or what it can do. They're buying it because it's a cheaper iPhone.

Even without a decent rumor mill, it doesn't take much imagination to figure out what the next-generation iPhone SE is going to look like and what its focus is going to be.

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It's going to look a lot like the existing iPhone SE. Apple won't want it easily confused with the higher-end iPhones.

That wouldn't be good for sales.  

It's going to feature components like the chip from older iPhones.

That's a lot cheaper for Apple to reuse tried and tested components than it is to have to design anything new, and those reused components will be more than good enough.

It's going to feature 5G.

Because that's going to be a major selling point.

Oh, and it's going to be a lot cheaper than the main iPhone lineup.

The big question -- at least the iPhone SE question I'm being asked the most. -- is whether the new iPhone SE will be cheaper than the existing iPhone SE.

If Apple wants to grow the bottom end, then offering a cheaper non-5G iPhone SE, and then slipping the 5G version in at the same price as the current one would be a winning formula. The iPhone SE would get a new lower starting price, but the nudge to future-proof that purchase by going the 5G route would buoy sales of the higher-priced model.

A cheaper iPhone SE (say one that hits somewhere in the$299 to$349 mark) would accomplish several things. A new lower price point would make headlines, it would put pressure on Android at the lower-end, and it would also make the price of a new iPhone from Apple attractive compared even to buying a secondhand one.

That sounds like a three-in-one win for Apple.

Apple

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