Apple announced a smaller iPhone price of $399 on Wednesday, lowering the starting price of a smartphone line to increase its attractiveness to consumers who are aware of the budget, as coronavirus has hit the international economy.
The lower-cost model could also attract more consumers to Apple services, a growing driver of revenue. Shares of Apple fell 1.1%, less than the 2.8% decline of the S&P 500 index.
The iPhone SE, available April 24, is the second generation of a previous value model. It will start at $50 less than what was previously the cheapest iPhone available, the $449 iPhone 8, which will be retired.
The SE comes with a 4.7-inch display and the same processor chip as Apple’s most advanced phone, the 11 Pro. The SE lacks 5G capability and Apple’s facial recognition system to unlock the device, instead of relying on a fingerprint sensor similar to older models.
The announcement comes as the United States and much of the world is reeling from the novel coronavirus, although US political leaders have begun to talk about ending stay-at-home orders and restarting the economy, hoping record deaths and falling hospitalisations represent a peak.
Apple’s cheaper phone reflects the coronavirus-driven economic downturn and job loss.
The cheaper phone enters a cut-throat market for value phones, especially in China, where Apple derives about 17% of sales. While the new iPhone adds features such as wireless charging and a high-end camera, it lacks connectivity for 5G, the next generation of mobile data networks. In China, rivals such as Xiaomi last month announced models with 5G features starting at about $425.
Apple said in January that it had 1.5 billion active installed devices and 480 million subscribers to both its own and third-party paid services, compared with 1.4 billion devices and 360 million subscribers a year earlier.
The company also set out a goal to reach 600 million paid subscribers by the end of calendar 2020.
