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The Real Reason Apple Made the iPhone SE So Cheap
Apple is all about services now
Over the past few years, Apple has methodically pivoted its business strategy away from getting you to replace your iPhone as frequently as possible. Instead, it’s maximizing the money it makes in a different way: selling you subscription services and accessories that work with the iPhone.
The recently updated iPhone SE is a prime example of that new strategy in action.
Released earlier this month, the iPhone SE starts at $399 for the 64 GB model. Compared to the iPhone XR and XS, which start at $749 and $999, respectively, that’s extremely affordable. But the services you’ll want to access through the phone are not.
Apple has slowly devised new ways to lock people into its ecosystem. In the past year alone, the company launched Apple Arcade, a game subscription service, for $4.99 per month; Apple TV+, its premium TV streaming service, also $4.99 per month; and News+, at $9.99 per month.
That’s on top of the services the company already offered, like iCloud storage, which ranges from $0.99 to $9.99 per month for an additional 1 TB of cloud storage; Apple Music, at $9.99 per month; and AppleCare insurance, which comes in at $7.99 per month for the iPhone SE.
Those smaller costs amount to one fairly substantial monthly bill — subscribe to all of them and you’ll pay at least $39. Apple has also encouraged people to use its iPhone Upgrade Program, which promises the latest and greatest iPhone every year in exchange for a monthly fee, starting at an oddly specific $35.33 per month. The SE isn’t offered in the upgrade program, but it is part of the same plan of building in extra spending opportunities around the iPhone rather than in it.
Selling a cheap phone like the iPhone SE gives more people the opportunity to spend their money every month on these services. It is the engine that prints more money: Apple gets you in the door to its ecosystem and has guaranteed, unfettered access to your attention (and wallet) until you buy your next device. In that time, it’s likely that you’ll subscribe to at least one of these services, if not more.
And if Apple doesn’t hook you on subscriptions, the company will likely upsell…
