Apple unveiled the long-rumored iPhone SE on Monday, and analysts in general are pretty happy with it. The updated 4-inch iPhone is particularly interesting because the mix of features makes it just about as good as the iPhone 6s lineup—only with a smaller screen and much smaller price tag. Analysts think Apple made all the right decisions with the iPhone SE.


iPhone SE Should Trigger New Upgrade Cycle For Apple Inc.

iPhone SE caters to 4-inch market

UBS analyst Steven Milunovich thinks the 15% of people who prefer a 4-inch iPhone will be pleased with Apple’s newest offering because it offers the new A9 processor, the Touch ID fingerprint scanner with Apple Pay support, and LTE speeds that are 50% higher than those of the iPhone 5s for between $399 and $499.

Apple management said they sold 30 million 4-inch iPhones last year, so Milunovich has added 12 million iPhone SE models to his estimates. He continues to expect Apple to sell 52 million iPhones for the March quarter, which is above consensus. It should be noted that the newest iPhones won’t be available until the end of the quarter with preorders starting on March 23 and availability coming on March 31. By the end of April, the new 4-inch iPhone will be available in 110 countries.

The UBS analyst adds that his iPhone Monitor suggests demand for 63 million iPhones during the March quarter based on Google searches, which climbed 5% year over year, including a 6% decline in the U.S. and 8% increase in Mainland China. He thinks such a high number seems unlikely but could end up being “directionally correct.”

iPhone SE to improve Apple’s positioning in mid-range smartphones

Drexel Hamilton analyst Brian White notes that the price range of the iPhone SE fits in nicely under that of the 4.7-inch iPhone 6s, which starts at $649, and the iPhone 6, which starts at $549. The iPhone 5s starts out at $450, so he thinks the $399 to $499 price point will better position Apple in the mid-range of the smartphone market. He also believes the price point will give the company a boost in developing markets like India and Tier 3 through 5 cities in China.

He is still looking forward to this year’s iPhone 7 cycle and the ramp of the Apple Watch. He also thinks the company is likely to increase its cash returns to shareholders even more and likes the new geographic markets like India.

iPhone SE triggers another upgrade cycle

Stifel analyst Aaron Rakers and his team seem to like the timing of the iPhone SE’s release because they believe it will trigger another upgrade cycle at a time when Apple’s smartphone sales are usually seasonally slow. They also expect the phone to help the company continue expanding its installed base by increasing its addressable market.

Apple shares moved higher today after closing down on Monday. As of this writing, the stock is up 0.85% at $106.81 per share.