Why Covid-19 May Give Apple Incentive To Make Smaller Phones Again
In a smartphone market driven primarily by entertainment, photography and convenience, Apple and its competitors could continue to make money with bigger phones even as unit sales declined.
But with the global economy entering recession, and possibly depression, there will be demand for less expensive devices used mostly for communication and other urgent matters. JL
Samuel Axon reports in ars technica:
As the market has become saturated, Apple and Android OEMs are seeing
slower smartphone sales growth—and people are upgrading less frequently. This makes the economics of selling low-cost
smartphones unfavorable. To make up
for selling fewer units overall, Apple and its competitors need to sell
more expensive phones. If they can't sell more phones, they can sell a smaller number
of phones at a higher price per unit.
The new iPhone SE is here, and it's an attractive product: it combines a tried-and-true design, arguably the fastest mobile chip in the industry, and a $400 starting price point. It might be the most appealing phone in Apple's lineup for a wide range of users.
That said, it's quite a bit bigger than its predecessor. Consumers who were hoping for the return of the 4-inch display, or maybe even a slightly larger display but in the same grip size as the original SE, were likely disappointed by this week's announcement. Apple is not alone in skipping smaller handset offerings; there aren't many small Android phones left, either.
There are reasons for this trend that make sense both for the tech company and the consumer, but there are also reasons Apple shouldn't turn its back on a minority of consumers who still want—or even need—smaller phones.
Why there aren't many small phones anymore
There are numerous reasons not a lot of very small smartphones get made at this point. And there is some overlap between why Apple has emphasized larger phones and why Android OEMs have. But in any case, we'll focus on Apple here since we're discussing the iPhone SE.
Bigger phones mean bigger revenue
You've probably noticed smartphone prices going up; part of that reflects the fact that some consumers are willing to pay more than they were previously because of how central smartphones have become in so many aspects of our lives. But part of it is because companies like Apple need to please investors, and if they can't do that by selling more phones, they can do it by selling a smaller number of phones at a higher price per unit.
As the market has become saturated, Apple and Android OEMs are seeing slower smartphone sales growth—and people are upgrading less frequently for various reasons, too. This makes the economics of selling low-cost smartphones more unfavorable than they have been in the past. To make up for selling fewer units overall, Apple and its competitors need to sell more expensive phones than before.
It makes sense for smaller phones to sell for cheaper because they contain fewer expensive materials and components. And a company couldn't just sell the small phones with a huge margin; a competitor would be able to undercut that price with a comparable phone.
Apple's emphasis on content and services calls for bigger screens
Investor pressure mounted on Apple in recent years to make up for the slowing growth of smartphone sales, and a more expensive phone hasn't been the company's only apparent strategy. Another has been to pivot to sell additional products and services to existing customers, ranging from AirPods to the Apple Watch to subscription services like Apple TV+, Apple Arcade, and Apple Music.
Generally, that strategy requires smartphones to be treated as primary media consumption devices—not just for short TikTok videos, but for long binge sessions of Arcade games or TV+ shows. (Also, Apple receives a cut from subscriptions to other video services started through its payment system.) That means it makes sense to emphasize more powerful devices with larger, more immersive screens.
It's not much fun to watch For All Mankind or play Sayonara Wild Hearts on a 4-inch screen. With 6.5 inches, though? That might be a different story for some, especially if that phone also sports an OLED display with HDR support like the iPhone 11 Pro Max.
Enlarge/ The iPhone 11 Pro Max (right) measures a whopping 6.22 inches tall. The iPhone 11 Pro (left) is no slouch at 5.67 inches, but that extra half-inch(ish) makes it look tiny in comparison.
Samuel Axon
Modern features don't fit in small packages
Those business-related reasons are part of the picture, but neither is the most significant reason. There are technical and design reasons, too.
Over time, Apple and its competitors have added more features and components to smartphones, requiring more space inside the phones to put those things in. And it just so happens that most of the top priorities of smartphone buyers run counter to the ideal of a small phone: battery life and cameras.
In February of 2019, market research company SurveyMonkey asked smartphone buyers what their top priorities were. The leading concern was battery life, cited by 76 percent of iPhone users and 77 percent of Android users. Also near the top: better cameras, at 57 percent and 52 percent, respectively.
A similar survey of 575,000 US consumers by Global Web Index also put battery life as a concern for 77 percent of smartphone users. Camera picture quality landed at 62 percent, and screen resolution was also high at 52 percent.
I've written before about how aging lithium-ion battery technology is a burden to the modern smartphone. That's still true now. A significant percentage of the bulk in modern smartphones is dedicated to batteries. The bigger the phone, the bigger the battery, and bigger batteries mean more battery life. This scale still tells the same story even if you account for the added battery drain of larger screens.
Today's smartphone cameras are modern marvels, but there's a reason Apple and Google have leaned so heavily on computational photography to improve the pictures taken with them: space limitations make it especially challenging to make these cameras better, especially as popular new features call for additional lenses.
All that is to say that while some smartphone buyers might say they want a small smartphone, a big chunk of those who say that might change their tune when told that means worse battery life and poorer-quality photos.
Companies like Apple do market research and adapt their product lineups accordingly. This isn't something former CEO Steve Jobs was known for, but Apple's current lineup seems to suggest Tim Cook is not so averse to that approach to product development. And market research is probably telling smartphone makers that the great majority of consumers want big phones—either because they want big screens, or because other desires like longer battery life are easier to deliver in larger devices.
There is surely still a niche audience for small phones, though, and it's not being served very well. Part of that may be because supply lines can only produce so many components in a given time frame, and it may make sense in many cases for Apple and its partners to focus those supply lines on products that have the widest possible appeal.
But nevertheless, a case can be made that Apple and Android OEMs are not adequately serving the market by leaving small phones like the original iPhone SE out of the mix.
Why Apple should keep making small phones anyway
There was a time when Apple's product lineup reflected the philosophy that one product can meet the needs of all users, but that has changed under CEO Tim Cook. There's a wide range of iPhones, Macs, and iPads available now. While this does undermine one of the original pitches behind the Apple ecosystem for some consumers—freedom from the burden of choice—it's generally a good thing. It's important for the future of Apple's platforms that they address a diverse range of users, from low-income to high-income, from one region to another, and so on.
To that point, offering small, iPhone 5-sized phones would fill in some critical gaps.
There have been numerousop-eds written over the past couple of years by women in the tech media space lamenting that it doesn't feel like today's smartphones are made with them in mind. And it's a complaint I've heard time and again. It's so common, in fact, that I can recall multiple times that a woman I have just met asked me what I did for a living, and as soon as I answered that I review gadgets, they responded with the question, "Why don't they make phones that suit women's hands anymore?"
Whether those individuals speak for all women or not, they're large enough in number that it's perplexing that companies like Apple aren't offering solutions.
And, of course, there are men with small hands, too. It shouldn't be difficult to find a phone that fits how your body is built, but for many it is. Some people with small hands purchase phone grip attachments like the ones pictured below. These attachments serve a few functions, but one of them is to help people with small hands hold gigantic phones securely. It seems obvious to me that there's something absurd going on when people have to purchase things like this to hold their phones.
Beyond that, there are accessibility concerns. Many users don't have full use of both of their hands or have other disabilities that would make small phones more practical for them. Apple has lately been an industry leader in offering powerful software accessibility features in iOS software for iPhones, so it's surprising that the company isn't doing as good a job addressing the diversity of human ability in hardware, too.
Phone size matters for software design, too. Apple's phones became so large that users began demanding that app developers move UI elements previously placed at the top of the viewport to the bottom. And Apple introduced a feature called Reachability that lets users pull the top of the viewport down so they can reach it with their hands.
It seems to me that when you have to introduce a feature called "Reachability" so users can conveniently access your entire user interface, you have a serious design problem without a good solution.
Luckily, there is a pretty simple solution: offer consumers a smaller phone as one of many options. Failure to offer options to address the entire available market has been one of the key factors preventing Apple from achieving majority market share in some of its product categories. Bringing back the original size of the iPhone SE would be one of many ways the company could remedy that.
Sadly, with the recent unveiling of that 4.7-inch iPhone SE successor, it unfortunately doesn't look like that's going to happen any time soon.
As a Partner and Co-Founder of Predictiv and PredictivAsia, Jon specializes in management performance and organizational effectiveness for both domestic and international clients. He is an editor and author whose works include Invisible Advantage: How Intangilbles are Driving Business Performance. Learn more...
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