Although the price for the new iPhone is quite low, Apple will expect to generate revenues from Apple TV and other services.
Apple has revealed its long-awaited cheaper iPhone, the SE, bringing back the look of the iPhone 8 in red, white and black.
The phone will be available for pre-order from tomorrow, costing £419 in the UK and $399 in the US, with delivery of devices expected to start on 24 April.
Reports had suggested that Apple’s plans to increase iPhone production and launch a cheaper model could be disrupted by the coronavirus outbreak.
The company had been expected to launch a mid-market line of phones, as prices of its flagship devices rose above the £1,000 mark.
As a line the iPhone SE had been discontinued in 2018, but is now making a comeback – resembling the iPhone 8 with its 4.7″ screen and fingerprint sensor instead of Face ID.
It is in many ways identical to the iPhone 8, but with an upgraded processor and camera – which Apple says will make all the difference, with software driving many of the phone’s features.
The phone is a significant departure from the iPhone XR and iPhone 11, phones which are much larger and feature the notch – which has been mocked by rivals such as Samsung – housing the Face ID equipment.
Ben Wood, chief of research at CCS Insight, told Sky News the device could challenge sales of new Android smartphones as well as tackle the market for companies who refurbish and resell second hand iPhones too.
“When it was planning this product, Apple couldn’t have known it would land in a market in complete turmoil as a result of the COVID-19 pandemic,” Mr Wood said.
“Although the new iPhone SE was undoubtedly designed to take the fight to Android rivals, it now also offers a more affordable iPhone at a time when many consumers will find it hard to justify spending $1,000 or more on one of Apple’s flagship devices.”
While the base price for the device is low, Apple has invested considerably in the services side of its business in recent years, including developing original programming for Apple TV, and games for Apple Arcade.
Mr Wood said this showed the company was confident it could create ongoing revenues from iPhone users without needing to put out top-end smartphones.
Apple “will see the benefits of the new iPhone SE as much more than just the profit margin on a hardware sale,” he said.
“In contrast, for most of its rivals, there’s little or no additional revenue after the initial phone sale.”
Apple is planning a major redesign for its next generation of 5G-compatible iPhones, according to a Bloomberg News report citing people familiar with the plans.
Apple had warned investors it would not meet its financial targets due to the impact of the COVID-19 outbreak on production and sales in China.