Apple has introduced a smaller iPhone priced at $399, slashing the starting price for the company’s smartphone line in a move to broaden its appeal to budget-conscious customers as the coronavirus stalls the global economy.
The lower-cost model could also attract more consumers to Apple services, a growing driver of revenue.
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 iPhone 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 relying on a fingerprint sensor similar to older models, Reuters reported.
The announcement comes as the United States and much of the world is reeling from the novel coronavirus, although U.S. political leaders have begun to talk about ending stay-at-home orders and restarting the economy, hoping record deaths and falling hospitalizations 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 percent 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 has been investing in subscription services such as its Apple TV+ streaming television service, Apple Music and iCloud. The new SE will come with a one free year of streaming television service.
Apple in January said 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.
Apple gets about 31 percent of its sales from its elegant stores and website, with 69 percent coming from partners such as mobile carriers and other retailers. Apple said partners would decide whether to sell the phones in their physical stores.