iPhone SE Pre-Orders In China Hit 3.4m But There's A Catch

Judging by the reactions on the Internet, the iPhone SE will be a big hit as any other iPhone, despite, or actually thanks to, sporting a size and design that is already two years old. In China alone, the pre-order numbers have reached an astounding 3.4 million units. While a healthy indicator at first glance, China is a country notorious for its consumer electronics black market, and vendors there are somewhat less optimistic about the real value that Apple's mid-year smartphone will have in the market.

The iPhone SE is almost like a living contradiction. It is expected and wanted but also odd and almost superfluous. Apple has always insisted that there is a huge market for 4-inch smartphones, like the iPhone 5, 5s, and 5c, especially in China. These pre-order numbers definitely prove Apple's point and, if it's any indicator, the iPhone SE will do particularly well there.

But numbers, especially pre-orders, is one thing. Actual sales and profits are different stories. While there might be strength in numbers, the overall profits might be considerably smaller. Vendors and scalpers, and even anonymous black market smugglers, are at bit skeptical how much profit they can squeeze from these small smartphones. Any other iPhone can get a $300 premium on top of the retail price. The iPhone SE would be lucky to even get more than $50.

Then again, that might be Apple's strategy all along. The iPhone SE is unabashedly a way for those with iPhone 5s or earlier to upgrade to near iPhone 6s specs without having to give up their preferred design. These are consumers that are more likely to stay with their old smartphones than upgrade to a newer, bigger iPhone.

And with the iPhone 7 later this year rumored to simply be an incremental upgrade over the iPhone 6s, the iPhone SE could help fill in the lull. All in all, Apple is effectively covering all its bases, which translates to more sales in total, despite relatively smaller profits.

SOURCE: CNBC