Apple announced on Wednesday that it will discontinue the iPhone SE, which first launched in 2016, and replace it with a more expensive entry-level model. This new version comes with advanced features that were previously reserved for Apple’s premium devices.

Tech experts had speculated that the simple, budget-friendly SE would either be updated or phased out. However, some analysts in Canada are concerned that the price hike could make the iPhone even more unaffordable for budget-conscious consumers.

“Apple’s pricing has always been on the higher side,” said Takara Small, a Toronto-based tech podcaster. “This new version might not be the last price increase we see,” she added, pointing out that rising manufacturing costs might push Apple to deliver a more profitable device for its shareholders.

The newly launched iPhone 16e is positioned as an entry-level model within the iPhone 16 series, retailing for $899 in Canada.

“Nine hundred dollars for a phone is a lot, regardless of the features,” said Patrick O’Rourke, editor-in-chief of Pocket Lint, a tech website.

This price is $320 higher than the iPhone SE, which continues to be sold for $579.

For comparison, the iPhone 15 is priced at $999, while the iPhone 16 costs $1,129. Samsung Galaxy models start at $279, and Google Pixel phones begin at $599.

“I don’t find the iPhone 16e’s price point appealing in Canada, especially when you consider Android options,” O’Rourke added.

Higher Price Brings Premium Features

The iPhone 16e is larger than the SE and includes features such as Face ID, Apple’s new AI toolkit (Apple Intelligence), and other upgrades generally found on higher-end iPhones.

“iPhone 16e brings the standout features that users love, including enhanced battery life, fast performance with the new A18 chip, a dual-camera system, and Apple Intelligence,” said Kaiann Drance, Apple’s Vice President of Worldwide iPhone Product Marketing.

The A18 chip powers AI functions, like automatically summarizing text and audio, creating dynamic emojis, and improving the virtual assistant.

Apple recently predicted strong sales growth, suggesting that the integration of more AI features in additional regions and languages could boost iPhone sales after a slight drop.

Counterpoint Research reported that the iPhone SE’s share of total iPhone revenue dropped from 10% at launch in 2016 to just 1% last year.

A Risky Pricing Strategy?

Some analysts believe that by replacing the budget model with a mid-range option, Apple is solidifying its status as a premium brand.

“Apple can offer lower-priced phones in Android-dominated markets without impacting revenue from its high-end devices,” said Gil Luria, an analyst at DA Davidson.

However, this approach may not work as well in Canada, according to some critics.

O’Rourke noted that the iPhone 16e and the iPhone 16 are similar in design and features, making the price difference difficult to justify.

“Both phones have the A18 chip, similar screen sizes, and the main difference is the camera. The iPhone 16e could end up cannibalizing sales of the iPhone 16 and 16 Pro,” he explained. “It will be interesting to see how this plays out.”

Higher Prices Could Fuel Demand for Used iPhones

Alex Sebastian, co-founder and COO of Orchard, a Canadian company specializing in the resale of used iPhones, believes the price increase could have wider implications for the market.

He argues that for most users, there’s little noticeable difference between older and newer models.

“If I handed you an iPhone 13 and an iPhone 16, most people wouldn’t notice much of a difference, even though one is three years older,” Sebastian said.

With increasing transparency from Canadian carriers offering “bring your own device” deals, Sebastian believes that more consumers will turn to used phones as a cheaper alternative.

“If the price of the cheapest new iPhone increases by $300, many people will likely consider pre-owned options. This could be a big boost for our business,” he explained.

Given the current economic climate, Small questions whether the higher price of the new entry-level iPhone will push many buyers away.

“Studies show that people are keeping their iPhones longer,” she said. “This trend is likely tied to the rising cost of living.”

Apple has announced that the iPhone 16e will be available for pre-order starting this Friday.