Many analysts see the product's modest price-point and upgraded capabilities as a major driver in luring budget-friendly consumers and older iPhone users with smaller screens.
"As we highlighted in our prior note, Apple has done a great job in gaining share in the higher smartphone price bands, and we think this refresh of the SE could help the company gain share in the lower bands," Bank of America analyst Wamsi Mohan wrote.
While the $429 price point for the new iPhone SE was slightly higher than previous models and what many analysts had forecast, the "attractive price point" could make it a major driver of upgrades or switches among consumers with smaller screen iPhones or low- to mid-tier Android devices, JPMorgan analysts wrote.
The new iteration, priced $30 above the previous SE model, comes in three colors, offers 5G capabilities, and includes the latest A15 Bionic chip which currently supports the iPhone 13.
On the sales front, Morgan Stanley is expecting more than 237 million iPhone shipments this year, including 22.6 million shipments of the iPhone SE. Analyst Katy Huberty called the forecast "conservative relative to the iPhone SE2 cycle" — it launched during the early pandemic and boasted 28.6 million shipments within its first year on the market.
"While there are slight timing differences when comparing the two cycles – the iPhone SE2 was launched in April vs. the iPhone SE3 in March – we believe these observations point to upside risk vs. our March and June quarter iPhone shipment forecast," Huberty wrote.
The bank's forecasting for the new model fell slightly below the pricing tier announced Tuesday, which puts "upward pressure" on the bank's average selling price forecast for iPhones this year, she added.
While many analysts lauded the technology giant's latest offering, some analysts aren't as impressed. While SE sales could top 20 million units this year, Bernstein's Toni Sacconaghi expects many users to continue upgrading to higher-priced products.
When introduced in 2016, the SE had "no visible impact" on seasonal iPhone revenue following its introduction and the new model is priced just $70 below the iPhone 11, Sacconaghi noted. Previous models offered a larger price spread between the least expensive iPhone on the market at the time.
"We continue to believe that iPhone's fortunes through year end will be most shaped by sustainability of demand for Pro models rather than the success of the SE," he wrote.
Apple's stock was up more than 2% pre-market.