mini Phone: Max Devotion
"I'll give you my mini when you pry it from my cold, dead hands"
A few days ago, a story surfaced reporting that Apple is cutting production on as many as 2 million units of the iPhone 12 mini to create more capacity for the higher-in-demand iPhone 12 Pro. Of course, this recharged speculation about what Apple may plan to do with their recently released 12 mini in the future, with arguments swirling about the possibility that Apple may kill the mini off or move to rebrand and transition it to the future SE variant in the iPhone lineup. I'm feeling a little more hopeful that the iPhone mini will stick around a bit longer, and here are a few of my mini... I mean many reasons for why I think that.
Full Disclosure: I'm super Biased
I'd push Apple to keep the iPhone mini around and continue investing billions of dollars in R&D to keep the mini in development even if I was their only buyer. I'd make a terrible economist.
Much of my workflow now occurs on the iPad and MacBook. I only desire an iPhone for photography, minimal messaging, listening to podcasts, and the occasional dive into social media. As my phone needs have shrunk, so has the desire for a bigger iPhone. But far more than purely practical reasons, the ergonomics and aesthetics of the iPhone 12 mini appeal to me. Having used Apple's smallest & largest iPhones over the years, I consistently find myself wanting to keep my phone as compact as possible.
Here are my thoughts on why I think the mini won't end up being just a one-hit-wonder.
2020: Abnormal Year, Abnormal Results
The report that came out last week states that the iPhone 12 mini was geared more towards western markets, which saw an outsized impact from the coronavirus pandemic. Off the bat, this creates a landscape where it may be harder to judge what the actual demand for this product would be in a quote, unquote "normal year." Suppose we were drawing conclusions based on 2020 alone. In that case, we should also conclude that in 2021 and beyond, we'll need to ramp up manufacturing for leggings, infrared thermometers, sourdough kits, beer, and Lysol wipes; and dial back any future manufacturing of jeans, makeup, luggage, swimwear and rash guards.
With 2021 expected to be an S-year for the iPhone line, I expect we'll see Apple take another kick at the can and upgrade the iPhone mini alongside the rest of the iPhone lineup. This would give Apple time to understand better how this product sells under more normal circumstances.
Just an adjustment
Just because production has been diverted from the iPhone 12 mini to the 12 Pro, and just because reports suggest that it makes up a smaller fraction of their iPhone sales relative to other models, doesn't mean it's selling poorly. Other models could be exceeding expectations, or Apple may have overestimated the actual demand for this class of product at this point. We also don't know what Apple's tolerances for sales might be to justify keeping this product as part of the lineup; the mini may remain well within those margins. More importantly, I highly doubt this iPhone is significantly cannibalizing sales away from Apple's more expensive offerings; instead, I'd hedge a bet that it's promoting earlier upgrading for users who found the mini’s form factor very appealing.
mini by the Millions
Even as YoY iPhone unit sales decline, Apple is still selling north of 150 million iPhones a year. Even if the iPhone mini accounted for only ~6% of iPhone sales in an otherwise normal year, that would still result in nearly 10 million units being sold on an annual basis. That's nothing to sneeze at.
Let's run with that 10 million number for just another second. Another factor that may influence Apple's decision to keep the mini in the lineup has to do with who is buying these smaller iPhones. If by keeping the mini in the lineup, Apple can enter new markets, encourage more rapid upgrading, or take market share from Android, then suddenly that sliver of 10-million units becomes a disproportionately valuable tract of land for Apple to plant a flag into.
What Else You Got
Perhaps more important than the product itself may be the depth of ecosystem reach Apple creates when buying a new product. Suppose data showing customers of a mini are X% more likely than other iPhone buyers to spend more on accessories, apps, Apple services, and additional products. In that case, this might go a long way towards justifying such a product in the lineup.
Mini Precedent
Apple isn't afraid of niche products existing in their lineup even if they sell less than some other models. One example with such precedent is a product like the iPad mini, which has only held a ~10-15% share of Apple's tablet sales but continues to be sold and upgraded by Apple on a somewhat routine basis.
And beyond just the iPhone and iPad, Apple sells a host of products that only appeal to a niche clientele. The AirPods Max, Pro Display XDR, and the 16" MacBook Pro are all examples of products kept in the lineup despite earning a small fraction of the revenue that Apple's other products make.
Keeps us Docile
This is both my most and least serious rational for keeping the iPhone mini in the lineup, and it has to do with how whiny us small phone diehards become when you take away our little devices! Keeping the iPhone mini in the lineup not only keeps this vocal minority happy but also docile and subdued. Now how can you put a price on that?
So What’ll Happen?
I expect Apple to update the mini this fall when the 12-lineup sees a refresh - whether that's as the iPhone 13, the iPhone 12S, or some other name. Apple's managed to scale down the iPhone 12 to a mini form factor without compromising cameras, features, or screen quality, and I expect that philosophy to continue in the next iteration. Removing elements from the mini would send sales into a death spiral. It would make mini iPhone lovers decide between size or feature parity, splitting a smaller market share even further.
I don't see the mini getting rebranded as a SE model anytime soon. The component costs, size, niche appeal, and philosophy of what SE denotes make the iPhone mini to SE seem very unlikely. Instead, I predict that if Apple cannot scale down components for the 2022 iPhone or finds that sales of the mini fail to attract new customers or otherwise justify further production, then at that point, the mini would be discontinued from the lineup entirely.
