Technologies

The 2024 iPhone SE 4 May Already Be Canceled

As its Pro line rises in popularity, Apple may forget about its budget option.

If you could get the same performance as an iPhone 14 for roughly half the price, wouldn’t you think it was worth getting? According to analyst Ming-Chi Kuo, Apple may scrap the next version of its wallet-friendly iPhone SE, which was expected to arrive next year.

«The supply chain has received instructions from Apple indicating that the production and shipment plans for the 2024 iPhone SE 4 have been canceled rather than delayed,» Kuo wrote in a Medium post on Jan. 6.

If Kuo’s predictions are correct, only Apple knows the reasoning behind the cancellation. But research and media reports suggest there may be a very simple answer. More expensive iPhone models tend to be more popular, possibly leaving little incentive for Apple to continue pursuing cheaper phones like the iPhone SE.

Apple didn’t respond to CNET’s request for comment.

The third-gen iPhone SE, which debuted in March, starts at $429 and is essentially an iPhone 8 stuffed with the guts of an iPhone 13. CNET’s Patrick Holland called it a «mind-blowing value» in his iPhone SE (2022) review, but he also highlighted missing elements that make it feel dated, like its lack of a full-screen design or night mode for the camera.

Previous generations of the iPhone SE took a similar approach; the 2020 version essentially had the same design but had the iPhone 11’s chip. The 2016 model had the body of an iPhone 5S with the processor of an iPhone 6S. A rumored fourth-gen iPhone SE was expected to adopt a new design similar to the iPhone XR, according to YouTube personality and gadget leaker Jon Prosser.

To understand why Apple may have canceled its next iPhone SE, consider the changes Apple recently made in its iPhone 14 lineup. In a departure from the prior two years, Apple did not release a cheaper «Mini» version of its new flagship iPhone in 2022. Instead, it released a larger version of the regular iPhone 14 called the iPhone 14 Plus, which is $100 more expensive than the regular $799 iPhone 14, raising the barrier to entry for shoppers.

This change followed reports from Nikkei Asian Review and Kuo (via MacRumors) that Apple would scrap the iPhone Mini in 2022, with the former adding that the Mini model didn’t resonate with consumers. Taken together, the elimination of the Mini and reports that next year’s rumored iPhone SE may have been axed could indicate that Apple is pivoting away from releasing smaller, cheaper iPhones.

But Gene Munster, managing partner for tech investment firm Loup and a longtime Apple analyst, doesn’t see it that way. He believes the iPhone SE still plays an important role in Apple’s lineup because of its low price.

«It’s still, I think, the best bang for your buck when it comes to an iPhone,» he said.

Evidence suggests that more expensive iPhones tend to be top sellers, which might help explain the shift. The average selling price of an iPhone rose 7% year over year in the third quarter of 2022, according to Counterpoint Research. The market research firm also reported in June that Apple dominated the global market for premium phones with a 62% share in the first quarter of 2022. It’s important to note that Counterpoint defines premium phones as devices that cost $400 and higher, meaning the third-gen iPhone SE would fall into that category since it starts at $429. The report, however, did say that Apple’s growth in the premium category largely came from the iPhone 13 lineup.

The pricier iPhone 14 Pro and Pro Max also appear to be the stars of Apple’s new smartphone lineup so far. The Information reported that Apple cut production of the iPhone 14 Plus within two weeks of its launch, while research firm Trendforce says Apple boosted production of the iPhone 14 Pro and Pro Max. Kuo also said on Twitter in September that the iPhone 14 Pro Max was responsible for about 60% of Apple’s order increase for the Pro lineup, hinting that Apple’s most expensive new iPhone is also its most popular. A November 2022 report from Wave7 Research also said 38 out of 39 surveyed carrier service representatives said they didn’t have in-store inventory of the iPhone 14 Pro or Pro Max.

The iPhone SE, meanwhile, has only accounted for roughly 5% to 8% of quarterly US iPhone sales over the past two years, said Josh Lowitz of Consumer Intelligence Research Partners. When looking at total volumes for the newest iPhone models in a given year, the Pro versions typically account for 35% to 40% of sales, while the iPhone SE makes up about 20%, according to Munster.

Carrier discounts have also made it easier to snag high-end phones at cheaper prices, especially when trading in an old device, as my colleague Eli Blumenthal pointed out following the iPhone 13’s launch. Many US shoppers also pay for their phones in monthly installment plans through carriers, which can make higher prices easier to swallow. Both of those factors can make the case for buying a less expensive iPhone with fewer features all the more challenging.

«Because you’re paying over such a long period of time … the $100 price difference, or even a $200 price difference, isn’t that much per month,» said Lowitz.

At the same time, Samsung has seen success in the market for lower-priced phones. Its Galaxy A phones, which typically cost hundreds of dollars less than its flagship Galaxy S phones, accounted for 58% of Samsung’s smartphone unit sales in 2021, according to Counterpoint Research data previously provided to CNET. Samsung’s Galaxy A phones have modern features not found on the iPhone SE, such as a camera with multiple lenses and larger screens, although they often run on less powerful processors than Samsung’s pricier phones.

The notion that Apple may have canceled the 2024 iPhone SE raises questions about the future of the SE line in general. Apple extended the SE branding to the Apple Watch in 2020 for the first time and launched a sequel to that product in September.

The fact that Apple had brought the SE line to another product had made it seem like a more permanent fixture in Apple’s lineup. But if Kuo’s insight turns out to be accurate, the iPhone SE’s days may be numbered. And once you take a closer look at how Apple’s smartphone lineup has changed and the data around phone shipments, it’s easy to understand why.

But Munster isn’t convinced that cheaper iPhones like the SE are going away for good. Having a more affordable option makes it easier for Apple to achieve its broader goal of bringing more customers into its web of products and services.

«I think that plays an important role,» he said. «I don’t think Apple’s giving up on that price point.»

Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know