Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Apple's new iPhone SE is meant to be aimed at emerging markets.

Indeed, the company went to great efforts to explain how demand for smaller 4-inch phones remains robust in China when it unveiled the SE this week at its Cupertino headquarters.

But Apple's pricing and rollout schedule looks decidedly unfriendly toward the markets it's supposedly addressing. To start, only one of the 12 markets in which Apple will release the SE this week could be considered emerging, and that's China.  It'll take another two months for the device to hit the next 100 countries, according to Apple.

In recent years, China has regularly been included in the first wave of product releases. That's helped Apple ensure solid initial demand, which is critical to those fanfare statements about record opening-weekend sales.

As for pricing, China will again pay a premium to the U.S. cost for Apple devices. Granted, it's not the only country to do so. Continental Europe tends to pay the biggest markup , and that's no different this time around, with France and Germany facing a 38 percent higher bill for the 16GB SE model, compared with 27 percent for China.

Premium Call
Apple's iPhone SE is priced up to 38% higher outside of the U.S.
Source: Apple country websites, compiled by Bloomberg. Puerto Rico pricing not available
Based on USD forex conversion as of March 23, 2016

Still, it's ironic that a Foxconn worker in Shenzhen (where iPhones are made) could cross the border into Hong Kong and save $56 on the cheapest SE, and as much as $157 on the most expensive iPhone 6s Plus. To be fair to Apple, these differences are largely determined by taxes and tariffs.

Yet the non-U.S. markups are higher for the SE than for any iteration of the iPhone 6s or iPhone 6s Plus. The SE premium for China compares with about 25 percent more for the 6s Plus. Over the border, Hong Kong once again has one of the smallest markups at 13 percent, though that's still higher than 10 percent premium for the 6s Plus.

More telling is Apple's decision not to discount the price of its two-year Apple Care warranty program in China for the SE. 

Cover Cost
Apple Care in China for iPhone SE is the most expensive globally
Source: Apple country websites for 2 year Apple Care service. Data and conversions by Bloomberg
Note: No pricing for Puerto Rico.

In every other country, Apple is charging less for the SE's warranty program than for the 6s and 6s Plus -- 39 percent less in Singapore. That means Chinese consumers are paying 23 percent more for the optional extra two-year coverage than U.S. consumers. By contrast, Chinese buyers pay 5.9 percent less than the U.S. for the same coverage on an iPhone 6s.

China's iPhone appetite is unlikely to be damped by continued differential pricing. But consumers who've listened to executives talk of people begging them to keep the 4-inch iPhone and the product's important position in the China market could be forgiven a whiff of cynicism.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Two if you count Puerto Rico as emerging, but as of publication time, pricing wasn't available for the territory.

  2. Among first-wave countries, Canada continues to get the (second-) best price across the entire range.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Matthew Brooker at mbrooker1@bloomberg.net