iPhone 16e Positioning in the Market and Apple C1 Strategy
Today Apple officially announced the newest member of the iPhone family, which includes the newest member of the Apple silicon family: the C1 (Cellular 1), their first-party Apple-designed cellular modem.
iPhone 16e Position in the Market
Where does the new iPhone fit in the current iPhone lineup is one of the main questions that has come up. Obviously, it is now the most affordable iPhone entry point for Apple Intelligence. That said, I am still of the opinion that Apple Intelligence is not yet the pull for hardware buyers that it will be someday. I still maintain the stronger cycles being observed with iPhone are from the very large aged installed base of devices, where many consumer demographics are holding onto their devices for lengths of time we have not seen before.
Apple has typically released their entry-level iPhone in the spring and not the fall for the specific reason that the audience that would generally be more interested in a true entry-level iPhone is not the typical buyer for iPhones that launch in the fall. Those buyers skew more early tech and also skew more toward frequent upgrades. The buyer profile for iPhone 16e is going to skew more late adopter and much more price sensitive. This is more the market I think Apple has targeted iPhone 16e for, which is why price and battery life seem to be the strongest points of the product positioning. In fact, I’d wager the part of the installed base Apple is positioning iPhone 16e to is sitting on some of the oldest iPhones, which means they are dealing with some of the worst battery life of anyone in the iPhone installed owner base.
iPhone 16e sets itself up well to appeal to the aged device and price-conscious customer that makes up a significant part of Apple’s installed base, as well as many new customers who fit this profile in other parts of the world where carrier subsidies are less normal than the US and price is a much larger factor in purchasing.
Thoughts on Apple Silicon C1
Perhaps the most interesting part of the iPhone 16e is Apple’s first in-house custom-designed modem called the C1. This is a result of many years of efforts for Apple to design their own modem, which was enabled by several factors including acquiring 5G modem assets from Intel and cellular license deals from Qualcomm.
Design-wise, Apple is noting specific battery life efficiencies gained by designing the modem themselves. For as long as I have been analyzing this potential of Apple doing their own modem, the question remained as to where they can differentiate and add value when it’s unlikely it is the fastest modem on the market in pure speed. It seems the answer to that question is battery life.
Like all modem designs, it is not just the chip but the total solution that makes up a baseband application processor. Apple’s ability to customize all of that directly to the design of the iPhone and to A18 is where they are getting up to 25% efficiency gains that are leading to less power draw and thus helping the battery life story with iPhone 16e.
Interestingly, the C1 is a discrete modem design. Part of my logic for Apple wanting to do their own modem was they wanted to put the modem on the SoC like Qualcomm and MediaTek do, since there are always efficiency gains when you integrate the modem onto the SoC. Given A18 was already in production and designed, it certainly makes sense C1 is a discrete solution, but now I question whether Apple needs to ever put their modem onto A series silicon. I specify A series because it is unnecessary to integrate a modem on M series silicon, and thus when they inevitably bring connectivity to Mac, I don’t think it will be on the M chip.
Given they were able to see such power efficiency gains by still doing a tightly integrated baseband application processor (AP), I can see them not wanting to make the design tradeoff for A series silicon, thus keeping that area on the die for CPU/GPU/ANE. One thing I’m very curious to watch for in future C-series modem designs.
Naming the modem C1 certainly makes it clear it is the first of many generations of modem designs from Apple, and I fully expect the Apple-designed modem to make its way to all of Apple’s products within the next two years.