Apple's launch of a cheaper iPhone is looking increasingly uncertain as the coronavirus spreads

Hollis Johnson/Business Insider

The iPhone 8 and 8 Plus

• Apple was reportedly planning to hold an event in March to announce new products, but has scrapped plans to do so because of the ongoing coronavirus outbreak, according to Cult of Mac.
• Apple was widely expected to announce a low-cost iPhone called the iPhone 9 or iPhone SE 2. The cheaper model would reportedly have a design similar to the iPhone 8 with the same processor as the iPhone 11 and 11 Pro.
• But Apple has delayed the announcement because of production delays, as well as concerns around bringing so many people together for an event, especially after California's Santa Clara County recently banned gatherings of 1,000 people or more.
• A cheaper iPhone would be critical to Apple's product strategy. It would give Apple a more affordable option that could expand its reach in emerging markets, which could in turn widen its audience for digital services and wearables that are tied to the iPhone.
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Apple was reportedly planning to hold an event at the Steve Jobs Theater on its campus in Cupertino to introduce the new low-cost iPhone that's been rumored for months. But that product launch has been scrapped as a result of the ongoing coronavirus outbreak, according to Cult of Mac.

Apple has reportedly postponed the event for several reasons: one being that the product isn't ready yet because of delays in production stemming from the virus. Another reason, according to the report, is that Apple was "concerned" about bringing so many people together in close quarters.

Santa Clara County's health department also recently passed an order banning mass gatherings of 1,000 people or more over coronavirus concerns, which was reportedly a big factor behind Apple's decision to delay the event.

Apple did not immediately respond to Business Insider's request for comment.

It was widely expected that Apple would release a new iPhone this month that is said cost around $400, making it a little more than half the price of the $700 iPhone 11. The phone, which has been referred to as the iPhone SE 2 or iPhone 9 in reports, is rumored to have a 4.7-inch screen, the same processor as Apple's iPhone 11 and 11 Pro, and a design that resembles the iPhone 8. But mass production of that device is said to have been pushed back following previous factory closures caused by the coronavirus, according to Nikkei Asian Review.

Bank of America analyst Elliot Lan also recently wrote that this cheaper iPhone will likely be delayed by several months because of supply constraints and weakened demand resulting from the coronavirus, as Bloomberg reported.

Apple is facing delays in production of "two of the primary products" it had planned to unveil at the March event, Cult of Mac says, although it doesn't say which products. Other than the so-called iPhone 9, Apple is also rumored to be working on a MacBook Pro with its new scissor switch keyboard and refreshed iPad Pros with 3D cameras for a launch in the first half of 2020. That's according to TF International Securities analyst Ming-Chi Kuo, who has a generally reliable reputation for making predictions about upcoming Apple products.

If the new phone is delayed as expected, it would represent another way in which the ongoing pandemic has impacted Apple's business. The company said in February that it did not expect to meet its quarterly revenue goal of between $63 billion and $67 billion for its fiscal second quarter.

A cheaper iPhone could be critical for Apple as it seeks to remain competitive with rivals Samsung and Huawei. The iPhone 9 would fill a gap that's missing in Apple's product lineup that Samsung and Huawei already have: a less expensive smartphone that could resonate in emerging markets.

The iPhone 11, which is priced $300 lower than the $1,000 iPhone 11 Pro, is already proof that there's demand for a cheaper Apple smartphone. The iPhone 11 was particularly successful in emerging markets because of its lower price, giving Apple the opportunity to appeal to a new customer base, as Canalys research analyst Shengtao Jin wrote in the research firm's 2019 report on the smartphone industry.

Launching a new iPhone that's even cheaper, especially in the middle of a product cycle while the expected iPhone 12 is still months away, could give Apple a new means of juicing iPhone sales outside of its typical product launch window.

Expanding the iPhone's user base is particularly critical for Apple as services and wearables divisions - two product categories aimed at iPhone owners - are becoming an increasingly large part of Apple's business.

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