Apple expected to go small at Monday's big event with 4-inch iPhone SE

Apple (NASDAQ: AAPL) is hosting yet another "big event" Monday, but the company is widely expected to go small.

The iPhone vendor has successfully ridden the wave of oversized smartphones with its 6 Plus and 6s Plus, but sales of its iconic handset have slowed substantially in recent months. Handset upgrade cycles have grown longer as carriers have moved away from subsidized devices and two-year contracts, and smartphone penetration rates have flattened in the U.S., Western Europe and China.

So Apple will reportedly introduce a smaller, less-expensive iPhone in an effort to encourage loyal iPhone users to upgrade more often and to appeal to consumers who might be attracted to more affordable Android devices. The new mid-market phone, which may be called the iPhone SE, will likely feature a 4-inch screen and may look a lot like the iPhone 5S. But it's also expected to have the same A9 processor used in the iPhone 6s as well as a 12-megapixel camera that can record 4K video, and support for Apple Pay.

"Since the biggest differentiator may be that the iPhone SE has all the upgrades of the current models but in a compacted form, there is a big upgrade opportunity for consumers who are holding on to the older models and are reluctant to change to a larger device," the mobile analytics firm Localytics wrote in a blog post

Localytics noted that the iPhone 6 is Apple's most popular model with 32 percent share, but that the 5S is the next in line with 19 percent share. Thus, the firm said there is some pent-up demand among 5S users to upgrade to a new phone.

The iPhone 6s commands 12 percent share, the firm said, and the 6 Plus has 10 percent share.

Apple is also expected to introduce a smaller version of the iPad Pro that debuted last fall. The tablet is expected to have a 9.7-inch screen rather than the 12.9-inch screen offered on the initial version, and the basic version is likely to cost $600 -- making it more expensive than any previous 9.7-inch iPad, but much more affordable than the original iPad Pro, which started at $800. And like the expected iPhone SE, the new iPad will reportedly offer some impressive specs despite its smaller size.

Finally, Apple CEO Tim Cook will almost surely address the company's ongoing battle with federal law enforcement officials over privacy and encryption. Apple is hosting the event just one day before its court date in the high-profile San Bernardino, Calif. case -- the timing is almost surely no coincidence -- and gives the company a final chance to make a public statement before appealing the case before a judge.

Apple isn't expected to introduce a new version of its Apple Watch, however, opting instead to wait until its annual fall event to trot out its latest wearable. It's also likely that Apple will introduce its latest high-end handset models at that event to fill out its smartphone portfolio.

Related articles:
Apple challenged by slowing iPhone sales in urban China, upgrades to Android in U.S.
Analysts: Smartphone shipments broke records in 2015 despite slowest-ever growth in Q4
Apple removes cellular option from lower-end iPad Pro

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