Analysts continue to forget one of Apple’s smartest decisions: copying the Samsung phablet. This was huge.

Credit to Tim Cook, because you absolutely know Jony Ive must have hated the very idea of a phablet.

Even as Samsung began selling millions of them, as China — Tim Cook’s favorite market — embraced the phablet, Apple resisted. Ive and his sycophants in the blogosphere made it clear that the phablet was ugly, ungainly, and poorly designed — requiring two hands to use!

As if that ever mattered to actual users.

When Apple finally released its own psuedo-phablet, the iPhone 5, it was hideous. One of the ugliest Apple products I can ever recall. It’s shape, which again the high-paid bloggers cheered, was all wrong. It was as if Jony Ive placed an iPhone 4 onto a railroad track and called it a day.

But, pent-up demand for phablets was so huge that Apple sold millions.

With the iPhone 6, Apple finally gave the world the large iPhone (phablet) it craved. That was back in 2014. Now, in 2016, there’s a hole in the iPhone line-up.

Because even though bigger is bigger, as Apple tells us, bigger doesn’t suit everyone. This means money is left on the table. And this cannot be. Apple is a corporation and the north star for all corporations is money, and so Apple will absolutely build a “small” iPhone.

The rumors are true.

But, positioning a small iPhone will remain tricky.

We are humans. We equate bigger with better, bigger with more, bigger with pricier, and this is particularly so for screens.

Meaning: the market will absolutely assume that a “small iPhone” should be a cheaper iPhone. And a cheaper iPhone likely means an iPhone with a lower margin. Problem: Tim Cook is the sitting Pope at the Most Holy Church of Profit Share. He will be loathe to offer an iPhone with a low(er) margin. Worse, the last time Apple attempted this, with the iPhone 5c, it flopped. Hard.

The iPhone 5c was originally promoted as the “cheap iPhone.”

And it looked it.

It had a brittle-feeling colorful shell and was utterly lacking in hardware and features, compared to the then top-of-the line iPhone.

I am sure Tim Cook no doubt thought he could build a cheap iPhone, using last year’s tech, but sell it for only a bit less than the top-of-the-line iPhone. This was a doomed strategy.

Two years ago I called out the iPhone 5c failure — and was brandished a heretic by the Apple priesthood.

Trying To Understand How The iPhone 5c Failed

Later that year, I offered additional reasons for the failure of the iPhone 5c:

The iPhone 5c was a failure both in terms of sales and for how it diminished Apple’s image as an innovator. I may never have been so right as when I declared the 5c a failure. Expect it to be erased from Apple Stores before this year is out.

The 5c will not be the last Apple flop. I suspect the primary value of any iWatch, at least in the first few years, will be to show people you have an iWatch.

Yep. Back in 2014, I also called out the failure of what was to become the Apple Watch.

iPhone 5c was priced about $100 less than the iPhone 5s, cheap by Apple standards, but the specs were woefully lagging. The effort to go down-market and maintain margins blew up in their face. Apple was demanding that its own customers pay Apple-like prices but for a device that had obviously lesser hardware and features, plus a design that signaled to the world — this is Apple’s hand-me-down!

Of course iPhone 5c was doomed to fail. It was an easy call.

The new alt-iPhone, smaller, what some are calling the iPhone 5se, does not have to meet the same fate.

Here’s how:

(Spoiler: make it an Ahrendts product, not an Ive or Schiller product, both of whom I suspect Tim Cook is losing faith in.)

  1. Abandon the 5se name. That’s both a dumb name and signals to the world that it’s old technology. No one paying Apple prices wants to tell the world they bought old technology. In fact, I would not be surprised if Apple uses this new device to abandon the numeric naming convention altogether. All the numeric naming convention does now is confuse. Do you remember that iPhone 6 is not the newest device? It’s the iPhone 6s. Do you know if your device has 3D Touch? Are all 6 models using the same processor? Does 5s offer Apple Pay? Do the same size phones have the same battery life?
  2. Only offer this small iPhone with the very best specs. This is critical. To do otherwise tells everyone the buyer is cheap and/or foolish. Thus, where possible, the small iPhone must have the same hardware, functions and features as the newest big iPhone.
  3. The battery and screen obviously can’t be equivalent, and Apple should make it plain that the small model is only cheaper because of its size, not because of the technology or parts. Fear not, $AAPL investors. Apple should easily make up for this loss by offering a slew of small iPhone-only accessories.
  4. The 5c came in different colors and Apple offered a wide variety of cases for the device. They should do the same with the new small iPhone, particularly given the fact that a disproportionate number of women will buy the smaller iPhone and because Apple’s head of retail, Angela Ahrendts, is among the best in the world at convincing women to buy high-margin, high-priced, utterly unnecessary accessories. Yes, dear reader, these Ahrendts-led accessories will cost you dearly. There will be no “unapologetically plastic” foolishness, still another one of those big Jony Ive tells where he makes it plain that he’s better than you. For Ahrendts, everything will scream upscale. Unlike plastic. With iPhone “SE” you’re part of her clique. There will be no Jony Ive looking down his nose at you and your plastic phone.
  5. I suspect Ahrendts is a year behind schedule in remaking Apple Stores. This is in large part because her vision, which I believe incorporates a very attentive store employee always pushing the high-margin accessories, got thrown off course by just how badly the market rejected Apple Watch. It can be used for the new, small iPhone. All that branding effort, the special cases, the training, the bands, the price ranges, each to distinguish your beautiful gloriousness, the sales at jewelers, the sales by appointments; simply transfer these to selling the new small iPhone. I think this is exactly what Ahrendts wants, only Apple Watch was the wrong product. A “small iPhone” that is a combination of actual functionality with actual beauty could be the product that Ahrendts dreams about. In fact, I think the only reason for the stupid 5se name is that “se” — special edition — is there because Ahrendts is masterful at selling “special.” But the “5” has to go. All the 5 does is remind the potential buyer they are getting a technological knock-off.

Based on my analysis, if the small iPhone came out today, there would be the iPhone 6s and 6s Plus at the top, the 6 and 6 Plus at the Apple midrange, and then in its own world, not bringing up the rear, nor priced as such, is the “special edition” iPhone.

The vision for the smaller, special edition iPhone will more closely match Ahrendts vision for Apple. Branding, luxury, margins, an endless supply of wealthy Chinese. It’s anti-Steve, yes, but it’s proven extremely profitable for her in the past.

And Tim Cook seems to love nothing more than profits.

For the new, smaller iPhone, instead of DISRUPTION! or REVOLUTION! or even ONLY APPLE! think high-fashion, high-profit, and highly accessorized — with high technology. It’s the Apple Watch strategy, but for a product that matters.