iPhone Neo should be an instant ‘no’ from Apple

The MacBook Neo was a brilliant idea, and Apple deserves every bit of success that followed. But that doesn’t mean you can apply the same formula to other products without thinking it through properly, and I fear that all this talk of an iPhone Neo misses the point.

What made the MacBook Neo so appealing to customers? It was an excellent laptop at a great price, with a fun and unique look and a finely balanced set of specs. It compromised in the areas where compromise was acceptable (the trackpad, multi-core performance), and excelled in the ones where it wasn’t (look and feel, the screen, everyday performance). This all sounds simple, but it’s not.

For a start, context matters. Think of the Mac range before the Neo came along. The cheapest Mac overall was a $599 Mac mini, not including a monitor or keyboard. As for the cheapest Mac laptop, this had been $999, and went up to $1,099 the day before the Neo’s launch. Very few pundits thought $599 was a realistic price for Apple to aim for (my guess was between $699 and $799), and those negative expectations made the product look like an absolute bargain when it was announced.

Then let’s consider how Apple achieved that low price. One key element was using A18 Pro chips that were made for the iPhone 16 Pro but ended up in an unused bin due to defective GPU cores. Those binned processors were very little use to Apple, so they’re essentially free parts: it was a clever economy, the tech equivalent of flushing the toilet with water you’ve already used to wash your hands. But what happens if everyone loves your new plumbing system and starts to flush more often than they wash? You’ve got yourself a problem.

Rather oddly, for a product designed to appeal to a wide audience, the MacBook Neo isn’t really scalable: the more successful it becomes, the less sense it makes from an economic perspective. Binned chips aren’t something you choose to make; they’re an accidental byproduct of other processes. If demand explodes and you have to fill the shortfall with non-binned chips (potentially disabling a single core via software for consistency), costs go up. And that’s aside from other component costs rising at the same time, thanks to the memory crisis, another thing for which we can thank the AI bubble.

What would happen if Apple applied the Neo formula to the smartphone space? Let’s imagine, as 9to5Mac does in its plea to John Ternus, that next fall’s iPhone 18e is rebranded as or accompanied by an iPhone Neo. What would that product look like?

It would, of course, be cheap. Not “cheap” like the $599 17e, which 9to5Mac calls “exactly in line with what you’d expect from Apple.” This would sit below that tier, let’s say around $399… a number which may ring some bells, because it’s the original price of the first iPhone SE. Apple has done this before.

To be fair, this wouldn’t be a remake of the SE, which was all about cramming up-to-date components into an old chassis. The Neo formula stresses the importance of an attractive design and looks to make sacrifices in other areas. So our iPhone Neo would look like a modern iPhone but feature older parts: maybe an A17 processor, an LCD screen, a 12MP camera, and similar outdated specs.

Would that be popular? Perhaps, and perhaps not. For one thing, we’d need to bear in mind that the context is different. Mac buyers were pleasantly surprised by the Neo’s price tag, which was unprecedented; whereas a $399 iPhone is, well, precedented. In fact, iPhones could be had for only slightly more than that (a mere $429) as recently as February last year. Nobody is going to be blown away by the idea of a $399 iPhone, particularly after the success of the MBN and the articles demanding a similarly budget-friendly iPhone.

On the looks front, too, the context is different. The blush, citrus, and indigo color finishes of the MBN arrived as a breath of fresh air, an antidote to the aesthetic conservatism of the rest of the MacBook range. Apple identified an unoccupied niche and occupied it. But we’ve had colorful iPhones before. Sure, the Pro models display a sad and inexplicable lack of fun, but the iPhone 17 comes in sage and lavender, and the iPhone 16 in teal and pink. Color-starved Mac users needed a Neo model in a way that similarly inclined iPhone users do not.

But most fundamentally, I doubt Apple’s ability to deliver an externally attractive $399 iPhone in the current market without making serious compromises on the inside. We don’t officially know why the company discontinued the iPhone SE line last year, but the profit margin at that price was almost certainly a factor. Components are now more expensive in general, and using a binned processor would only help to a limited extent. Apple already uses them in the Neo, iPad mini, iPhone 17e, and other products, and budget smartphones generally sell in higher numbers than laptops, so we would quickly reach a point where the “free” chips start to run out, and the savings are lost.

Do I think customers like the idea of a $399 iPhone Neo? Of course. But do I think they would like the actual iPhone Apple would make at that price, reflecting component costs and the need to make a profit? No. Steve Jobs famously said that innovation is saying no to 1,000 things: turning down good ideas and focusing on the right ideas. The iPhone Neo is a lovely idea, but someone needs to say no.