The One Reason Why Apple Is Making a Smaller iPhone

For the first time since 2013, Apple is launching a new iPhone with a 4-inch screen. Called the iPhone SE, the new device is meant to pack the full power and functionality of Apple’s flagship iPhones, but wrapped in a smaller, cheaper package.

It’s a significant departure from the iPhone 6 and 6s, which are only available in larger form factors. But the move makes sense for one simple reason: people still like smaller smartphones.

Read more: These Are the Major New Features Coming to Your iPhone Today

With the iPhone SE, Apple will be able to target almost every variety of smartphone shopper: Those who want a big-screened “phablet,” those looking for something compact enough to slip into small pockets and purses, and those seeking something in-between. Before today, Apple fans who weren’t ready for a bigger phone were stuck with devices that haven’t been updated in years.

“[Apple is] demonstrating that they will continue to offer this size, that it’s not just an afterthought hanging around from 2013,” says Frank Gillett, vice president and principal analyst at Forrester Research.

About 18 percent of iPhone owners are using the older, smaller iPhone 5s, according to data from Mixpanel. That makes it the second most popular model behind the iPhone 6. Apple said Monday that it sold more than 30 million 4-inch iPhones in 2015. And Apple CEO Tim Cook said on an earnings call in January that 60 percent of iPhone owners had not yet upgraded to a larger model.

The new iPhone isn’t just about size. At $399, the iPhone SE gives those shopping on a budget the opportunity to use Apple’s latest features, like Apple Pay and Touch ID, without splurging on a larger device. This is increasingly important as companies like OnePlus, Motorola, and Google release low-cost high-quality Android phones that compete with Apple’s offerings.

Gillett believes the iPhone SE could be indicative of Apple’s future handset strategy. He says Apple will begin to regularly offer its phones in small, medium, and large sizes. That doesn’t necessarily mean we’ll be seeing a new smaller phone launch alongside Apple’s flagships every year. “My bet is that you’ll see a new small [iPhone] in a year and a half,” he says.