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The new iPhone will also attract buyers who have so far been forced to buy older iPhones just because they think smaller displays are better. Apple's iPhone 5s at 4 inches was the largest iPhone ever at the time of its launch. If the new iPhone costs near or around the same what the iPhone 5s costs now, Apple will surely make a killing at Samsung's expense.
As per 9to5Mac, the new iPhone is mentioned as iPhone 5se either as a 'special edition' or as an upgrade of the iPhone 5s rather than a cheaper version of the iPhone 6s. This probably makes sense for Apple since the iPhone 5c, despite being cheaper, didn't perform well after it was released.
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Earlier in November, Ming-Chi Kuo, an analyst at KGI Securities, said that the upcoming iPhone may feature an A9 chip and will run the latest iOS 9 operating system. Given that there is still demand for smaller displays, Apple may end up selling 20 to 30 million units of the new iPhone.
iPhone 5se will also be an upgrade over the iPhone 5s in terms of specifications but may not feature 3D Touch technology which was introduced by Apple with the latest iPhone 6s and iPhone 6s Plus handsets.
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As per available leaks, iPhone 5se will also feature 8MP and 1.2MP cameras, a power button on the right hand side, rounded edges, iOS 9, Live Photos, Apple Pay and Apple Music features. It is generally believed that iPhone 5se will launch along with the Apple Watch 2, but we haven't had any confirmation in this regard from Apple as yet.