Apple may launch a new version of its tiny, cheap iPhone from 3 years ago, and it could be just as crucial for Apple's business as the iPhone 11

When it comes to targeting price-conscious consumers, especially those in emerging markets, Apple is at a disadvantage compared to rivals like Samsung and Huawei. That's because unlike these companies, both of which place ahead of Apple in the global smartphone market, Apple does not offer a true budget option. Huawei sells smartphones that are significantly less expensive than its flagship Mate line under its Honor brand, which includes phones like the Honor 6X and Honor View10 that can be found for as cheap as $180 and $400 respectively. Samsung, too, offers midrange phones like those found in its Galaxy A series, which cost between $180 and $360 depending on the model. Apple does sell the iPhone 7 on its website for $450, but that means that consumers looking to purchase a smartphone for less than $500 from Apple are limited to a device that's almost three years old. Apple's focus on premium phones is part of the reason why it lost the No. 3 spot in the worldwide smartphone market last month, according to IHS Markit. The market research firm reported in early August that Chinese smartphone giant Oppo ousted Apple out of the top-three smartphone makers for the second quarter of 2019, citing insufficient price elasticity in its older models and super-premium pricing as key challenges. Apple also said in its most recent earnings report that iPhone revenue fell yet again, revealing a 12% year-over-year decline. Read more: The best smartphones you can buy right now for $300 and under However, despite a slumping smartphone market, Samsung was still able to show growth in the second quarter of 2019 because of strong demand for its mid-range Galaxy A devices, Anshul Gupta, a senior research director at Gartner, wrote in a report from late August. Demand for high-end flagship phones has also slowed at a greater rate than demand for mid-range and low-end devices in the second quarter of 2019, Gupta also wrote in Gartner's report. It would make sense for Apple to diversify its lineup with a cheaper new option like a refreshed iPhone SE to combat this trend. Doing so could potentially bring in new iPhone users or give those with older models that have held off on upgrading to avoid spending nearly $1,000 a more compelling and budget-friendly choice. As iPhone sales and worldwide smartphone shipments continue to decline, Apple has made a bigger push into services. In March, for example, it announced a slew of new digital offerings which include subscription services for television, gaming, and news. It also released the Apple Card last month, a digital credit card that lives in the iPhone's Wallet app. All of these services are designed to keep you hooked into Apple's ecosystem — and their success largely hinges on the company's massive installed base of iPhone users around the world. The Apple Card, for example, requires that you have an iOS device in order to pay your bill and manage your account. And although the company's Apple TV app is available on smart TVs made by other companies like Samsung, it's the company's installed base of 900 million iPhones that could give it an edge when it comes to distributing its services. And launching a cheaper iPhone like a new iPhone SE could help it further expand that user base. Read more: Apple cofounder says the Apple Watch is his 'favorite piece of technology in the world' because he doesn't want to be addicted to his phone That's especially important considering Apple's biggest areas of growth — its services division and its wearables, home, and accessories business — depend on the iPhone. Apple's services division generated $11.5 billion in revenue in the third quarter of 2019, an increase of 12.6% from the year-earlier quarter. The company's wearables, home, and accessories product category, which includes popular gadgets like the Apple Watch and AirPods, eclipsed iPad sales and is closing in on the Mac, as the firm's latest earnings report shows. Launching a new low-cost iPhone could be a smart way for Apple to bring more users into its increasingly important web of services, accessories, and wearables.

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Apple may launch a new version of its tiny, cheap iPhone from 3 years ago, and it could be just as crucial for Apple's business as the iPhone 11

It could improve Apple's presence in emerging markets and help it compete with Samsung and Huawei.

Bringing in new iPhone users is central to Apple's services and wearables strategy.