Edited by Arunabh at 2016-03-22 15:20

Apple’s new iPhone SE has first-rate features and a relatively low price tag, but its prospects in key markets like China and India may be limited by its diminutive size.

At the product launch in Cupertino, California on Monday, Apple vice president of iPhone Product Marketing Greg Joswiak singled out China as a target market, saying four-inch displays like that on the iPhone SE were still popular with first-time smartphone buyers. Chinese buyers tend to start off with a phone with a 4-inch screen, just like the iPhone SE, he argued.

However, it’s clear most Chinese buyers prefer the larger screens—as attested by the rapid growth of popular domestic brands such as Xiaomi and Vivo, which market phones in sizes similar to the iPhone 6 and bigger.

China, Apple’s second-biggest market, and India, one of the fastest-growing major markets in the world, are both seen as key for Apple, which expects overall iPhone sales to contract. China provides Apple with nearly a quarter of its total revenues.

The iPhone SE is seen as particularly important for India, where Anshul Gupta, research director at Gartner, expects the smartphones market to double to 200 million units in the next two years.

But in India and China, smartphones are often the main connection to the digital world, and a big screen is highly valued, analysts said.

Only 10% of smartphones sold in India at the end of December had a four-inch screen, according to Counterpoint, and Apple accounted for only two percent of overall smartphone shipments in India last year.

And with nearly 70% of smartphones selling for less than $150 in India, the iPhone SE’s roughly $400 price tag may still be out of reach for most buyers there.

In China, analysts warned the iPhone SE could mirror the disappointing outcome of Apple’s iPhone 5C, which was launched as an affordable gadget three years ago. It was also less technologically advanced than the top phone at the time.