Apple bets on a new iPhone with AI features at a reduced price
Apple has unveiled a new iPhone featuring artificial intelligence (AI) capabilities, priced lower than its flagship models. The iPhone 16e comes with the same processor as the iPhone 16, offering similar storage options, though with fewer cameras and other downgraded specifications. Apple has been struggling to spark consumer excitement, as iPhone sales dropped toward the end of last year. The company hopes the addition of AI features to a more affordable device will help reverse this trend, but analysts remain cautious about the impact AI may have on sales.
The iPhone 16e’s name hints at the earlier iPhone SE series, which ran from 2016 to 2022 and was priced significantly lower. Pre-orders for the 16e will begin on February 21 in 59 countries, with a UK launch price of £599—£200 less than the iPhone 16 but still more than double the cost of the original iPhone SE from 2016.
“This now becomes one of the most affordable powerful iPhones on the market,” said industry analyst Paolo Pescatore. “This move should help accelerate adoption, especially with Apple’s foray into AI through Apple Intelligence. Apple’s credibility is key—it will help drive sales and attract users from rival devices.”
One of the key selling points of the new model is its performance, with the same A18 chip found in Apple’s higher-end devices. This ensures the iPhone 16e can run the same apps and games as other iPhones, with AI likely central to this capability. Apple CEO Tim Cook highlighted the device’s “performance, intelligence, and privacy”—key features that users expect from the brand. He also emphasized that Apple Intelligence would help users save time, boost productivity, and express themselves in new ways.
Apple Intelligence, a set of AI-powered tools, was introduced with this line of devices. The new features include capabilities for writing and incorporating OpenAI’s ChatGPT into Siri. However, the implementation of AI hasn’t always been smooth, with Apple briefly suspending AI-generated news alerts after they resulted in inaccurate headlines. Now, the company presents AI-driven summaries in italics for clarity.
The iPhone 16e is “built for Apple Intelligence,” with features like photo cleanup and image search. While other phone manufacturers offer similar AI tools, the 16e will be the most affordable way to access AI on an Apple device.
“The iPhone 16e opens a new revenue stream for Apple, particularly in markets like India, where iPhones are often too expensive for most consumers,” said Dipanjan Chatterjee, a principal analyst at Forrester. “It also lowers the entry barrier to the Apple ecosystem, potentially attracting new customers. While many existing users have been reluctant to upgrade, the new model makes it easier to join the Apple Intelligence movement.”
Despite Apple’s significant investments in research and development—$189 billion over the last decade—some critics feel the company’s current product offerings are underwhelming. “So far, all we have to show for it are the HomePod and $3,500 ski goggles,” said Cory Johnson, chief market strategist at Epistrophy Capital Research. “AI should be Apple’s forte, but both fans and investors are right to be disappointed.”