Apple Bets on Affordable AI-Powered iPhone to Boost Sales.
Apple has unveiled a new iPhone model that incorporates artificial intelligence (AI) features while being offered at a more affordable price point compared to its premium devices.
The iPhone 16e is equipped with the same processor as the larger iPhone 16, according to Apple, and offers similar storage options; however, it features lower specifications in other areas, including a reduced number of cameras.
Apple has faced challenges in introducing a new product that captivates consumers, as iPhone sales experienced a decline towards the end of the previous year.
The company aims to revitalize interest by integrating advanced AI capabilities into a budget-friendly device, although analysts remain skeptical about the extent of the sales increase that such features may generate.
The name of the device pays homage to the iPhone SE series, which was available from 2016 to 2022 and was similarly priced at a significantly lower range.
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Apple announced that the iPhone 16e will be available for pre-order starting February 21 in 59 countries.
In the UK, it will be priced at £599, which is £200 less than the iPhone 16, yet more than double the launch price of the original iPhone SE in 2016.
"This now becomes one of the most affordable powerful iPhones now on the market," industry analyst Paolo Pescatore told BBC News.
"The move should help accelerate adoption and especially its foray into AI with Apple Intelligence.
"Apple's trust and credibility is critical - this alone will help drive sales and lure users from rival devices and platforms."
Apple Intelligence
The discourse surrounding the new handset is expected to focus significantly on its performance, as Apple has chosen to incorporate the same A18 chip found in its higher-end models.
Consequently, the 16e will have the capability to run the same applications and games as other iPhones, with artificial intelligence likely playing a central role in this choice.
During the announcement, Apple CEO Tim Cook stated that the new model embodies "the performance, intelligence and privacy" that Apple enthusiasts anticipate from the company.
He further noted that the Apple Intelligence features integrated into the device would "help you save time, quickly get more things done, and express yourself in new ways".
The company unveiled its interpretation of the technology—Apple Intelligence—alongside this series of devices, which includes new functionalities for writing and the integration of OpenAI's ChatGPT into Siri.
The journey has not been entirely smooth, as the company once had to halt its AI-generated news alerts due to the creation of inaccurate headlines linked to reputable news organizations.
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Apple has announced that its latest phone is "built for Apple Intelligence" highlighting specific technological features, such as a user-friendly method for organizing photos and searching through the image library.
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Other smartphone manufacturers offer comparable features on their devices; however, the iPhone 16e will represent the most affordable option for accessing AI capabilities on an Apple device.
"The iPhone 16e generates a new revenue stream for Apple, and this will be particularly noticeable in key markets like India, where iPhones are out of reach for most people," said Forrester principal analyst Dipanjan Chatterjee.
"There is also a second-order effect of cheaper devices like the iPhone 16e, bringing new customers into the Apple ecosystem.
"We've seen a limited appetite among many of the installed base to upgrade from previous versions, but the new phone reduces the cost hurdle of joining the Apple Intelligence bandwagon."
Apple's present product lineup appears lackluster, especially considering the substantial investments the company has made in research and development. Cory Johnson, the chief market strategist at Epistrophy Capital Research, noted that Apple has allocated $189 billion to R&D in the past ten years.
"All we have to show for that is the HomePod and $3,500 ski goggles," Johnson said. "AI should be right in Apple's wheelhouse. But Apple fanboys, fangirls, and investors are right to be disappointed so far."
Apple has long positioned itself as an industry leader, yet its approach to innovation often lags behind competitors. The iPhone 16e, with its AI features, follows the same pattern—introducing capabilities that Android devices have had for years. While Apple refines and markets technology effectively, it consistently arrives late to trends, whether it’s larger screens, higher refresh rates, or AI-powered features.
Despite its massive R&D spending, Apple’s recent product launches, including the Vision Pro and HomePod, have underwhelmed. The company’s reliance on brand loyalty keeps sales afloat, but its slow innovation risks losing ground to more forward-thinking competitors.
