Apple Introduces Budget-Friendly iPhone 16e with AI Features for $599

Apple Unveils iPhone 16e: A Budget-Friendly AI-Powered Smartphone

Apple (AAPL.O) launched its latest budget-friendly smartphone, the iPhone 16e, on Wednesday, aiming to capture mid-market consumers in the U.S., China, and India. The new model replaces the SE series and is positioned to compete with Android devices from Samsung (005930.KS) and Huawei, which are increasingly incorporating AI features.

A More Affordable AI-Powered iPhoneThe iPhone 16e will retail for $599, marking a $170 increase over the previous SE model but offering features that align more closely with Apple’s premium devices. The smartphone comes equipped with the A18 chip and Apple Intelligence features, including integration with ChatGPT. It closely resembles higher-end iPhones, with the key differences being the absence of a wide-angle camera lens, a missing button, and a slightly different display.

"We believe the iPhone 16e will lower the barrier for users looking to experience Apple Intelligence without committing to a flagship model," said Forrester principal analyst Dipanjan Chatterjee.

Apple's stock showed little movement following the announcement.

Designed for Cost-Sensitive MarketsApple has faced declining iPhone sales, particularly in its budget lineup, with SE models shrinking from 10% of total iPhone revenue in 2016 to just 1% in 2024, according to Counterpoint Research. The company aims to reverse this trend by targeting price-sensitive regions such as Europe and China, where consumers typically purchase phones outright rather than through carrier financing.

Ben Bajarin, principal analyst at Creative Strategies, noted, "The iPhone 16e’s pricing and feature set make it an appealing option in regions where affordability is a key factor."

New In-House C1 Modem & Enhanced FeaturesOne of the biggest advancements in the iPhone 16e is the introduction of Apple’s first proprietary modem, the C1 chip. This shift reduces Apple’s reliance on Qualcomm (QCOM.O) for cellular connectivity solutions.

The device features a 48-megapixel primary camera with a dual-lens system, including a two-times zoom lens, but lacks the ultra-wide camera found in premium models. Additionally, it retains a display notch for the front-facing camera, unlike the high-end models with a seamless screen.

With a 6.1-inch display, the 16e offers the same screen size as the base iPhone 16. It also marks the end of the SE series’ physical home button, adopting Face ID authentication instead.

Availability and Future OutlookThe iPhone 16e will be available in black and white color options, contrasting with the vibrant hues of the flagship iPhone 16 models. Pre-orders begin on February 21 across 59 countries, including the U.S., China, and India, with shipments starting February 28.

Additionally, the iPhone 16e will be among the first models fully transitioning to the USB Type-C charging port, aligning with European Union regulations and replacing Apple’s proprietary Lightning connector.

With its competitive pricing and AI integration, the iPhone 16e positions Apple to regain traction in the mid-range market while leveraging its proprietary hardware advancements.

Reporting by Stephen Nellis in San Francisco and Akash Sriram in Bengaluru; Editing by Arun Koyyur and David Gregorio.