Apple has introduced a more stylish and pricier version of its entry-level iPhone in an effort to appeal to a broader audience, offering a bundle of artificial intelligence features that the company hopes will boost demand for its highly profitable iPhone range.
The new iPhone 16e, revealed on Wednesday, is the fourth generation of a model priced significantly lower than the standard and premium iPhones. The previous affordable models, known as the iPhone SE, were last updated in 2022.
Similar to the iPhone 16 models released in September, the iPhone 16e is equipped with a more advanced chip that powers a variety of AI-driven functions. These include automatic text and audio summaries, creating emojis on the spot, and enhancing Siri, the virtual assistant. Additionally, the iPhone 16e comes with an improved battery and camera.
The iPhone 16e will come with a higher starting price of $600, reflecting the upgrades, which is a 40% increase from the previous iPhone SE’s $430 price. However, it remains more affordable than the base iPhone 16, which starts at $800. The new iPhone 16e will be available in stores starting February 28, with pre-orders opening this Friday.
“We’re thrilled to introduce the iPhone 16e as a powerful yet more affordable option, expanding the iPhone experience to even more people,” said Kaiann Drance, Apple’s vice president overseeing a device lineup that generates more than half of the company’s revenue.
However, Apple faces the challenge of balancing its goal to provide a budget-friendly iPhone that attracts new customers while also protecting its profit margins from higher-priced models, according to Dipanjan Chatterjee, an analyst at Forrester Research.
Chatterjee explained, “The issue with offering a lower-end product in a luxury brand is that while you want it to be good, you also don’t want it to be so good that it undermines your premium offerings.”
Although Apple has been promoting its AI features since last June, the full set of capabilities, branded as “Apple Intelligence,” has yet to be fully released in the U.S. and isn’t available in some parts of the world. The delays in rolling out the AI through free software updates impacted Apple’s sales during the recent holiday season, with iPhone sales dipping slightly compared to 2023.
Apple has primarily seen a decline in China, where the company hasn’t confirmed when the AI features will be available. However, Apple has recently formed an AI partnership with Alibaba in China, which could bring the technology to iPhones in the country by this spring.
In addition to the AI features, the iPhone 16e introduces a new design compared to previous SE models. It has a 6.1-inch display, slightly larger than the 4.7-inch screen on the SE, and no longer includes the home button. Instead, the iPhone 16e will feature facial recognition for unlocking, similar to the more expensive iPhone models.
Apple’s stock rose slightly on Wednesday, closing at $244.87, though it remains below its peak of around $260 reached in late December.