Apple gambles on new iPhone with AI features at lower cost

Apple recently announced the new iPhone 16e, a phone priced lower than its flagship models while boasting artificial intelligence (AI) capabilities. This move aims to attract a broader range of consumers and boost sales figures. The company hopes to leverage the lower price point to capture a larger market share.

According to Apple, the iPhone 16e utilizes the same processor as the iPhone 16 and offers similar storage options. However, specifications are reduced in other areas, such as the number of cameras. The phone's naming clearly draws inspiration from the iPhone SE series, which was released from 2016 to 2022 and was also priced significantly lower. This strategic branding aims to capitalize on the familiarity and positive reputation of the SE line.

The iPhone 16e will be available for pre-order in 59 countries/regions starting February 21st, with a starting price of £599 in the UK, £200 less than the iPhone 16 but more than double the price of the original iPhone SE launched in 2016. Industry analyst Paolo Pescatore stated, "This will be one of the most affordable and powerful iPhones on the market. This move should help accelerate adoption, particularly in the area of Apple Intelligence AI." The lower price point is expected to make the device more accessible to a wider audience.

The core competitiveness of the new iPhone 16e lies in its robust performance, with Apple choosing to use the same A18 chip found in more expensive devices. This means the 16e can run the same games and applications as other iPhones, and AI functionality is likely central to this decision. Apple CEO Tim Cook stated at the launch event that the new model has the "performance, intelligence, and privacy" that Apple fans "expect." He also said that the Apple Intelligence AI features on the device will "help you save time, get more done quickly, and express yourself in new ways."

Apple has introduced its interpretation of AI technology, Apple Intelligence AI, in this series of devices, including new tools for writing and the integration of OpenAI's chatbot ChatGPT into Siri. Apple stated that the new phone is "built for Apple Intelligence AI" and highlighted some specific features of the technology, such as easily cleaning up photos or searching image libraries. Forrester Chief Analyst Dipanjan Chatterjee stated, "The iPhone 16e creates new revenue streams for Apple, particularly evident in key markets like India, where most people cannot afford iPhones." He also added that cheaper devices, like the iPhone 16e, also bring a "second-order effect" of new customers entering the Apple ecosystem.

Despite Apple's significant investment in research and development, its current product performance has not been entirely satisfactory. Epistrophy Capital Research Chief Market Strategist Cory Johnson stated that Apple has spent as much as $189 billion on R&D over the past decade. "But all we've seen is the HomePod and $3,500 ski goggles," Johnson said. "AI should be in Apple's area of strength. But Apple's fans and investors have reason to be disappointed." The pressure is on Apple to demonstrate the value of its AI investments and deliver innovative products.