By: Brain Akutei Azu Mateko
Apple has introduced the iPhone 16e, a new budget-friendly smartphone priced at $599. This is the first update to Apple’s most affordable iPhone since 2022.
The device includes Apple Intelligence, an artificial intelligence (AI) system that offers features like notification summaries and writing suggestions. Initially, these AI features will be available in English, but Apple plans to expand them to Chinese, Portuguese, and a localized English version for India in the coming months.
Unlike its predecessor, the iPhone 16e does not have a home button or Touch ID. Instead, it uses Face ID, Apple’s facial recognition system, which has been available on most iPhones since 2017.
Apple is launching the iPhone 16e at a time when its smartphone sales are declining. Since reaching a peak of $205.5 billion in 2022, iPhone sales have dropped by 2%. Apple’s CEO, Tim Cook, believes the limited availability of Apple Intelligence has contributed to this decline.
However, he stated that in markets where these AI features are available, iPhone sales have increased. Despite this, market research indicates that AI is not the primary reason people upgrade their phones.
According to Jeff Fieldhack from Counterpoint Research, most customers replace their devices when the battery stops charging or when the phone becomes too outdated.
The iPhone 16e is priced 40% higher than its predecessor, the iPhone SE, which was sold at $429. This increase means Apple will earn an additional $170 per unit, boosting revenue despite stable phone sales at around 230 million units per year.
The price increase comes after the U.S. government imposed a 10% tariff on imports from China, where most iPhones are manufactured. However, Richard Kramer from Arete Research believes Apple’s pricing decisions are made months in advance, and this increase is part of a broader strategy to gradually raise iPhone prices.
Apple faces increasing competition, particularly in China and India. In China, the company’s market share declined by 2.4% last year as local competitors like Huawei gained ground. Meanwhile, in India, Apple saw growth, with the iPhone 15 becoming the best-selling smartphone in the last quarter of 2024, increasing the company’s market share in the country by 2% to 11%. To strengthen its position, Apple is expanding its AI features and introducing its first custom-designed modem chip, the C1.
This new chip, which replaces Qualcomm’s modem chips, is expected to improve battery life in future iPhones and could eventually be used in other Apple products like iPads and MacBooks.
Apple introduced the iPhone 16e with a much lower-profile launch compared to previous models. Instead of a live event, the company released a 13-minute video featuring Tim Cook discussing the new phone.
This is a significant shift from the one-hour live event Apple hosted for the iPhone SE in 2022. With the iPhone 16e, Apple aims to attract budget-conscious customers while expanding its AI technology and proprietary hardware to compete more effectively in the global smartphone market.
