On Wednesday, Apple (AAPL.O) unveiled the iPhone 16e, a low-cost phone with artificial intelligence that aims to regain mid-market consumers both domestically and in China and India, two important growing countries.
At a time when competitors Samsung (005930.KS) and China’s Huawei are introducing AI capabilities to their handsets, the new phone, which abandons the SE naming standard for Apple’s budget series, will compete with popular Android smartphones.
Last quarter saw a decline in Apple phone sales, and over the past ten years, sales of the company’s low-cost phone line have fallen precipitously in relation to iPhone revenue.
Although the 16e’s features are more akin to those of Apple flagship phones, including a strong chip that runs Apple Intelligence and a suite of services that include access to ChatGPT, its price of $599 is a $170 increase over the previous entry-level phone, the SE. The 16e resembles its more expensive siblings in appearance, with the exception of a slightly altered display, one missing button, and the absence of a wide-angle camera lens.
Midafternoon trading saw very little movement in Apple’s stock price.
Apple predicted robust sales growth late this month, indicating that iPhone sales would rebound from a decline as it expands the availability of artificial intelligence technologies to additional languages and areas. Apple has not yet disclosed a data partner in China for the AI features, and analysts have warned that the roll-out is sluggish.
Dipanjan Chatterjee, a principal analyst at Forrester, stated, “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.”
According to Counterpoint Research, the SE model’s sales as a percentage of overall iPhone revenue fell from 10% when it was first introduced in 2016 to roughly 1% last year.
According to Ben Bajarin, chief analyst at consulting firm Creative Strategies, Apple will probably benefit from the 16e in price-sensitive areas like China and Europe where consumers typically pay for phones up front.
The A18 chip, which powers the more costly versions that will be released in September 2024, will run the iPhone 16e and support Apple Intelligence right out of the box.
It will only be available in black and white, but the more costly iPhone 16 models come in a variety of vibrant colors. It will cost around $200 less than the entry-level device that was released in September.
Additionally, the 16e will be the first Apple device to use the C1 chip, which is the company’s first in-house modem developed for cellular connectivity and a departure from Qualcomm processors (QCOM.O), opens a new tab.
