On Wednesday, February 19, 2025, Apple introduced the iPhone 16e, a new, more affordable addition to its iPhone 16 lineup, priced at $599. This launch represents a significant step for the tech giant as it aims to capture a larger share of the budget smartphone market while integrating its cutting-edge Apple Intelligence features. Set to hit stores on February 28, the iPhone 16e also debuts Apple’s first in-house cellular modem, marking a milestone in the company’s journey toward greater hardware independence. As the cheapest iPhone currently offered with Apple Intelligence, this device could democratize access to Apple’s AI tools, intensifying its competition with rivals like Google and Samsung.
A Strategic Shift from the iPhone SE
The iPhone 16e signals a departure from Apple’s previous budget offering, the iPhone SE, which was last updated in 2022 and has now been discontinued from Apple’s online store following Wednesday’s announcement. Priced at $429, the iPhone SE bore a dated design reminiscent of the iPhone 8, complete with a home button and fingerprint sensor features Apple began phasing out with the iPhone X in 2017. According to Consumer Intelligence Research Partners, the SE accounted for just 5% of U.S. iPhone sales as of December 2024, suggesting limited appeal. In contrast, the iPhone 16e, though pricier than the SE, aligns more closely with Apple’s modern design language and capabilities, potentially attracting consumers seeking a budget-friendly yet contemporary iPhone experience.
Cutting-Edge Features Meet Affordability
The iPhone 16e shares several features with its pricier sibling, the iPhone 16, ensuring it feels like part of Apple’s current lineup. It sports a 6.1-inch display, Face ID for secure unlocking, a 48-megapixel camera, and the programmable Action button introduced in recent models. However, to keep costs down, it omits the dedicated ultra-wide second camera and the Camera Control button found on the iPhone 16. Powered by the same processor as the rest of the iPhone 16 family, the 16e supports Apple Intelligence—a suite of AI-driven tools previously limited to higher-end models like the iPhone 15 Pro, Pro Max, and the iPhone 16 series, as well as select iPads and Macs.
A standout feature of the iPhone 16e is its new 5G modem, designed entirely by Apple. Described as the “most power-efficient modem ever on an iPhone,” this component is the result of Apple’s 2019 acquisition of Intel’s struggling smartphone modem division. By developing its modem, Apple reduces reliance on external suppliers, gaining greater control over its product timelines and innovations—over five years in the making.
Apple Intelligence: AI for the Masses
Apple Intelligence, now available on the iPhone 16e, brings a range of generative AI capabilities to users, including notification summarization, custom emoji, and image creation, photo object removal, and ChatGPT integration with Siri. While Apple has leveraged AI for backend features like camera enhancements for years, its consumer-facing AI efforts lagged behind competitors until the rollout of Apple Intelligence last fall. The surge of ChatGPT’s popularity in late 2022 spurred tech giants like Microsoft, Google, and Samsung to embed generative AI into their ecosystems, leaving Apple playing catch-up. By bringing these tools to a $599 device, Apple signals that AI is now a cornerstone of its product strategy, aiming to make its technology more accessible amid fierce competition.
Competing in a Crowded Market
Apple’s move comes as Google and Samsung bolster their own budget and AI offerings. Google’s Pixel A-series has earned praise for delivering strong value at lower price points, while both companies have aggressively updated Android devices with AI features over the past year. Apple, meanwhile, has faced pressure in the budget smartphone segment and saw its iPhone revenue fall short of Wall Street expectations in its fiscal first quarter of 2025. The iPhone 16e could help reverse this trend by appealing to cost-conscious consumers who still want modern design and AI functionality, potentially driving upgrades and expanding Apple’s market reach.
A Tease from Tim Cook and Future Implications
Apple CEO Tim Cook hinted at the iPhone 16e’s arrival in a February 13 social media post, calling it a new “member of the family” set to debut on February 19. The announcement has sparked speculation about whether AI features like Apple Intelligence will be compelling enough to boost iPhone sales. Tech giants view generative AI and chatbots as the next frontier in consumer technology, but their ability to drive hardware upgrades remains unproven. For Apple, the iPhone 16e represents both a tactical play in the budget market and a broader bet on AI as a defining feature of its future devices.
With the iPhone 16e, Apple retires the aging SE line and introduces a budget option that feels fresh and forward-looking. By combining a modern design, a powerful in-house modem, and Apple Intelligence at a $599 price point, the company aims to reclaim ground in the competitive smartphone landscape. Whether this strategy pays off will depend on how consumers respond to the blend of affordability and AI innovation when the iPhone 16e launches on February 28. For now, Apple’s latest move underscores its determination to stay relevant in an era defined by rapid technological evolution.
