Apple has unveiled the iPhone 16e, a lower-cost handset featuring artificial intelligence (AI) capabilities, as the company seeks to reinvigorate iPhone sales following a decline at the end of last year.

The iPhone 16e is powered by the same A18 processor as its more expensive iPhone 16 counterpart, offering similar storage options but with fewer cameras and lower overall specifications.

The move mirrors Apple’s earlier iPhone SE series, launched between 2016 and 2022, which also provided budget-friendly alternatives to flagship models. The iPhone 16e will be available for pre-order on Feb. 21 in 59 countries, with a UK launch price of £599—£200 less than the iPhone 16 but more than twice the price of the original iPhone SE in 2016.

“This now becomes one of the most affordable, powerful iPhones on the market,” said industry analyst Paolo Pescatore.

“The move should help accelerate adoption, particularly for Apple’s AI expansion with Apple Intelligence. Apple’s trust and credibility alone will help drive sales and lure users from rival platforms.”

Apple Intelligence Takes Center Stage

A major selling point of the iPhone 16e is its AI functionality, with Apple Intelligence integrated into the device. This includes tools for text generation, image editing, and enhanced Siri capabilities—now incorporating OpenAI’s ChatGPT.

Apple CEO Tim Cook emphasized the device’s AI potential, saying it would “help you save time, quickly get more things done, and express yourself in new ways.”

Despite Apple’s ambitions, its AI rollout has faced challenges. The company was forced to suspend AI-generated news alerts after false headlines were attributed to major news organizations, including the BBC. Apple has since reformatted its AI-generated summaries in italics to distinguish them from traditional news reporting.

The iPhone 16e will be the cheapest way to access Apple’s AI tools, positioning the device as a more accessible entry point into Apple’s expanding AI ecosystem.

“The iPhone 16e creates a new revenue stream for Apple, particularly in markets like India, where iPhones remain out of reach for many consumers,” said Forrester principal analyst Dipanjan Chatterjee.

“Lower-cost devices like the iPhone 16e bring new customers into the Apple ecosystem, reducing the cost barrier for those wanting to experience Apple Intelligence.”

Skepticism Over Apple's AI Strategy

While the iPhone 16e introduces AI at a lower price point, some analysts remain skeptical about Apple’s broader AI strategy.

Despite investing $189 billion in research and development over the past decade, Apple’s major hardware releases—including the HomePod and $3,500 Vision Pro headset—have underwhelmed investors.

“AI should be right in Apple’s wheelhouse. But Apple fanboys, fangirls, and investors are right to be disappointed so far,” said Cory Johnson, chief market strategist at Epistrophy Capital Research.

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