Apple launches the iPhone 16e, a cheaper new version of the iPhone 16

People walk by an Apple store at the Westfield UTC shopping center on January 31 in San Diego, California. (Kevin Carter/Getty Images North America/Getty Images via CNN Newsource)

Apple on Wednesday announced a cheaper new version of the iPhone 16 called the iPhone 16e, signalling a renewed push into the budget smartphone market for the tech giant. It’s also the first iPhone with a cellular modem designed by Apple, and the cheapest iPhone Apple currently sells that supports Apple Intelligence.

The iPhone 16e costs US$599 (starting at C$899) and launches on February 28.

Adding Apple Intelligence on a cheaper iPhone could be crucial for putting the company’s AI tools in the hands of more consumers. Apple has faced increased competition from Google and Samsung in recent years, both in the budget smartphone market and in the AI space. Google’s cheaper Pixel A-series of phones have been well received, for example, and both Google and Samsung have prioritized updating Android devices with new AI features over the last year.

The launch also marks a shift away from the iPhone SE, the budget iPhone line Apple debuted in 2016 and last updated in 2022. The iPhone SE made up only a sliver of Apple’s iPhone market share, according to research firm Consumer Intelligence Research Partners, which reports it accounted for just 5 per cent of US iPhone sales as of December 2024.

The iPhone 16e, despite being more expensive than the SE, could be more appealing to those who want a device that feels more like Apple’s more recent phones. The iPhone SE was the last iPhone with a traditional home button and fingerprint sensor on the front, a longtime staple that Apple began shifting away from with the iPhone X in 2017.

Apple CEO Tim Cook teased the launch in a social media post on February 13, saying a new “member of the family” would arrive on February 19.

What the iPhone 16e can do

Apple claims the new 5G modem in the iPhone 16e is the “most power-efficient modem ever on an iPhone.” The new modem is arriving more than five years after Apple acquired the majority of troubled chipmaker Intel’s smartphone modem business in 2019. Using its own modems makes Apple less reliant on partners and suppliers, giving it more control over product development and launch timing.

The iPhone 16e marks a long-awaited overhaul to Apple’s cheaper iPhone. The US$429 iPhone SE, while less expensive, looked like the seven-year-old iPhone 8 and lacked features found on most new phones, such as face unlock and a nearly borderless screen. After Wednesday’s announcement, the iPhone SE is no longer available on Apple’s online store.

Unlike the iPhone SE, the iPhone 16e has a lot in common with the iPhone 16, bringing it up to speed with Apple’s current lineup. Both phones have a 6.1-inch screen, Face ID, a 48-megapixel camera and the Action button for programming shortcuts. However, the iPhone 16e is cheaper and it lacks a dedicated second camera for capturing wider shots and the Camera Control button for quickly accessing the camera.

It’s powered by the same processor as the rest of the iPhone 16 lineup, enabling it to run Apple Intelligence.

Apple Intelligence, which until now has only been available on the iPhone 16 family, 2023’s iPhone 15 Pro and Pro Max and certain iPads and Macs, is a blanket term that refers to a handful of AI-powered tools – such as the ability to generate emojis and images with a prompt, summarize notifications, and remove objects from photos as well as ChatGPT integration with Siri.

The popularity of ChatGPT following its late 2022 release sent a shockwave through the tech industry, prompting companies such as Microsoft, Google and Samsung to incorporate generative AI into their products.

But Apple was largely considered to be a latecomer to consumer-facing artificial intelligence. Like many tech companies, Apple has long used AI to power backend features, like camera modes, but didn’t begin rolling out Apple Intelligence until last fall. Apple Intelligence’s arrival on a cheaper device like the iPhone 16e signals the company sees AI as being a core part of its products moving forward.

Tech giants have positioned generative AI and chatbots as the next major evolution in how consumers use and interact with technology. Yet it’s unclear whether AI tools like Apple Intelligence will be compelling enough to drive smartphone upgrades, with Apple’s iPhone revenue falling short of Wall Street’s expectations in its fiscal first quarter of 2025.

Article written by Lisa Eadicicco, CNN