Apple is taking a risk with its new iPhone, offering AI features at a more affordable price.

Apple has launched the iPhone 16e, a more affordable version of its flagship iPhone, featuring advanced artificial intelligence (AI) capabilities. While it shares the same processor and storage options as the larger iPhone 16, the 16e offers a more streamlined specification with fewer cameras and other features.

This move comes as Apple struggles to reignite excitement in its product lineup, with iPhone sales dipping at the close of last year. By introducing enhanced AI functionality at a lower price point, Apple hopes to reignite interest, though experts remain cautious about the true sales impact of AI features.

The iPhone 16e is clearly a continuation of the iPhone SE series, which offered budget-friendly options from 2016 to 2022. Pre-orders for the iPhone 16e will begin on February 21 across 59 countries. In the UK, it will be available for £599, a £200 discount compared to the iPhone 16, although it is still significantly more expensive than the original iPhone SE at launch.

Paolo Pescatore, an industry analyst, believes the iPhone 16e could become “one of the most affordable powerful iPhones” available, potentially accelerating the adoption of AI through Apple’s new Apple Intelligence features.

However, some experts are skeptical about how much consumers value AI features, despite Apple’s significant investment in the technology over the last decade. Cory Johnson, Chief Market Strategist at Epistrophy Capital Research, noted that AI hasn’t yet delivered significant returns for Apple, referencing products like the HomePod and Vision Pro headset, which have not seen widespread success.

The iPhone 16e features the powerful A18 chip, ensuring it can run the same games and apps as other iPhones, with AI likely at the core of its capabilities. Tim Cook, Apple’s CEO, emphasized that the device combines performance, intelligence, and privacy, with Apple Intelligence designed to help users save time and accomplish tasks more efficiently.

Apple’s push into AI includes incorporating OpenAI’s ChatGPT into Siri, and new tools for writing and editing photos. While AI has faced challenges, including the suspension of AI-generated news alerts after they spread false headlines, Apple is betting on its new phone to revolutionize the AI experience on smartphones.

The iPhone 16e is expected to open new revenue opportunities, particularly in emerging markets like India, where many people have been priced out of premium iPhones. By offering a lower-cost entry point into the Apple ecosystem, the iPhone 16e could attract new customers and expand the company’s influence in the AI space.