MW Apple hopes adding this feature to its lower-priced iPhone will make it more enticing

By Claudia Assis and Therese Poletti

Apple's iPhone 16e is priced higher than expected - but it has AI

Apple Inc.'s newest lower-priced iPhone costs more than Wall Street expected, but it includes artificial-intelligence features previously only available in the consumer-tech giant's top-end smartphones.

The iPhone 16e starts at $599. Some investors had expected Apple $(AAPL)$ to price the new device at around $500.

While lower than the $799 starting price of the iPhone 16, the price of the 16e is still about $50 more than Wedbush Securities analyst Dan Ives had estimated. Still, he called it "smart pricing."

"This should help drive incremental growth in many international markets," Ives said.

The iPhone 16e is the fourth generation in Apple's lower-cost iPhone line, previously called the iPhone SE.

Wednesday's iPhone update was announced in a press release, without the typical fanfare of a big product launch at the company's headquarters in Cupertino, Calif. Last week, Apple Chief Executive Tim Cook vague-tweeted about a "newest member of the family" to be launched on Feb. 19, fueling speculation that the company was retiring the SE moniker.

Wall Street's reaction to the launch has been a bit ho-hum, with some saying that it would be mostly incremental in terms of adding revenue to Apple going forward. But the slightly higher-than-expected price, as well as the addition of AI features, may be fueling more enthusiasm among investors.

Forrester Research analyst Dipanjan Chatterjee said that the integration of Apple Intelligence could "reduce the hurdle" among users of older iPhones who want to try out Apple's version of AI. Apple currently offers Apple Intelligence on its iPhone 16 line and its iPhone 15 Pro line.

"Tim Cook tells us that iPhone sales have performed best in markets with Apple Intelligence," Chatterjee said in an email, adding that the higher cost of those phones, starting with the iPhone 15 Pro, "effectively prices out adoption of many of these AI capabilities."

Also on Wednesday, BofA analyst Wamsi Mohan said in a note that he expects Apple may have to raise prices on its iPhones and other products by about 10% to offset anticipated tariffs from the Trump administration. Apple's iPhones are mostly made in China, with an increasing number made in India.

Also read: Apple may have to raise prices of the iPhone to offset tariffs, BofA says

The iPhone 16e, which is available in white or black, "is built for Apple Intelligence," the company said. OpenAI's ChatGPT is integrated into Apple's writing tools and Siri applications, and users can choose to access ChatGPT without jumping between apps, Apple said. Customers will be able to use ChatGPT for free and without creating an account and will have full control over what information or personal data is shared with the program, Apple said.

The iPhone 16e is powered by Apple's latest-generation A18 chip, a 6-core central processing unit that is up to 80 percent faster than the A13 Bionic chip on the iPhone 11. In addition, it has Apple's latest C1 modem, the first cellular 5G modem designed by Apple in house, as the company seeks to end its dependence on Qualcomm Inc. $(QCOM)$ for its 5G chips.

Apple said customers in 59 countries, including in the U.S., can pre-order the iPhone 16e starting Feb. 21, with availability by Feb. 28. Those countries and regions include Australia, Canada, China, France, Germany, India, Japan, Malaysia, Mexico, South Korea, Turkey, the UAE and the United Kingdom.

Shares of Apple were up 0.4% Wednesday amid weakness in the broader U.S. stock market SPX.

-Claudia Assis -Therese Poletti

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February 19, 2025 14:38 ET (19:38 GMT)

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