Image Credit: Bloomberg

Apple (AAPL) unveiled its budget-friendly iPhone 16e on Tuesday, marking a significant step with the introduction of its Apple Intelligence platform and the company’s first in-house-designed modem.

The iPhone 16e features a design more aligned with Apple’s higher-end models than its previous budget option, the iPhone SE. It comes equipped with Face ID facial recognition and an upgraded camera system. Priced at $599 and available starting February 28, the 16e is powered by the same A18 chip found in the $799 iPhone 16 and $899 iPhone 16 Plus. The phone boasts a 48-megapixel rear camera with a built-in 2x telephoto zoom for detailed close-up shots.

The 16e sports a 6.1-inch OLED display with a Face ID cutout similar to the iPhone 14, a big upgrade from the smaller 4.7-inch screen of the iPhone SE. Notably, it’s the first iPhone to feature Apple’s own cellular modem, the C1 chip, replacing Qualcomm’s (QCOM) components. This move is part of Apple’s broader strategy to reduce its reliance on third-party suppliers, improving overall control over the design process and battery life. The 16e offers up to 24 hours of battery life, 12 hours more than the second-generation iPhone SE, and swaps the Lightning port for a USB-C connector.

Targeted as Apple’s entry-level option, the 16e aims to attract a wider range of customers compared to the mid-range iPhone 16 and high-end iPhone 16 Pro, which starts at $999. The phone also serves as an ideal platform to expand Apple Intelligence, a service offering features like writing assistance, notification summaries, and ChatGPT integration. Apple positions this service as a key reason for users to upgrade from older models, though it has yet to drive the kind of sales boost initially anticipated by Wall Street.

In its latest earnings call, CEO Tim Cook highlighted that iPhone sales were higher in regions where Apple Intelligence is available, but the company still fell short of analyst expectations. While analysts had forecasted $71 billion in iPhone revenue, Apple posted $69.1 billion—down from $69.7 billion the previous year.

Additionally, Apple faces slowing sales in China, with Q1 2024 revenue reaching $18.5 billion, below both expectations and the $20.8 billion from the same period last year. For the full 2024 year, revenue from China totaled $66.9 billion, down from $72.5 billion. Apple is also working to introduce Apple Intelligence in China, but it faces stiff competition from local smartphone makers, and the launch date remains unclear. Apple has partnered with Alibaba (BABA) to bring the service to Chinese customers, though the rollout timeline is still uncertain.

Paraphrasing text from "Yahoo!Finance"all rights reserved by the original author