(Bloomberg) -- Apple Inc. introduced a new low-end smartphone called the iPhone 16e priced at $599, aiming to revive growth after a sluggish holiday season.
The rebranded device goes on sale Feb. 28 and will cost $170 more than the $429 iPhone SE that it replaces. Preorders for the phone begin Feb. 21.
Apple modernized the device by removing the now-antiquated home button and adding a larger, 6.1-inch screen with Face ID. The model has a 48-megapixel camera, the same A18 chip as the iPhone 16 and a USB-C charging port. It also runs the company’s AI software, Apple Intelligence.
In a first, the product also includes an in-house cellular modem chip. That replaces a key component from Qualcomm Inc. in a long-awaited shift.
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The new installment represents the biggest change in the history of Apple’s low-end iPhone, which was introduced as the SE in 2016 and last updated nearly three years ago. As part of the shift, the current iPhone SE and iPhone 14 have been discontinued.
The debut is the first of several iPhone design changes slated for this year, with Apple also planning a new skinnier version. The company’s smartphone business could use a boost. Sales fell about 1% in the holiday quarter, when the iPhone 16 failed to entice shoppers. The Apple Intelligence software also has lagged behind rival offerings and isn’t available in much of the world.
China has been a particular weak spot. Apple’s overall sales fell 11% in the country last quarter, where it’s losing ground to local players like Huawei Technologies Co. and Xiaomi Corp.
The new model should give Apple a more compelling way to reach the lower end of the smartphone market. The company spent years working on the device, aiming to close the gap between its low-end phone and the main iPhones with newer technologies like facial recognition.
Still, the new model lacks some of the features found on pricier versions. For instance, it doesn’t have the Dynamic Island interface, lacks MagSafe magnetic wireless charging, has only one back camera and doesn’t have the faster-refreshing ProMotion display found on the iPhone 16 Pro line. There’s also no Camera Control button.
The phone is groundbreaking in one way that users might not notice: the in-house modem chip, which is called the C1. That component allows the phone to connect with cellular networks.
The device kicks off a broader transition away from Qualcomm, a longtime supplier. Apple plans to bring the same modem to the skinnier iPhone planned for this fall, and a second-generation part will go into Pro models in 2026, Bloomberg News has reported.
The chip, which Apple didn’t describe in detail during its announcement, stemmed from a multibillion dollar endeavor that included hiring thousands of engineers and acquiring Intel Corp.’s old cellular modem division. The company has been working on the part for at least seven years and has opened dedicated engineering centers for it near Qualcomm’s offices in Southern California.
If all goes to plan, users shouldn’t notice any changes to how their iPhone works because of the new modem. But the risk of dropped calls and networking issues is one that Apple has been seeking to avoid. The company has been testing the chip with networks from scores of carriers globally, aiming to ensure that its performance is close enough to Qualcomm’s offerings.
The new modem doesn’t include mmWave technology, a type of 5G connection that allows for much faster downloads in some major metropolitan areas. But it should help improve battery life compared with previous lower-end models. The company says the 16e has up to 26 hours of video playback, compared with only 15 hours on the third-generation iPhone SE.
The device comes in options with 128, 256 and 512 gigabytes of storage, as well as white and black colors. Bloomberg News first reported earlier this month that the product was imminent and earlier wrote about its features. The 256 gigabyte version is priced at $699, while the top-end model will cost $899. That makes it nearly the same price as an entry-level iPhone 16 Pro.
The USB-C charging standard allows Apple to sell the device in the EU again. Rules in that region require device makers to use that kind of port, and the prior iPhone SE had a Lightning connector.
The new hardware specifications also can support Apple Intelligence, and the company is making that technology central to its marketing pitch. But Apple’s AI tools have been slow to catch on with consumers. New writing features and capabilities like Genmoji — custom AI-created emoji — haven’t inspired as many iPhone upgrades as anticipated.
The new iPhone 16e includes a customizable Action button like recent high-end models, as well as the ability to connect to satellite networks for off-the-grid texting and accessing emergency services.
The Cupertino, California-based company is planning a software update in April that will bring Apple Intelligence to more countries and add support for additional languages. It’s also racing to bring Apple Intelligence to China, Bloomberg News reported last week.
Apple is looking to introduce new iPads and Macs in the coming months as well, including a MacBook Air with an M4 chip. And in addition to the iPhone overhaul later in the year, the company will debut a new Apple Watch Ultra 3 with off-the-grid satellite capabilities.
(Updates with more details on Apple’s modem transition from Qualcomm starting in fourth paragraph.)
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