In a major shift for its budget-friendly smartphone lineup, Apple announced on Wednesday the discontinuation of its long-standing entry-level iPhone SE, which first launched in 2016. In its place, the company is introducing the iPhone 16e, a significantly more expensive device that integrates several premium features previously exclusive to Apple’s higher-end models.
Industry analysts had anticipated either an upgrade or the retirement of the SE model, but the substantial price hike has surprised many. Canadian tech experts warn that this increase will further widen the gap between Apple devices and their more affordable competitors, making iPhones even less accessible for cost-conscious consumers.
“Apple has always positioned itself at the premium end of the market,” said Takara Small, a Toronto-based tech podcaster and a frequent CBC Radio columnist. “This latest move is just another step in that direction. Manufacturing costs have risen, and Apple appears to be aiming for higher profit margins to satisfy shareholders.”
The decision comes amid a decline in Apple’s smartphone sales, with a particularly sharp drop in budget-model sales over the past decade.
A Premium Price for a More Powerful Entry Model
The iPhone 16e is priced at $599, marking a $170 increase over its predecessor, the SE, which retailed for $429. Despite this higher cost, Apple has positioned the 16e closer to its flagship devices in terms of performance and capabilities. It is powered by the A18 chip, the same processor found in Apple’s premium iPhones, enabling advanced functionalities, including Apple Intelligence—a suite of AI-driven tools integrated with OpenAI’s ChatGPT.
Design-wise, the iPhone 16e bears a strong resemblance to Apple’s flagship models, featuring a 6.1-inch display, the same size as the base iPhone 16. However, it lacks a wide-angle camera lens, has a slightly modified button layout, and removes the physical home button in favor of Face ID authentication.
Apple CEO Tim Cook emphasized the device’s AI-powered capabilities, stating that the Apple Intelligence system would “help users save time, complete tasks more efficiently, and express themselves in new ways.” The AI integration is expected to be a major selling point, making cutting-edge features more accessible across Apple’s lineup.
Apple’s Strategic AI Push and Global Expansion
The introduction of Apple Intelligence across more devices signals the company’s commitment to artificial intelligence as a key driver of future growth. While Apple has projected a rebound in iPhone sales due to these innovations, some analysts caution that the rollout has been gradual, particularly in regions like China, where the company has yet to announce a local AI data partner.
Forrester principal analyst Dipanjan Chatterjee noted that while some Apple users have been hesitant to upgrade in recent years, the 16e lowers the entry barrier for those eager to experience AI-driven enhancements.
Beyond AI, the iPhone 16e also marks an end to Apple’s proprietary Lightning connector, embracing the industry-standard USB Type-C port. This change was largely driven by European Union regulations, which required tech companies to standardize charging ports. As a result, Apple had previously pulled the iPhone 14 and third-generation SE models from the EU market due to non-compliance. With the 16e conforming to these requirements, Apple is now positioned to regain a foothold in European sales.
Availability and Market Impact
Apple is set to open pre-orders for the iPhone 16e starting February 21 in 59 countries, including the U.S., China, and India, with shipping beginning on February 28.
By raising the price of its entry-level model by 40%, Apple stands to boost its overall revenue per unit, even if total iPhone sales remain stable at approximately 230 million units annually. While the cost increase may deter some budget-conscious buyers, Apple is betting that the added power, AI capabilities, and design upgrades will justify the higher price tag.
With this shift, Apple is effectively reshaping what it means to own an "entry-level" iPhone—positioning even its most affordable option as a high-performance device in an increasingly AI-driven world.
Zainab Y.
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