Apple has unveiled its latest iPhone model, introducing advanced artificial intelligence (AI) capabilities while keeping the price more accessible compared to its premium devices.

According to Apple, the iPhone 16e is equipped with the same processor as the larger iPhone 16 and offers comparable storage configurations, although it features lower specifications in certain areas, including fewer camera options.

Facing challenges in generating fresh excitement among consumers, as demonstrated by a recent decline in iPhone sales, Apple hopes that the introduction of enhanced AI functionalities in a budget-friendly model will stimulate interest once again. Nevertheless, analysts remain cautious regarding the actual impact of these AI features on sales.

The name of the new device pays homage to the iPhone SE series, which was launched between 2016 and 2022 and also offered more affordable pricing.

Pre-orders for the iPhone 16e will commence on February 21, spanning 59 countries worldwide.

In the UK, the iPhone 16e will retail for £599, which is £200 less than the iPhone 16, yet still more than double the introductory price of the original iPhone SE back in 2016.

Industry analyst Paolo Pescatore emphasized to BBC News that “This now becomes one of the most affordable powerful iPhones now on the market.” He underscored that the move could accelerate user adoption, especially regarding Apple’s AI initiatives.

However, some experts have raised concerns about the actual worth consumers place on AI, particularly as Apple has invested a staggering $189 billion (£150 billion) in this field over the last decade.

Cory Johnson, chief market strategist at Epistrophy Capital Research, pointed out, “All we have to show for that is the HomePod and $3,500 ski goggles,” referencing Apple’s Vision Pro headset, which has struggled to achieve significant sales.

He added, “AI should be right in Apple’s wheelhouse. But Apple enthusiasts and investors have reason to feel let down thus far.”

Meanwhile, tech influencer Marques Brownlee remarked on X (formerly Twitter) that one of the “most lowkey interesting things” about the iPhone 16e is its new C1 modem.

This marks the first occasion Apple has implemented its own modem design for the iPhone, moving away from reliance on chips from Qualcomm and Intel for cellular connectivity.

By doing so, Apple aims to eliminate costly licensing fees associated with these chip manufacturers, a point that has led to legal disputes with Qualcomm in the past.

Transitioning to in-house modems aligns with CEO Tim Cook’s vision from 2009 of owning and controlling the technology behind its products.

The focus on the iPhone 16e will likely revolve around its performance, as Apple has chosen to incorporate the same A18 chip found in its higher-end devices. This means the 16e will be fully capable of running the same games and applications as the other iPhone models, with AI being a central aspect of this decision.

In his announcement, Mr. Cook highlighted that the new model embodies “the performance, intelligence, and privacy” that Apple customers have come to expect.

He also noted that the Apple Intelligence features on the device would “help you save time, quickly accomplish more tasks, and express yourself in innovative ways.”

Apple introduced its version of AI, termed Apple Intelligence, with this line of devices, which includes new features for writing and utilizing OpenAI’s ChatGPT in Siri.

However, the rollout has not been without its setbacks, including the temporary suspension of AI-generated news alerts due to the creation of misleading headlines attributed to news outlets such as the BBC.

The summaries are now presented in italics as an adjustment.

Apple asserts that the new iPhone is “built for Apple Intelligence,” featuring capabilities such as simplified photo management and efficient image library searches.

While other manufacturers offer similar functionalities, the iPhone 16e will be the most affordable option for accessing AI on an Apple device.

Forrester principal analyst Dipanjan Chatterjee remarked, “The iPhone 16e generates a new revenue stream for Apple, especially in key markets like India, where iPhones are generally out of reach for most consumers.”

He also noted the potential for this budget-friendly phone to attract new users into the Apple ecosystem.

Additionally, Apple seems to target existing users of older models, hoping to encourage upgrades. A graphic on its website highlights that “there’s never been a better time to upgrade” and allows comparisons of the iPhone 16e’s specifications with models dating back to 2019.

Mr. Chatterjee commented, “There has been a limited interest among the current user base to upgrade from earlier versions, but the new device diminishes the cost barrier for embracing Apple Intelligence.”

Additional reporting by Lily Jamali.