It takes a certain amount of confidence, or maybe stubbornness, to raise prices on a line of products that was meant to help people who couldn’t afford your main line. That’s exactly what Apple did in February: they quietly stopped making the iPhone SE and put out the $599 iPhone 16e in its place. That’s a 40% rise from where the SE was. There is still no clear answer to the question of whether that choice was brave or a mistake.
The iPhone 16e isn’t a bad phone. That should be said right away. The A18 chip inside powers Apple’s top-of-the-line phones. It also has a 48MP camera, Face ID, USB-C, and a battery that lasts longer than any battery in the SE line. The Apple Intelligence suite also comes with tools like Genmoji, Writing Tools, and Clean Up in Photos. From the specs, it looks like a very important gadget. What the phone gives you isn’t the problem. The price tells us a lot about the people Apple is making it for.
The old SE was never very cool. It worked out well. It was a way in for people who were price conscious to join the Apple ecosystem before they could afford to spend more. With the 16e, Apple seems to have given up on that idea completely. Instead, the company is betting that AI features and a modern design will persuade people who aren’t sure about spending a lot to do so. That’s a very different question.
The C1 modem is an important part of the 16e story that doesn’t get enough attention. Since buying Intel’s modem division in 2019, Apple has been working on making its own cellular modem. The C1 is the first real product that comes from that work. It is a real engineering milestone, but it is also a risk that was carefully thought out. Qualcomm’s modems are still the best when it comes to 5G performance, especially when it comes to mmWave connectivity. The C1 doesn’t work with mmWave. Apple will say that at this price point, limitations don’t matter much. That’s a valid point, but it’s harder to make a strong case for it when other Android phones with similar prices already offer it. In the real world, if the C1 works well, Apple benefits from lower costs, better hardware integration, and less reliance on Qualcomm. If it doesn’t, it will hurt the line of products that are meant to get more people to use iPhones.
Apple Intelligence is the other thing that can change. Apple is marketing it as a reason to upgrade, and there’s some truth to that—Tim Cook said during the Q1 FY2025 earnings call that areas where Apple Intelligence launched did see higher adoption of the iPhone 16. But there have been bumps in the rollout. For now, it’s only available in English-speaking markets, which makes it less appealing in places where the 16e might be most important. There is no set date for when Apple products will be available in China, but a partnership between Apple and Alibaba is said to be happening. The people in Europe, Southeast Asia, and Latin America are still waiting. When most people haven’t seen it yet, it’s hard to call it a selling point.
China is another one. In the most recent quarter, Apple’s revenue in Greater China dropped 11% year-over-year. This is because Huawei and Xiaomi are making progress in markets that Apple used to dominate. Tim Cook said that inventory adjustments were one reason, but the competitive reality is harder to ignore. China is not a market that Apple can enter with a product that does not fully support AI.
India is the other side that Apple is leaning on. In India in the first quarter of FY2025, the iPhone was the best-selling smartphone. As a result, Apple is opening four new stores in India. As India’s middle class grows, people are spending more on high-end devices. The 16e, which is still less expensive than the top models, is positioned as an easy way to get into that ecosystem. The real test will come in the next two quarters, when it’s put up against high-performance Android phones in the same price range.
The 16e isn’t a small step toward what Apple wants to do. It’s quietly changing what “entry-level” means for the brand by making its own silicon stack, which includes everything from the chip to the modem, and trying to make AI feel like a reason to buy instead of a feature that you can check off. It is a real goal. Analysts at Apple are probably keeping a close eye on this right now to see if the execution and price will bring in the volume that Apple needs from this tier.
