Apple is preparing to launch a more affordable AI-powered smartphone that could reshape its competitive position in key markets, particularly China. According to Bloomberg correspondent Mark Gurman, citing sources familiar with the project, a new iPhone SE is scheduled for early 2025 and will feature Apple Intelligence, the company’s suite of AI capabilities.
Currently, Apple Intelligence is limited to premium devices—only iPhone 15 Pro ($899+) and iPhone 16 ($799+) models support the AI features rolling out later this month. The existing iPhone SE, priced at $429, lacks these capabilities. While Bloomberg hasn’t disclosed pricing for the new SE model, bringing AI features to a sub-$500 price point could significantly expand Apple’s market reach.
This strategic move comes at a critical time for Apple in Greater China, where the company has faced mounting pressure from domestic competitors. Huawei’s success with the Mate 60 Pro and Pura 70 Ultra in 2024 has eroded Apple’s market share, contributing to a nearly 10% sales decline in the region during the nine months through August 1.
Jacob Bourne, a tech analyst at Emarketer, emphasized that “by offering affordability coupled with Apple Intelligence features, the tech giant could reignite interest among cost-conscious consumers.” However, Gene Munster, managing partner at Deepwater Asset Management, identified China as Apple’s “big unanswered question when it comes to Apple Intelligence,” noting that success depends on partnering with Chinese companies to deliver AI features locally and “getting the price right.”
Beyond China, the affordable AI-enabled iPhone could benefit US consumers who want to experience Apple Intelligence without spending nearly $1,000 on an upgrade. The device will also undergo a significant design refresh—abandoning the home button for an edge-to-edge screen design similar to the iPhone 14, moving away from the iPhone 8-inspired look of the current SE 3 released in 2022.
This product strategy reflects Apple’s recognition that AI features are becoming essential differentiators in the smartphone market, and that democratizing access to these capabilities through lower-priced devices may be crucial for maintaining competitive positioning against both premium and budget-conscious rivals.
Key Quotes
by offering affordability coupled with Apple Intelligence features, the tech giant could reignite interest among cost-conscious consumers
Jacob Bourne, a tech analyst at Emarketer and BI sister company, explained how the affordable AI-powered iPhone SE could help Apple recover market share, particularly among budget-conscious buyers who have been priced out of Apple’s AI features.
big unanswered question when it comes to Apple Intelligence
Gene Munster, managing partner at Deepwater Asset Management, characterized China’s market as Apple’s major challenge for AI deployment, emphasizing that success requires both strategic partnerships with Chinese companies and competitive pricing to win back consumers.
Our Take
Apple’s decision to bring AI capabilities to the iPhone SE represents a strategic acknowledgment that the company cannot afford to keep its most innovative features locked behind premium price points, especially in competitive markets like China. This move is particularly telling because it suggests Apple views AI as a fundamental requirement for smartphone competitiveness, not merely a premium feature. The timing—early 2025—also indicates urgency to respond to Huawei’s resurgence and other Chinese competitors who have successfully combined advanced features with aggressive pricing. However, the China challenge extends beyond pricing; Apple must navigate complex partnerships with local AI providers to comply with regulations, potentially diluting its ecosystem control. This could set a precedent for how Western tech companies compromise on their integrated approach to succeed in regulated markets. The broader implication is clear: the AI smartphone wars will be won not just through technological superiority, but through strategic pricing and localization.
Why This Matters
This development signals a pivotal shift in Apple’s AI strategy and the broader smartphone industry. By bringing Apple Intelligence to a budget-friendly device, Apple is democratizing AI access and acknowledging that artificial intelligence features are no longer luxury add-ons but essential smartphone capabilities. This move could reshape competitive dynamics in the global smartphone market, particularly in price-sensitive regions like China where domestic manufacturers have gained ground.
The timing is critical as the AI race intensifies among tech giants. Apple’s ability to deliver AI features at multiple price points will determine whether it can maintain its premium brand position while competing with aggressive Chinese manufacturers like Huawei. For the broader AI industry, this represents a maturation phase where AI moves from flagship exclusivity to mainstream accessibility. The success or failure of this strategy could influence how other smartphone makers—Samsung, Google, and Chinese brands—approach AI feature deployment across their product lines. Additionally, Apple’s need to partner with Chinese AI companies highlights the geopolitical complexities of deploying AI technology globally, setting precedents for how international tech companies navigate regional AI regulations and partnerships.
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Source: https://www.businessinsider.com/apple-new-iphone-se-with-ai-could-help-china-sales-2024-10