(Credit: Apple)
We should have seen it coming. When Apple announced the iPhone 16e, many, including myself, were taken aback by its $599 starting price. Apple is pitching the iPhone 16e as a more affordable version of the $799 iPhone 16—which it is—but most of us had anticipated it to be a fourth-generation iPhone SE, which has historically been priced around $400. It's a classic case of rumors leading to mismanaged expectations.
That said, the iPhone 16e looks to be a notable step up from what we would expect from another iPhone SE, so the higher price makes sense. It also signals a potential price adjustment on the horizon.
iPhone Prices Have Hardly Changed for Years
Apple has been fairly consistent with iPhone pricing over the last several years. The iPhone 12, 13, 14, 15, and 16 all share a $799 starting price, with the Plus and Pro models also carrying over their prices ($899 and $999, respectively) from generation to generation. The Pro Max is the only phone that's seen a recent price change: It increased from $1,099 for the 14 Pro Max to $1,199 for the 15 and 16 Pro Max, which, given some of the upgrades, felt fair.
The original iPhone SE was launched in 2016 with a starting price of $399. That was a steal compared with the iPhone 7, which launched in 2016 at $649. The second iPhone SE didn't arrive until 2020 but carried over the $399 price. It was a bargain compared with the iPhone 12, which started at $799. Two years later, the third-generation iPhone SE arrived at a slightly higher price of $429, but it was still significantly less than the $799 iPhone 13.
It's easy to see why the iPhone SE has become known as the "budget" or "cheap" iPhone. It's not as affordable as some of the cheapest phones on the market, but it traditionally costs about half as much as a standard iPhone.
Rumors about the fourth-generation iPhone SE started swirling around the internet more than a year ago. Many wondered if it would carry over the outdated design, the Home button with Touch ID, and the single-camera configuration of the third-gen model. It wasn't until after the iPhone 16 family launched that reports of a dramatic change for the budget-friendly iPhone started to appear. Over time, the picture became more clear. The iPhone SE 4, as it was being called, would adopt a more modern design with an all-screen front. It would lose the Home button and switch to Face ID. It would get a better camera, better radios, a faster processor, and better battery life.
You can't have all this improvement without driving the price up at least a little—even if it recycles an older design and shares the processor and camera components with the iPhone 16. I was hoping Apple's economies of scale would help keep the cost reasonable. I expected the price to go up, but not any further than $499.
Then again, the iPhone 16e is the first iPhone to have Apple's custom C1 modem, which the company spent billions of dollars developing. While Apple isn't looking to recoup all those R&D dollars in the iPhone 16e, it surely plays a role in the pricing.
Is $599 a Fair Price for a New iPhone?
The disappointment in the much higher price boils down to the point of view. Many believed Apple's next device would be an updated version of an existing product line, so it was logical to think that the price would remain in line with what preceded it. Instead, Apple approached it from the completely opposite direction. It started with something more expensive and retooled it to bring the cost down. This disconnect is why our collective eyes popped a little when Apple priced the iPhone 16e at $599.
So, is $599 a fair price? Well, it's not out of line, considering the feature set. Yes, it's basically a starter version of the iPhone 16, but it's also a significant upgrade compared with the 2022 iPhone SE. Moreover, it's priced near its top Android competition, including the $649 Samsung Galaxy S24 FE (a pared-back Galaxy S24) and the $499 Google Pixel 8a (an entry-level Pixel 8).
The $599 price means Apple is focusing on driving up the average selling price of its iPhones. With no $429 option, we'll all collectively be paying more, on average, for our iPhones. Apple would have priced the iPhone 16e more aggressively if it wanted to steal market share from Google's Android platform. At $499, the iPhone 16e could have put midrange Android phones on serious notice, particularly in markets outside the US where people can't break down the cost over two or three years through their carrier.
An iPhone Price Hike Might Be Coming
Finally, consider this: The iPhone 16e's higher price sets the stage for more iPhone price increases later this year. For example, the latest rumor about the iPhone 17, expected in the fall, suggests it will undergo a massive redesign. Primarily, it will be thinner and have a fresh camera module, but we'll also see upgrades that mirror the 16e. This means the C1 modem is highly likely to be on board, as is a wholly new internal design with a different battery, an upgraded processor, and more. It wouldn't be completely out of left field for these major changes to come with an increase in price. (Let's not even get into what tariffs could mean for industry pricing altogether.)
We'll get more indicators soon. Apple is widely expected to announce a new base model iPad and a refreshed version of the iPad Air as early as March or April. Some believe the base iPad will see a price jump of $100 from $349 to $449. Further, the iPad Air has maintained the same $599 starting price for several generations. If the new model shows up with a higher price, we can almost certainly consider a costlier iPhone 17 a lock.