Apple’s budget-friendly iPhones carried the SE (Special Edition) label for years, distinguishing between its premium models and lower-cost alternatives. The SE moniker communicated trade-offs—fewer features, an older design, and a lower price. This precise segmentation served a purpose but also reinforced the perception that the SE line was an inferior alternative rather than a legitimate part of the leading iPhone lineup. With the launch of the iPhone 16e, Apple is eliminating that divide. By giving its more affordable model a name that aligns with its flagship series, Apple shifts consumer perception from “budget iPhone” to “a different iPhone.” This is not just a rebranding exercise; it’s a psychological shift that affects how consumers categorize and justify the purchase of a lower-cost iPhone.

Leveraging the Halo Effect: Premium by Association

The iPhone 16e is no longer an outlier in Apple’s smartphone family. By placing it under the iPhone 16 umbrella, Apple ensures that the device benefits from the “halo effect,” a marketing phenomenon in which positive perceptions of a premium product extend to other products within the same brand. By sharing the name of the iPhone 16, the 16e automatically gains credibility, making it feel like a legitimate member of the flagship series rather than an afterthought. Instead of being viewed as a budget device with compromises, the 16e becomes an “alternative” choice within the flagship family rather than a lesser one. The shift away from the SE label makes the price increase more reasonable since consumers compare it to other iPhone 16 models rather than older SE versions. This strategy is similar to what Apple has done in different product lines, such as transitioning the MacBook Air from a low-end Mac to a mainstream model and consolidating iPads under fewer but more premium-sounding names.

The Justification of a Higher Cost

Apple has historically used pricing as a branding tool. The iPhone SE (2022) launched at $429, while the iPhone 16e starts at $599—a nearly 40% increase, according to The Wall Street Journal. However, this price hike is softened by the rebranding. If Apple had stuck with the SE name, such a jump would have seemed excessive. Instead, by aligning the 16e with the flagship series, Apple frames the price as a natural part of the premium lineup rather than a budget phone getting inexplicably more expensive. The pricing structure also follows a classic decoy pricing strategy. The iPhone 16 Pro and Pro Max are high-end aspirational models, while the iPhone 16 and 16 Plus represent the lineup’s core. The iPhone 16e, rather than competing against mid-range Android phones, is positioned as a lower-cost entry into the premium iPhone family. By setting the 16e against its flagship models instead of directly competing with mid-range Android phones, Apple ensures that consumers view it as a strategic, cost-effective way to own an iPhone 16 rather than a compromise-driven purchase.

Long-Term Brand Loyalty & Ecosystem Integration

Apple’s strategy goes beyond the immediate sale of the iPhone 16e. By positioning the device as an extension of the iPhone 16 family, Apple strengthens its ecosystem lock-in. Customers who buy a 16e are more likely to stay within the Apple ecosystem, purchasing accessories and services like iCloud+ and AppleCare+ and eventually upgrading to higher-tier models in the future. This move also reduces the likelihood of first-time iPhone buyers feeling like they are settling for a lesser experience. Instead of treating the 16e as an entry-level product, Apple ensures that consumers think they are getting a legitimate iPhone 16 experience at a lower cost, increasing the likelihood of them remaining loyal to the brand.

A Masterclass in Brand Positioning

Apple’s transition from SE to 16e is a textbook example of strategic brand repositioning. By eliminating the budget stigma, integrating the 16e into the premium iPhone 16 family, and justifying a higher price through association, Apple strengthens its brand while maintaining profitability. This move is not about making a cheaper iPhone—it’s about creating an iPhone that feels premium at every price point. And that, in essence, is what keeps Apple at the top of the smartphone market.