At the Mobile World Congress (MWC) in Barcelona, Deutsche Telekom (DT) announced its plans to launch an "AI Phone," a low-cost smartphone developed in close collaboration with Perplexity, a Silicon Valley-based AI startup. The device, set to be released in 2026 for under $1,000, will initially target the European market.

The AI Phone is a significant move for DT, as the company aims to become a major player in the AI space. Claudia Nemat, a DT board member overseeing tech and innovation, emphasized that the company is not building foundational large language models but rather focusing on AI agents. Perplexity, valued at around $9 billion, is playing a key role in the development of the phone, marking a significant step in its transition from being an "answer machine" to an "action machine."

The AI Phone will feature an AI assistant app called Magenta AI, which will be available for DT's 300 million customers to install on their own Android or iOS devices. The phone will also include AI capabilities from Google Cloud, ElevenLabs, and Picsart. DT's spokesperson revealed that the device's specifications, operating system, and manufacturer will be disclosed in the second half of the year.

This move is part of a larger trend in the telecom industry, as carriers seek to compete with technology companies like Apple and Google. DT's partnership with Perplexity is a strategic attempt to gain a stronger foothold in the market, particularly in the AI space. The company's efforts to develop an AI-powered smartphone demonstrate its commitment to innovation and customer experience.

Perplexity's involvement in the project is significant, as it marks a shift towards more proactive AI products. The startup's CEO, Aravind Srinivas, highlighted the phone's capabilities, including booking flights, making reservations, sending emails, and setting smart reminders. This move is seen as a point of differentiation for Perplexity, which competes with well-capitalized companies like OpenAI and Anthropic, as well as big tech companies like Google.

The AI Phone's success remains to be seen, as the smartphone market is notoriously competitive and dominated by a few major players. However, DT's move into the AI space, in partnership with Perplexity, demonstrates the growing importance of AI in the tech industry and the potential for innovation in the smartphone market.

As the AI landscape continues to evolve, it will be interesting to see how DT's AI Phone fares in the market and whether it can successfully challenge the dominance of established players. One thing is certain, however – the AI pull is strong, and even legacy companies like DT are recognizing its potential to drive innovation and growth.