At this year’s Mobile World Congress (MWC) in Barcelona, Deutsche Telekom (DT) announced a groundbreaking new venture—a low-cost AI-powered smartphone developed in collaboration with Perplexity, Picsart, and other partners. Dubbed the “AI Phone,” this innovative device is set to launch in the latter half of 2025, with sales beginning in 2026 at a price point below $1,000. Initially, the device will be available in the European market.
Claudia Nemat, DT’s board member for technology and innovation, emphasized the company’s strategic shift towards AI integration. “We are becoming an AI company,” she declared. While DT is not developing foundational large language models, it is heavily invested in AI-powered digital assistants, which will be central to the new device.
A key partner in this initiative is Perplexity, a Silicon Valley-based AI startup currently valued at approximately $9 billion. Known for its generative AI search engine, Perplexity is now transitioning into more proactive AI solutions. “Perplexity is evolving from being just an answer machine to an action machine,” said Aravind Srinivas, Perplexity’s co-founder and CEO. “It will not only provide answers but also book flights, make reservations, send emails, and even place calls on behalf of users.”
While details on the hardware specifications and operating system remain undisclosed, early concept designs suggest a customized Android-based experience. The AI Phone will integrate AI capabilities directly into the user experience, with Perplexity’s technology embedded in the lock screen for seamless interaction.
DT is also developing its own AI assistant, Magenta AI, which will be available as an app for Android and iOS users—provided they are among DT’s 300 million customers. In addition to Perplexity, DT is leveraging AI solutions from Google Cloud, ElevenLabs, and Picsart to enhance the device’s functionality.
For years, telecom companies have struggled to compete with tech giants like Apple and Google, which dominate mobile ecosystems with their operating systems and proprietary app marketplaces. DT’s AI Phone represents a strategic push to reclaim influence over consumer interactions by embedding AI-driven services directly into its devices.
This initiative marks a significant shift for Perplexity as well. Competing with AI heavyweights like OpenAI, Anthropic, and Google’s Gemini, Perplexity is seeking differentiation through real-time action-oriented services. By integrating its AI directly into a telecom-backed smartphone, the startup aims to deliver a more proactive and hands-free user experience.
Despite its ambitions, DT and Perplexity will face significant challenges in a smartphone market dominated by established players. Even major companies like LG have exited the space due to its competitive nature. However, the increasing demand for AI-powered solutions could provide the edge needed to carve out a niche.
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