Deutsche Telekom and Perplexity Set to Introduce AI-Powered Smartphone in 2026, Priced Under $1,000

Deutsche Telekom (DT) has announced a groundbreaking collaboration with Perplexity, alongside partners such as Picsart, to develop an affordable “AI Phone” at MWC 2025 in Barcelona. The new smartphone will feature an integrated AI assistant app called “Magenta AI” and is designed to provide advanced AI capabilities at an accessible price point.

Set for release in the second half of 2025, the device is expected to retail for under $1,000 and will initially target the European market, according to a spokesperson. The AI-driven phone is slated to hit the market in 2026, marking a significant step in the evolution of smartphones incorporating cutting-edge AI technologies.

“We are becoming an AI company,” Claudia Nemat, a DT board member who is responsible for the telecom’s technology and innovation, during a press conference on Monday. She quickly clarified that the AI agents are the focus, rather than the construction of foundational large language models.

It is worth noting that Perplexity, a Silicon Valley-based startup that is currently valued at approximately $9 billion, is being cited as a significant contributor to the phone’s development. This is a sign of the startup’s efforts to develop more “proactive” products, as it is currently most renowned for its generative AI search engine.

 “Perplexity is transitioning from just being an answer machine to an action machine,” Aravind Srinivas, Perplexity’s co-founder and CEO, said on stage at the event. “It is going to start doing things for you, not just answering questions. It’s going to be able to book flights for you, book reservations for you, send emails for you, send messages, place phone calls for you, and all those sorts of things, like set smart reminders.”

Despite the fact that this is the first time that Perplexity has entered into a contract with a carrier to create an AI interface for a smartphone, the company has some experience with assistants. In January, Perplexity introduced an Android assistant that appears to be a viable model for the forthcoming “AI Phone.”

The news is the latest development in a well-known tale from the telecommunications industry. For years, carriers, regardless of whether they are mobile or fixed, have been yearning for strategies to more effectively compete with technology companies.