Core Viewpoint - Deutsche Telekom is developing an "AI Phone" in collaboration with companies like Perplexity and Picsart, aiming to integrate AI capabilities into a low-cost smartphone targeted at the European market, with a launch planned for the second half of this year and a price under $1000 by 2026 [1][2][4]. Group 1: Product Development - The AI Phone will feature a new AI assistant application called "Magenta AI," which will be available for existing Deutsche Telekom customers on Android and iOS devices [6]. - Perplexity, valued at approximately $9 billion, plays a crucial role in the phone's development, transitioning from a passive answering machine to an active assistant capable of performing tasks like booking flights and sending messages [2][3][7]. - The phone is expected to incorporate AI services from Google Cloud, ElevenLabs, and Picsart, enhancing user experience through proactive assistance [4][6]. Group 2: Market Context - The initiative reflects a broader trend among telecom operators to compete more effectively with tech giants like Apple and Google, who have historically dominated the smartphone market and limited telecom companies' roles [3][4]. - Deutsche Telekom's move into AI-driven hardware represents a strategic effort to strengthen its consumer presence in a highly competitive market, where traditional companies are increasingly viewing AI as a potential solution to regain market relevance [6][7]. - The collaboration with Perplexity marks a significant step for both companies, as they seek to differentiate themselves in a crowded market where even established players like LG have exited [7].