It was inevitable that this year at MWC in Barcelona, at least one carrier would announce a major effort at building a smartphone with a top AI company. And here it is: Deutsche Telekom (DT), said that it is building an “AI Phone,” a low-cost handset created in close collaboration with Perplexity, along with Picsart and others, plus a new AI assistant app it’s calling “Magenta AI.”
DT will unveil the device in the second half of this year, and it will start selling it in 2026 for a price tag of less than $1,000. Initially, it will be aimed at the European market, a spokesperson told TechCrunch.
“We are becoming an AI company,” Claudia Nemat, a DT board member who oversees tech and innovation at the telecom, said during a press conference Monday. It’s not building foundational large language models, she was quick to add, “but we do the AI agents.”
Notably, Perplexity — the startup out of Silicon Valley that is reportedly now valued at about $9 billion — is being touted as playing a key role in the development of the phone. That is a signal of how the startup, best known today for its generative AI search engine, is taking steps to create more “proactive” products.
“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.”
Although this appears to be the first time that Perplexity has inked a deal with a carrier to develop an AI interface for a smartphone, it has a little experience in assistants already: Perplexity launched an Android assistant in January that seems like it could be a likely template for this new “AI Phone”.
The news is the latest development in a familiar story from the world of telecoms. For years, carriers — both mobile and fixed — have pined for ways to compete better with technology companies.
Specifically, they have focused on the likes of Apple and Google, which have created operating systems and phones that largely cut telecom companies out of the equation when it comes to making money around apps, and “owning” that customer relationship. Over the years, we’ve seen partnerships with Mozilla to create a carrier-first phone to compete with these two. (The Firephone, as it was called, was not that hot after all.) And there were many cozy years with Facebook, as the social network too looked for stronger footing of its own in the mobile world. (Meta, as it’s now called, is focusing its hardware and telecoms attentions elsewhere now.)
Moving fast and breaking things is not a part of the telecoms wheelhouse. Perplexity and Deutsche Telekom have been working together since inking a partnership in April 2024. And DT first talked about an “AI Phone” a full year ago, at last year’s Mobile World Congress event.
Nemat did not get into many details of the hardware, like device specifications, nor did she give information on who is building it and what operating system it will run on (from the concept renderings, it looks like a flavor of Android). We contacted DT directly and a spokesperson said these details would be disclosed in the second half of the year.
Nemat did note that the phone will have AI baked in, with the experience built by Perplexity “so that you can experience the full Monty,” she added: “AI on your lock screen.”
Other services on the phone will include AI from Google Cloud, ElevenLabs, and Picsart, DT said.
Magenta AI, which will be an app-based version of DT’s AI assistant, will be available for those who want to install it on their own Android or iOS devices — as long as you are already one of DT’s 300 million customers, Nemat said.
Leaning into the current vogue for all things AI — a pervasive theme at MWC this year — the AI Phone is DT’s latest attempt to gain some stronger footing with consumers around an anchoring piece of hardware, alongside the app for when they simply cannot get users to buy their own device.
For Perplexity, the company competes with the likes of not just the very-well-capitalised OpenAI and Anthropic when it comes to building new AI tools for consumers, but also big tech companies like Google, which has baked its Gemini AI into its basic search products. So moving into “action” services, in partnership with a telco, gives it a little point of differentiation, at least for now.
Here, it seems that Perplexity is leaning into the next phase of how AI can improve user experience.
“These are the kinds of things that, earlier, you would have to do in your own way, learning how to use these different apps,” Srinivas said. “All these things are going to start becoming easier so that you can focus your time and energy on problem-solving…. This is really the next phase where AI [is] going to transition from being just reactive and having you input prompts into something that’s just natively there on your phone, always listening to you and being able to […] proactively assist you.”
It remains to be seen whether DT and Perplexity will be able to crack the notoriously tricky smartphone market, which is dominated by a small number of companies and has over the years seen even leviathans like LG cash in their chips and back away.
It nevertheless points to just how magnetic the AI pull is right now, how even legacy companies see it as a possible panacea, and how even cutting-edge startups are looking for safe moats amid fierce competition.
