Germany's Deutsche Telekom announces new AI phone with Aravind Srinivas's Perplexity, price under $1,000

Deutsche Telekom (DT) stated at this year’s Mobile World Congress(MWC) in Barcelona that it is developing an “AI Phone,” a low-cost device designed in close collaboration with Perplexity, Picsart, and others, as well as a new AI assistant software dubbed “Magenta AI”.

DT will debut the gadget in the second half of this year and begin selling it in 2026 for less than $1,000. A representative told TechCrunch that it will first focus on the European market.

During a press conference on Monday, Claudia Nemat, a DT board member who oversees tech and innovation at the telecom, said, “We are becoming an AI company.”

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She also quickly added that while it is not building foundational large language models, “but we do the AI agents.”

Notably, Perplexity, a Silicon Valley start-up currently valued at almost $9 billion, is credited with playing a crucial part in the phone’s creation. That demonstrates how the business, best known for its generative AI search engine, is working to develop more “proactive” offerings.

At the event, Aravind Srinivas, Perplexity’s co-founder and CEO, said, “Perplexity is transitioning from just being an answer machine to an action machine.”

He also stated that it will begin to do things for you, rather than just answering questions. It will be able to book flights, make bookings, and send emails, texts, and make phone calls for you.

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Even though this seems to be Perplexity’s first agreement with a carrier to create an AI smartphone interface, the company has some prior experience with assistants: Perplexity introduced an Android assistant in January, which appears to be a possible prototype for this new “AI Phone.”

The announcement is the latest chapter in a long-running telecommunications tale. For years, carriers, both mobile and fixed, have sought methods to compete more effectively with technology businesses.

They have specifically targeted businesses such as Apple and Google, who have developed operating systems and phones that have largely eliminated telecom providers from the equation when it comes to collecting money from apps and “owning” the client connection.

Moving quickly and breaking things are not part of the telecommunications wheelhouse. Perplexity and Deutsche Telekom have been collaborating since signing a partnership in April 2024. DT originally discussed a “AI Phone” during last year’s Mobile World Congress.

Nemat did not go into much detail about the hardware, such device specs, nor did she share information on who is creating it and what operating system it will operate on.

Nemat did mention that the phone will have AI integrated in, with the experience created 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, according to DT.

Magenta AI, an app-based version of DT’s AI assistant, will be available to individuals who wish to install it on their own Android or iOS devices, as long as they are already one of DT’s 300 million clients, according to Nemat.

Leaning into the current penchant for all things AI — an ubiquitous theme at MWC this year — the AI Phone is DT’s newest attempt to acquire a better foothold with customers around an anchoring piece of hardware, alongside the app for when they just cannot persuade people to purchase their own smartphone.

When it comes to developing new AI tools for customers, Perplexity competes with not just the well-funded OpenAI and Anthropic, but also huge tech corporations such as Google, which has integrated its Gemini AI into its basic search offerings. So, partnering with a telecom to provide “action” services provides it a little point of distinction, at least for the time being.

It remains to be seen if DT and Perplexity will be able to break into the notoriously difficult smartphone industry, which is dominated by a limited number of businesses and has seen even behemoths like LG cash in and walk away in recent years.

It does, however, demonstrate how compelling AI is right now, how even legacy firms view it as a potential cure, and how even cutting-edge startups are seeking for safe bets in the face of strong competition.