Apple is gearing up for the launch of the new iPhone, which expected to heavily promote AI-powered features.
The iPhone 16 is set to debut. The new phone isn’t anticipated to showcase significant hardware changes, but Apple is betting its new AI feature, Apple Intelligence, will spark consumer interest.
Despite Apple’s push, consumers have yet to embrace AI as a primary reason for upgrading their smartphones.
Rival brands like Samsung have promoted AI capabilities in their latest devices. However, surveys, including one from BayStreet Research, suggest AI hasn’t been a major selling point. Only seven percent of consumers expressed a strong inclination to buy a smartphone based on AI features, according to a study by research firm Canalys.
Cliff Maldonado, principal analyst at BayStreet Research said:
“AI hasn’t resonated yet with the masses.”
Apple’s AI Strategy
Apple’s new AI system, Apple Intelligence, aims to integrate generative AI into every app on the iPhone.
This includes improvements to Siri, as well as new capabilities such as creating custom emojis and generating text messages. Some of these features were introduced earlier this year during Apple’s developer conference in June.
Notably, Apple is collaborating with AI startup OpenAI, the company behind ChatGPT, to embed AI technology into its phones.
Apple is reportedly in talks to invest in OpenAI, aiming to leverage partnerships with established AI leaders rather than reinventing the wheel itself.
Trip Miller, managing partner at Gullane Capital Partners and an Apple shareholder said:
“Apple is doing partnerships instead of having to reinvent the wheel, They’ve already got the platform and the user base that wants to consume this revolutionary technology.”
However, many of Apple’s new AI features won’t be immediately available when the iPhone 16 launches and some are expected to roll out later in 2024.
The initial release of Apple Intelligence will also be limited to English. This could curb excitement, especially in international markets like China, where Apple faces increasing competition.
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Sluggish Sales and Market Challenges
Apple’s iPhone sales have been declining in recent quarters. Revenue is down more than two percent in the fiscal year ending September 2023.
The company’s last major sales boost came in 2021 when promotions and subsidies from wireless carriers helped drive a 39 percent increase in sales.
Since then, new iPhone generations have offered fewer significant hardware redesigns, leading many customers to delay upgrades.
Michael Levin, co-founder of Consumer Intelligence Research Partners said:
“People are holding on to their phones for longer and longer periods of time.”
Carriers remain crucial to Apple’s sales strategy, accounting for around three-quarters of new iPhone purchases in the U.S., according to Consumer Intelligence Research Partners.
However, analysts say promotions have been less aggressive recently, and Apple may need more than just AI features to reignite consumer interest.
Future Outlook
Despite the uncertainty around immediate iPhone 16 sales, many analysts are optimistic that the iPhone 17, expected next year, could offer more substantial innovations.
The iPhone 17 is rumored to feature a thinner design and an upgraded camera system. It is hoped this could entice more customers to upgrade.
Additionally, as AI technology becomes more integrated into daily life, consumer interest in AI-driven smartphone features may grow.
For now, Apple faces the challenge of convincing consumers that AI is the future of smartphones—and that its new iPhones are worth the upgrade.
