Apple Unveils an AI iPhone
Apple unveiled a new series of iPhones on Monday, integrating advanced AI features into their operating system to gauge consumer interest in these technologies, the Wall Street Journal reports.
The new AI suite, termed “Apple Intelligence,” encompasses an enhanced Siri voice assistant and a range of text-editing and photo-processing functions, compatible with the latest iPhone 16 and iPhone 15 Pro models. Much of the AI functionality was previewed in June.
During the announcement, Apple’s stock dipped by over 1%, reflecting some investor skepticism regarding the emphasis on AI-driven products.
Tim Cook, Apple’s CEO, expressed gratitude to the attendees at the Cupertino, Calif., event, highlighting that the new iPhones are “designed from the ground up for Apple Intelligence and its breakthrough capabilities.”
Aside from new camera enhancements and a novel button for feature adjustments, the iPhone 16 series presents limited hardware innovations. Apple is betting on the allure of its new AI capabilities to attract users.
“Apple Intelligence draws on the immense power of our silicon to run multiple generative models on the iPhone in your pocket,” stated Craig Federighi, Apple’s head of software.
The demonstration showcased the new capabilities, such as refining text tone for communications like Slack messages or book reviews. It also includes photo sorting, personalized slideshow creation based on simple prompts, and email prioritization along with message summaries.
Apple noted that Siri’s improved language comprehension will allow it to understand even when users fumble their words. Siri will also be able to retrieve personal recommendations, like suggesting a TV show. Additionally, users can utilize “visual intelligence” to identify a dog breed from a photo.
A beta version of some Apple Intelligence features will be accessible next month, initially only in English. Apple plans to expand this to Chinese, French, Japanese, and Spanish next year.
The new iPhone models are equipped with a chip designed to enhance AI functionalities, which Apple claims surpasses the speed of competing devices and even some high-end desktop computers.
The entry-level iPhone 16 is priced at $799, the Plus 16 model at $899, and the Pro version starts at $999, with the larger size available for $1,199.
Consistent with its fall event tradition, Apple’s “Glowtime” presentation began with new gadgets like a smartwatch and updated AirPods before revealing the iPhone 16 series.
The latest Apple Watch, the Series 10, features a slimmer design, a larger screen, and the capability to detect potential sleep apnea. It also includes new features for swimmers, measuring water depth and temperature. The watch is priced at $399 and will be available from September 20.
Apple has also upgraded its AirPods Pro 2 to function as an over-the-counter hearing aid, with additional hearing tests based on scientific research. The AirPods 4, the baseline model, is priced at $129.
AI features have yet to significantly drive consumer upgrades. Samsung 005930 -1.33%decrease; red down pointing triangle, Apple’s main competitor, has heavily marketed its latest AI-enhanced devices. Surveys by BayStreet Research indicate that AI was a minor selling point for carriers after initial sales, and only 7% of consumers were highly inclined to buy a phone for its AI features, according to Canalys.
“AI hasn’t resonated yet with the masses,” commented Cliff Maldonado, principal analyst at BayStreet Research.
Despite this, some investors are optimistic about a potential surge in iPhone sales, as many users are overdue for an upgrade. Analysts predict a nearly 5% increase in iPhone revenue for the 2025 fiscal year, ending next September, according to FactSet.
The reception to Apple’s AI-enabled phones will further test market interest in this technology. While competitors have heavily invested in AI models for interactive and creative purposes, investor enthusiasm for AI spending has cooled this year as companies struggle to demonstrate clear profitability.
Unlike its competitors, Apple has not invested heavily in AI. Instead, it relies on partnerships with leading AI firms to participate in the market.
“Apple is doing partnerships instead of having to reinvent the wheel,” said Trip Miller, managing partner at Gullane Capital Partners. “They’ve already got the platform and the user base that wants to consume this revolutionary technology.”
In its AI efforts, Apple is collaborating with the startup OpenAI, led by Sam Altman, to incorporate ChatGPT, which Apple considers a leader in generative AI. The company also plans to engage with other AI developers and is reportedly discussing an investment in OpenAI, according to The Wall Street Journal.
Apple has not yet announced an AI partner in China, one of its largest markets, where it has faced new competition from local smartphone brands and experienced stagnant sales.
Apple’s last major iPhone success came in 2021, with a 39% sales increase compared to the previous year. However, sales have declined over the past two quarters, and revenue fell by over 2% in the fiscal year ending September 2023.
The 2021 sales boost was driven by promotions and subsidies from wireless carriers, who invested in new 5G infrastructure to attract or retain users. Carriers are crucial to iPhone sales in the U.S., accounting for about three-quarters of new iPhone purchases, according to Consumer Intelligence Research Partners. However, some iPhone users have postponed upgrades due to less significant changes in newer models.
“People are holding on to their phones for longer and longer periods,” noted Michael Levin, co-founder of CIRP. “Apple is swimming upstream that way.”
Analysts anticipate a potential resurgence in iPhone sales with the iPhone 17 generation, expected to feature a thinner design and updated camera. More consumers might also be ready to adopt AI features by then.
{Matzav.com}