San Francisco: Apple’s recent developer conference showcased more than just advancements in software infused with cutting-edge artificial intelligence technology, including contributions from ChatGPT. It also underscored the tech giant’s strategic focus on driving iPhone sales in a competitive market landscape.
With consumer spending fluctuating and formidable rivals emerging, Apple has turned to AI as a catalyst to energize its vast user base, exceeding 1 billion customers, and reverse the sales decline of its flagship product.
The unveiled software, tailored for iPhone 15 Pro or Pro Max models and dubbed Apple Intelligence, holds the promise of triggering a wave of new purchases, according to several analysts. Some anticipate a robust upgrade cycle akin to the surge following the release of the iPhone 12 in 2020, buoyed by features such as 5G connectivity.
“What we saw today was more compelling than anything we’ve seen since,” remarked analyst Gil Luria of D.A. Davidson.
Apple’s demonstration of its generative AI capabilities showcased its ability to produce custom emojis, convert cartoons into text, or refine email content for a more professional tone. Additionally, its virtual assistant Siri seamlessly integrates with ChatGPT, offering users enhanced assistance.
However, skepticism persists among some analysts, questioning whether consumers will flock to Apple stores solely for AI enhancements.
“While the new and improved Siri-powered, intelligently Apple devices may stem some revenue decline, it’s unlikely to generate a new wave of followers,” noted Forrester analyst Dipanjan Chatterjee.
Tejas Dessai of Global X echoed similar sentiments, expressing investor expectations for a more comprehensive AI strategy from Apple. The company’s stock dipped 2% in response to the news.
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AI Upgrade
Apple’s AI features come with a catch—they’re exclusive to the iPhone 15 Pro and Pro Max models released in September 2023. These features, designed to prioritize user data privacy, leverage the processing power of Apple’s latest smartphone chips.
For Wedbush Securities analyst Dan Ives, this presents a significant opportunity, with an estimated 270 million iPhones not upgraded in four years. “We estimate 15%+ of the Apple installed base will upgrade to iPhone 16 as Apple Intelligence is the killer app many have been waiting for,” Ives projected.
The anticipated release of the iPhone 16 this autumn adds further momentum to this upgrade trend.
Gene Munster, managing partner at Deepwater Asset Management, lauded Apple’s seamless integration with ChatGPT, emphasizing its role in simplifying AI usage. “They’re really taking the friction out of using AI,” Munster remarked.
While AI represents a compelling addition to Apple’s offerings, consumer preferences may still prioritize features like larger displays or improved cameras. Yet, the AI updates are poised to resonate with early adopters, distinguishing Apple as a leader in consumer AI applications.
