Apple is betting on artificial intelligence to stimulate iPhone sales in search of new customers

Apple’s developer conference was about more than just infusing its software with the latest artificial intelligence (AI) technologies, including ChatGPT.

It was also about selling more iPhones.

Facing volatile consumer spending and the resurgence of its technology rivals, Apple has turned to artificial intelligence as a way to energize its loyal fan base of more than a billion customers and reverse the decline in sales of its best-selling products.

Several analysts said the program, which requires at least an iPhone 15 Pro or Pro Max to run, could encourage a flurry of new purchases. Some expected the biggest update cycle to arrive in the fall since Apple launched the iPhone 12 in 2020, which attracted consumers in part through 5G connectivity.

“What we saw today was more compelling than anything we’ve seen since,” said Gil Loria, an analyst at DA Davidson.

The company showed off what it called Apple Intelligence, its version of generative artificial intelligence that can conjure up text, images, and other content on demand.

Apple demonstrated how its AI can create custom emojis, a cartoon to text friends, or edits that make email look more professional. Its digital assistant, Siri, can let users know if they also want ChatGPT’s help.

Some analysts expressed skepticism and predicted that consumers would not rush to Apple stores to get more artificial intelligence on their phones.

“There may be enough in Apple’s new and improved Siri-powered smart devices to contain some of the hardware revenue that has been hemorrhaging recently, but not enough to create a new following,” the Forrester analyst said. , Dipanjan Chatterjee. .

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“It’s clear that investors want a more comprehensive and ambitious strategy from Apple when it comes to AI,” added Tejas Desai of Global X.

The company’s shares fell 2% after this news.

Read more: These are the key new features Apple introduced at WWDC 2024

Apple could launch the iPhone 16 in the fall

Like it or not, Apple’s AI features won’t be available on all iPhones.

The company said smartphone customers should upgrade to the iPhone 15 Pro or Pro Max, which Apple began selling in September 2023. The artificial intelligence, which is designed to be able to process data specifically on a user’s device, is based on chips in Apple’s latest smartphones.

Wedbush Securities analyst Dan Ives sees this as a great opportunity. It is estimated that about 270 million iPhones have not been updated in four years.

“We estimate that more than 15% of Apple’s installed base will upgrade to the iPhone 16. Apple Intelligence is a great app and one that many have been waiting for,” Ives said.

The iPhone 16 is expected to launch sometime this fall.

Another selling point for Apple is its easy-to-use integration with ChatGPT, said Gene Munster, managing partner at Deepwater Asset Management. “They really remove the friction that comes with using AI,” he said.

The company’s latest annual report showed iPhone revenue for the fiscal year ending September 2023 at $200.6 billion, up from $205.5 billion the previous year.

However, artificial intelligence is only part of Apple’s appeal to consumers. “They may primarily want a larger iPhone screen or a better camera, but AI upgrades will attract early adopters and highlight their ability to take actions within and between apps,” said Martin Yang of Oppenheimer & Co.

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“This action will make Apple a direct leader in consumer AI,” Yang said.

With information from Reuters

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