Jeffrey Dustin and Aditya Soni
SAN FRANCISCO (Reuters) – Apple’s (NASDAQ:) developer conference on Monday wasn’t just about introducing the latest artificial intelligence technologies into its software, including ChatGPT.
It was also about selling more iPhones.
Faced with faltering consumer spending and resurgent tech rivals, Apple saw AI as a way to revitalize its loyal fan base of more than 1 billion customers and reverse declining sales of its best-selling product.
The software, which requires at least an iPhone 15 Pro or Pro Max to run, could spur a cascade of new purchases, according to several analysts. Some predicted the biggest update cycle would come in the fall since Apple’s 2020 release of the iPhone 12, which attracted consumers in part due to its 5G connectivity.
“What we saw today was more compelling than anything we’ve seen since then,” said analyst Gil Luria of DA Davidson.
The company showed off what it called Apple Intelligence, its take on generative artificial intelligence that can create text, images and other content on command.
Apple showed off how its AI can generate custom emojis, cartoons for text messages to friends, or edit emails to make them look more professional. Its digital assistant, Siri, can prompt users if they need help from ChatGPT.
Some analysts have expressed skepticism, predicting that consumers won’t rush to Apple stores to get more artificial intelligence on their phones.
“Apple’s new and improved Siri-powered smart devices may be enough to stem some of the device revenue that’s been falling lately, but it won’t be enough to create a new group of followers,” said Forrester analyst Dipanjan Chatterjee. .
Global X’s Tejas Dessai added: “Investors clearly want a more comprehensive and ambitious strategy from Apple when it comes to artificial intelligence.” On this news, the company’s shares fell 2%.
UPDATE TO AI
Like them or not, Apple’s AI features won’t be available on every iPhone.
The company said smartphone buyers should upgrade to the iPhone 15 Pro or Pro Max, which Apple began selling in September 2023. Artificial intelligence designed to process data confidentially on a user’s device depends on the chips in Apple’s new smartphones.
This represents a big opportunity, according to Wedbush Securities analyst Dan Ives. He estimates that about 270 million iPhones have not been updated in four years.
“We estimate that more than 15% of Apple’s installed device base will upgrade to iPhone 16 because Apple Intelligence is the incredible app that many have been waiting for,” Ives said.
The release of the iPhone 16 is expected sometime this fall.
Gene Munster, managing partner at Deepwater Asset Management, said another advantage Apple has is its easy-to-use integration with ChatGPT. “They really make AI easier to use,” he said.
Apple’s iPhone revenue for the fiscal year ending September 2023 was $200.6 billion, up from $205.5 billion the previous year, the company’s latest annual report showed.
However, artificial intelligence is only part of Apple’s appeal to consumers. They may primarily want the iPhone’s larger display or better camera, but the AI upgrades will appeal to early adopters and stand out for their ability to perform actions within and across apps, says Oppenheimer & Co.’s Martin Young.
“This piece of action will make Apple an immediate leader in consumer artificial intelligence,” Yang said.