New York — Apple has faced criticism for not providing a compelling reason for users to upgrade their iPhones since the introduction of 5G with the iPhone 12 four years ago. This lack of innovation is a concerning trend for the tech giant’s core business. However, this week may mark a turning point.
Last year, the iPhone generated more than half of Apple’s total revenue, but sales growth has slowed as customers are taking longer to upgrade to new models. This extended upgrade cycle, which affects many tech companies, has been particularly detrimental to Apple. The company is also contending with fierce competition in the crucial Chinese market and a significant antitrust lawsuit.
Apple is anticipated to unveil new artificial intelligence (AI) features at its annual Worldwide Developer Conference (WWDC) on Monday. These advancements could potentially revolutionize Apple’s products and reestablish its competitive edge in the tech industry, which has already embraced AI advancements enthusiastically. No product is more critical to Apple than the iPhone, and new AI capabilities could be the key to driving upgrades when the iPhone 16 is released this fall.
Even if Monday’s event doesn’t meet all expectations, Apple’s status as a tech powerhouse remains secure. The company earned over $200 billion from iPhone sales last year, its stock (AAPL) has increased by 9% over the past year, and its robust services business helps mitigate the seasonal fluctuations of hardware sales.
Analysts emphasize that revitalizing iPhone sales is crucial for Apple’s ongoing growth.
“This can’t be another, ‘Oh, we’ll do something cool later on,’ kind of presentation. They know that,” D.A. Davidson analyst Gil Luria told CNN ahead of WWDC. “For Apple’s stock to work, for the business to grow, we need to hear from them why we should buy iPhone 16.”
Investors are also watching to see if Apple can compete in the fiercely competitive AI landscape, especially as other tech giants have already clearly defined their strategies for the next wave of technological development.
“The timing is critical for Apple. Nvidia just leapfrogged it as the second most valuable technology company behind Microsoft,” said eMarketer senior analyst Gadjo Sevilla. “Any misstep by Apple at this juncture could see it lose its traction as a technology leader.”
Anticipating AI Innovations
Apple has subtly integrated AI into its products for years, enhancing user experiences in often unseen ways. Now, the company is poised to introduce its most significant consumer-facing AI updates yet.
On Monday, Apple is expected to announce new generative AI capabilities for iOS, particularly benefiting its Siri personal assistant. An AI-powered Siri could perform specific tasks such as retrieving old photos, providing detailed weather updates, or answering complex trivia questions. Over time, Siri could learn user preferences and personalities, offering more personalized responses.
Following the trends set by competitors, Apple might also introduce features like summarizing or drafting emails using AI.
Historically, Apple has not been the first to introduce new technology. Instead, it focuses on delivering a premium experience at a measured pace. Now, the pressure is on for Apple to unveil features that outshine those of competitors like Samsung and Microsoft.
A crucial question remains: will these new AI features be available on older iPhones, or will they be exclusive to new models launching this fall, necessitating powerful new chips or faster processors?
If the latter is true, and the features are compelling, it could trigger a significant iPhone upgrade cycle, benefiting the entire company.
Luria warned that if the new features are underwhelming or accessible on older iPhones, Apple’s stock could drop to $160 per share. Conversely, exciting new technology that prompts users to upgrade could push shares to $240 each. (Apple shares closed just shy of $197 on Friday.) “That’s the key: if it’s compelling and not backward-compatible, Apple will have the first upgrade cycle in four years,” Luria said. “And that will mean a lot for the stock because that was the last time they had a big jump.”
