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CNN
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Apple hasn’t given users a meaningful reason to buy an upgraded iPhone in four years, since it rolled out 5G connectivity with the iPhone 12 – a worrying trend for the tech giant’s core business. technology. That could change this week.
The iPhone generated more than half of the company’s total revenue last year, but sales growth lagged as customers were slower to upgrade to new models. Longer upgrade cycles (the time between user purchases of new phones) are currently a problem for many device makers. But they have been particularly painful for Apple, which is grappling with complex challenges that also include competition in key China market and one historic antitrust trial.
Apple expected to announce new artificial intelligence features at its annual Worldwide Developers Conference on Monday, which could boost its products and bring Apple back into competition with much of the rest of the tech world has already gone full steam ahead on AI. And no product is more important to Apple than the iPhone.
New AI features that provide a compelling reason to upgrade when Apple launches the iPhone 16 in the fall could boost the company at a crucial time.
Here’s the thing: No matter how Monday goes, Apple isn’t going to lose its status as a tech powerhouse anytime soon. The company earned more than $200 billion from iPhone sales alone last year, its shares (AAPL) is up 9% over the past year and its services business is healthy, helping to balance out some of the seasonality in hardware sales.
But analysts say revived iPhone sales are key to Apple’s continued growth.
“This can’t be another ‘Oh, we’ll do something cool later’ presentation. They know it,” DA Davidson analyst Gil Luria told CNN ahead of WWDC. “For Apple’s stock to work and for the company to grow, we need to explain to them why we should buy the iPhone 16.”
Investors are also counting on Apple to prove it can hold its own in the fiercely competitive AI arms race, at a time when many of its peers have much more clearly articulated a strategy for the next big wave of technology development .
“The timing is crucial for Apple. Nvidia just overtook it as the second most valuable technology company behind Microsoft,” which also seeks to compete more directly with Apple’s device business. with new AI-powered PCs, said Gadjo Sevilla, principal analyst at eMarketer, in an emailed comment. “Any misstep by Apple at this point could cause it to lose its appeal as a technology leader.” ”
Apple has for years been integrating AI into its products in small ways, often invisible, but which nevertheless make life easier for its fans. But now Apple is set to introduce its most consumer-facing AI updates.
The company is expected to announce new generative AI capabilities for iOS on Monday, which could particularly benefit its customers. Personal assistant Siri. An AI-powered Siri could potentially perform specific tasks such as recalling a photo taken years ago on the device or answering detailed questions about the weather, news or trivia. Over time, it could learn the user’s preferences and even personality and respond accordingly.
Given how competitors have already started integrating generative AI into their devices, Apple could also introduce other tools, such as the ability to summarize or compose emails.
Historically, Apple is often not the first to introduce new technologies, but rather rolls out a premium experience more slowly. Now the pressure is on for the iPhone giant to wow people with features that go beyond what competitors like Samsung and Microsoft have already introduced for their smartphones and computers.
But beyond the features themselves, perhaps the biggest question at WWDC is which Apple device owners will be able to use them: will the new AI tools be accessible on older iPhones or will- Do they only work on the next devices scheduled for launch in the fall? , perhaps due to the need for new powerful chips or faster processors?
The latter scenario – assuming the features are compelling – could trigger the next major iPhone upgrade cycle and have ripple effects throughout the company.
Luria said annoying new features or AI capabilities available to anyone with an older iPhone could cause the company’s stock to fall as much as $160 per share. But an exciting new technology that encourages users to upgrade in the fall could send shares soaring to $240 apiece. (Apple shares closed the day just under $197 on Friday.)
“That’s the key: If it’s compelling and not backwards compatible, Apple will have the first upgrade cycle in four years,” Luria said. “And it will mean a lot for the title because it was the last time he made a big jump.”
