Apple’s forthcoming artificial intelligence features are poised to drive a surge in iPhone upgrades and bolster future sales, analysts predict.
During its Worldwide Developers Conference (WWDC), Apple unveiled plans to integrate “Apple Intelligence” across eligible iPhones, iPads, and Mac devices later this year. This initiative aims to deliver enhanced AI capabilities that promise to be highly useful and relevant to users. Alongside this announcement, Apple also previewed updates for its operating systems, teasing additional functionalities beyond AI advancements.
“We believe Apple’s AI strategy will leverage its extensive installed base to personalize user experiences and incorporate large language models (LLMs) directly on the phone, potentially sparking an AI-driven upgrade cycle starting with the iPhone 16,” noted Daniel Ives, an analyst at Wedbush Securities, in a post-WWDC research note.
Goldman Sachs echoed these sentiments, forecasting that Apple Intelligence could stimulate increased demand for device upgrades. “Apple Intelligence will initially be available on iPhone 15 Pro/Pro Max or iPad & Macs with M1 or better, which we view as a catalyst for strong device upgrade demand starting with iPhone 16 this fall,” remarked analyst Michael Ng in a research report.
The anticipation surrounding these advancements underscores Apple’s strategic push to maintain its competitive edge in the tech industry. By enhancing AI capabilities across its product lineup, Apple aims to not only enhance user engagement but also potentially explore avenues for monetization through AI-driven services.
In addition to consumer-facing benefits, Goldman Sachs highlighted potential financial implications tied to Apple’s new operating system and AI capabilities. These advancements could pave the way for future AI monetization strategies while potentially reducing compute costs through enhanced integration with paid ChatGPT accounts.
Looking ahead, many industry observers anticipate Apple’s next major iPhone release, the iPhone 16, to debut in the upcoming fall season. This follows the tech giant’s established pattern of annual smartphone launches, with the iPhone 15 lineup introduced last September.
Despite Apple’s ambitious plans, recent market dynamics have shown fluctuations in global smartphone shipments. In the first quarter of 2024, Samsung surpassed Apple in global smartphone shipments with 60.1 million units, according to the International Data Corporation (IDC). This shift marks a notable change from earlier reports, where Apple led in smartphone shipments throughout 2023, breaking Samsung’s 13-year streak as the top phonemaker.
Financially, Apple reported net sales of iPhones totaling nearly $115.67 billion for the first two quarters of fiscal year 2024, reflecting a marginal decline of 1.2% compared to the same period in the previous fiscal year. These figures illustrate the ongoing challenges and opportunities in the fiercely competitive smartphone market, where technological innovations and consumer preferences continue to shape industry dynamics.
As Apple prepares to roll out its AI-enhanced devices and operating system updates, the company faces a pivotal moment to leverage these advancements for sustained growth and market leadership. The integration of Apple Intelligence signifies a strategic pivot towards enhancing user experience through advanced AI functionalities, potentially setting the stage for renewed consumer interest and heightened demand for its upcoming product offerings.
