Apple needs to make the iPhone fashionable again; this is your chance
(CNN) — Apple hasn’t given users a compelling reason to buy an upgraded iPhone in the four years since it launched 5G connectivity with the iPhone 12, a worrying trend for the tech giant’s core business. That could change this week.
The iPhone accounted for more than half of the company’s total revenue last year, but sales growth slowed as customers took longer to upgrade to new models. Longer upgrade cycles—the time between users purchasing a new phone—are currently affecting many device companies. But they have proved particularly difficult for Apple, which faces additional challenges such as fierce competition in the key market of China and a historic antitrust lawsuit.
Apple is expected to announce new artificial intelligence features at its annual Worldwide Developers Conference on Monday, which could improve the quality of its products and put Apple back in competition with much of the rest of the tech world, which is already well on its way to artificial intelligence. And there is no product more important to Apple than the iPhone.
New artificial intelligence features that make a strong case for an upgrade when Apple releases the iPhone 16 in the fall could support the company at a crucial time.
Here’s the thing: No matter how Monday goes, Apple isn’t about to lose its status as a tech powerhouse anytime soon. The company earned more than $200 billion in iPhone sales last year alone, its shares are up 9% over the past year, and it has a strong services business that helps balance out the seasonality of hardware sales.
But analysts say reviving 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 stock to perform, for the business to grow, we need to hear from them why we should buy the iPhone 16.”
Investors are also counting on Apple to show it can hold its own in a fiercely competitive artificial intelligence arms race at a time when many of its rivals have much more clearly articulated a strategy for the next big wave of technology development.
“Time is of the essence for Apple. Nvidia just overtook Apple to become the second-biggest tech company behind Microsoft, which is also trying to compete more directly with Apple’s device business with new AI-powered PCs, said Gaggio, a senior analyst at the company. eMarketer, in an email comment. “Any misstep by Apple at this stage could cause it to lose its position as a technology leader.”
The Apple iPhone 15 series is up for sale at The Grove Apple retail store in Los Angeles, California. Wall Street expects the iPhone 16 to feature major AI upgrades. (Photo: Patrick T. Fallon/AFP/Getty Images)
We are waiting for an iPhone with AI
Apple has been incorporating AI into its products for years in small and often subtle ways that nonetheless make life easier for its followers. But now Apple is set to unveil its most consumer-focused AI updates yet.
The company is expected to announce new generative AI capabilities for iOS on Monday, which could particularly benefit its personal assistant Siri. AI-powered Siri can perform specific tasks, such as remembering a photo taken on a device years ago or answering detailed questions about the weather, news or trivia. Over time, it will be able to learn the user’s preferences and even personality and respond accordingly.
Given that its competitors have already begun integrating generative AI into their devices, Apple could also introduce other tools, such as the ability to summarize or compose emails.
Historically, Apple has typically not been the first to adopt new technology, but has been slower to adopt a premium version. Now the iPhone giant has to surprise people with features that go beyond what competitors like Samsung and Microsoft have already introduced in their smartphones and computers.
But beyond the features themselves, perhaps the biggest unknown at WWDC is which Apple device owners will be able to use them: Will the new AI tools be available on older iPhones, or will they only work on the next devices released this year? decline, perhaps due to the need for new powerful chips or faster processors?
This latest hypothesis, assuming the features are compelling, could drive the next iPhone update cycle and have a ripple effect throughout the company.
Luria said boring new features or artificial intelligence capabilities available to everyone with an old iPhone could cause the company’s stock to plummet to $160 per share. But exciting new technology that encourages users to upgrade in the fall could push the stock to $240 a share. (Apple shares closed the day just below $197 on Friday.)
“That’s the key: If it’s compelling and not backwards compatible, Apple will have its first update cycle in four years,” Luria said. “And it will mean a lot for the stock because this was the last time it had a big run.”