Apple to launch its AI-enhanced iPhone 16 on Monday — But Wall Street is divided on whether it will be able to reverse a slump in sales of the tech giant's flagship product.
The company's AI initiative, called “Apple Intelligence,” was front and center during the high-profile presentation held at its headquarters in Cupertino, California. The latest model features an A18 chip designed to power large generative models and a customizable “action button” that can be associated with various functions such as voice translation, and a new dedicated “camera control” button.
However, the first AI software features won't be available to iPhone users in beta before next month — more than a week after the phone hits stores on September 20. More updates, including an overhaul of the Siri voice assistant and Apple's collaboration with ChatGPT, It is reportedly expected to follow early next year,
“The next generation of iPhone has been designed from the ground up with Apple intelligence at the helm,” said CEO Tim Cook during the company's presentation. “It marks the beginning of an exciting new era.”
The base iPhone 16 costs $799, while the iPhone 16 Plus is slightly more expensive at $899. The more powerful iPhone 16 Pro and Pro Max models start at $999 and $1,119. The phones are available for preorder on Friday and go on sale on Sept. 20.
Apple is relying on AI to upgrade its phones. The company has posted a. iPhone sales drop by a massive 10% year-on-year There was a decline in second-quarter results reported last May – the worst drop since the COVID-19 pandemic triggered a global economic recession.
Highly-discussed AI features include advanced writing tools that can rewrite or proofread posts, automatically craft email summaries, and the ability to create emojis and other animated images through written prompts.
Stiff competition from smartphone rivals in China has forced Apple to rely on discounts for some models to spur demand. Ironically, Apple Intellivision will not initially be made available in China or the EU due to regulatory concerns.
Apple shares were down about 1% in afternoon trading after the event ended on Monday.
To win back customers, Apple will have to convince the public that AI features on its smartphones are more than just a fad, according to Mark Vena, CEO and principal analyst at Smartech Research.
“Consumers may still be somewhat resistant due to privacy and confidentiality concerns to taking full advantage of the AI benefits in the new iPhones, but I think momentum will quickly build given Apple's historical brand trust among consumers,” Vena said.
“The iPhone 16's AI enhancements could help drive more interest in the new lineup, but delays in some features could mean more people will have to wait to see these features,” said Ben Bajarin, CEO and principal analyst at Creative Strategies.
“I think it's still undetermined whether or not this iPhone cycle will play out as a stronger cycle than normal,” Bajarin said. “But I think there's good reason to believe that a large portion of their base may upgrade due to the aging base as well as very aggressive carrier promotions, since a large portion of the base is on 3.5+ year old phones.”
Wedbush analyst Dan Ives, a leading Apple analyst, said in a note that initial supply chain checks for the iPhone 16 show sales are “significantly stronger” than last year's model.
He estimated that initial shipments could exceed 90 million units — higher than Wall Street's expectations of 80 to 84 million.
“We are also seeing further indications in the Asia supply chain that this iPhone upgrade cycle may be a historic one, setting the stage for a super-cycle, as we currently estimate that approximately 300 million iPhones globally have not been upgraded in 4 years,” Ives said in a note to clients.
Ives gave the stock an “outperform” rating and set a target price of $285 per share.
In addition to the new iPhone models, the company also announced updated versions of the Apple Watch and AirPods.
The Apple Series 10 Watch costs $399 and is described as the thinnest version of the device ever, with a bigger screen and new features including sleep apnea detection. The premium edition, the Apple Watch Ultra 2, costs $799.
AirPods 4, which are designed to be more comfortable to wear than previous versions, start at $129. The version with active noise cancellation capabilities costs $179.
