Apple is gearing up to unveil its iPhone 16 models in September, with expectations to ship at least 90 million units, a 10% increase from the current generation. The tech giant is placing its bets on Apple Intelligence (AI) to drive sales, following CEO Tim Cook's declaration of generative AI as a new chapter in Apple's innovation history.
Despite the anticipated boost in sales, Apple has been facing a decline in iPhone sales over recent years. In the last financial year, iPhone sales dropped to $200 billion from $205 billion, with a similar trend continuing in the current financial year. Particularly in key markets like China, iPhone sales have seen a significant 19% decline in the first quarter of 2024.
Consumer behavior in the smartphone market has also been evolving, with users less inclined to upgrade their devices as frequently. This shift poses a challenge for Apple, as it looks to AI to potentially reverse the downward sales trajectory.
While Apple is banking on AI as a game-changer, it faces stiff competition from rivals like Google and Samsung, who have already introduced their AI models to their devices. Samsung, in particular, has made its AI features compatible with older smartphones, potentially impacting Apple's market penetration with Apple Intelligence.
One of the key questions for Apple is whether consumers value AI features enough to justify purchasing a new device. Despite collaborations with AI developers like OpenAI and integrating AI into its products, the company will soon discover if users are willing to upgrade for AI-driven functionalities beyond basic tasks like email and photo editing.
As Apple prepares to launch the iPhone 16 models with Apple Intelligence, the tech giant faces the challenge of convincing consumers of the value proposition of AI in smartphones amidst evolving market dynamics and fierce competition.
