Apple’s AI push may boost iPhone sales as users seek upgrades

Apple’s most recent developer conference was mostly about adding advanced AI technologies to its software to boost iPhone sales, especially through upgrades to the iPhone 15 Pro or Pro Max, in a time of tough economic and competitive conditions.

On Monday, Apple‘s developer conference focused on more than just adding the newest AI technology, such as ChatGPT technology, to its software. Getting more iPhones sold was another goal.

To keep its more than 1 billion loyal customers interested and to stop the sales drop of its best-selling product, Apple has turned to AI. This is because consumer spending is unstable, while tech competitors are returning strong.

Several analysts said the software, which needs at least an iPhone 15 Pro or Pro Max to work, could lead to a flood of new purchases.  Some people thought that this autumn would be the biggest upgrade cycle since Apple released the iPhone 12 in 2020, which partly attracted customers because it had 5G connectivity.

“What we saw today was more compelling than anything we’ve seen since,” D.A. Davidson analyst Gil Luria said. The company showed off what it called “Apple Intelligence,” which is its version of generative AI that can make text, images, and other content appear when asked to.

Apple demonstrated how its AI could create personalized emojis, a cartoon to text friends, or changes to an email to make it sound more professional. Siri could ask users if they also wanted ChatGPT’s help.

Some analysts were doubtful and said they didn’t think people would rush to Apple stores to get more AI on their phones.

Dipanjan Chatterjee of Forrester said that the new and improved Siri-powered, smart Apple devices might be enough to stop some of the device sales that have been going down lately, but not enough to get new people to follow Apple. It’s clear that investors want Apple to have a bigger and more ambitious plan for AI, said TejasDessai of Global X. The news caused the stock to drop 2%.

Apple won’t add AI features to every iPhone, whether you like them or not. The company said that people who own smartphones need to get the new iPhone 15 Pro or Pro Max, which Apple started selling in September 2023. Newer Apple smartphones have chips that the AI needs to work on. This is due to the AI’s ability to privately process data on a user’s device.

Strong Demand Expected for iPhone 16 with AI Integration

Dan Ives, an analyst at Wedbush Securities, sees that as a huge chance. He believed that Apple had not updated about 270 million iPhones in four years.

“We estimate 15%+ of the Apple installed base will upgrade to the iPhone 16 as Apple Intelligence is the killer app many have been waiting for,” said Ives. The iPhone 16 should be released sometime in the fall.

Gene Munster, managing partner at Deepwater Asset Management, said that Apple’s easy integration with ChatGPT was another plus. “They’re taking the friction out of using AI,” he noted.

The latest annual report from Apple showed that the iPhone brought in $200.6 billion during the fiscal year that ended in September 2023. This was less than the $205.5 billion it brought in the previous year.

AI indeed is one of the things that draws people to Apple. Early adopters would like the AI updates because they can do things within and across apps, but they may want a bigger iPhone screen or a better camera. Martin Yang of Oppenheimer & Co. said this. He said, “That action part will make Apple an immediate leader in consumer AI,”.