Apple appears to be expecting sales of the upcoming iPhone 16 to be boosted by consumer interest in Apple Intelligence.
Apple
It seems Apple is quietly confident about the power of AI to sell iPhones.
The tech giant expects to ship at least 90 million units of the iPhone 16 models set to be revealed in September, Bloomberg reported, as it banks on Apple Intelligence to drive sales.
That would represent a 10% boost in sales compared with the existing generation of iPhones, according to an unnamed source familiar with Apple's discussions with suppliers and partners quoted by the outlet.
For CEO Tim Cook, who declared generative AI a "new chapter" in Apple's history of innovation after revealing Apple Intelligence last month, such a boost would come at a crucial moment.
Apple's biggest revenue stream has been stuck in a downward spiral of late, so the rollout of a hyped technology that could arrest that decline would be a gift to the company.
But while Apple is banking on AI as its future, it might want to tread carefully for a few reasons.
For one, Apple's sagging iPhone sales have been no short-term blip. The downward trajectory has been the case for some time — and could take more than hype to reverse.
In its last full financial year, iPhone sales were down to $200 billion from $205 billion the previous year. It was a similar story in the first six months of this financial year, with sales down to just under $116 billion.
Though the overall decrease has been marginal, Apple has faced much more serious declines in recent months in some of its most important markets such as China, where iPhone sales dropped 19% in the first three months of 2024, per data from research firm Counterpoint.
This has all taken place against a backdrop of changing consumer trends in the smartphone market, as users have been less inclined to upgrade their phones as soon as a new device goes on sale.
These trends are not deeply entrenched by any means, but they are too significant to ignore. It means Apple will need its AI offering to be strong enough to change consumer behaviour.
Then there's the problem of competition.
While Apple boldly presented its vision of generative AI at its Worldwide Developers Conference (WWDC) in June, it did so several months after some of its main competitors.
Google has also been busy rolling out its AI model Gemini to its Pixel devices this year, while South Korea's Samsung heralded Galaxy AI with the launch of its flagship S24 smartphone range back in January.
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Not only that, Samsung has made its AI compatible with older smartphones such as the S23 and Z Fold 5, which means users can try out buzzy new AI features without shelling out for a new gadget.
That may hurt Apple's chances of making a fresh dent in the Android market with Apple Intelligence. However, Apple could see an upgrade upsurge as it's only making its new AI features available on newer devices like the upcoming iPhone 16 and existing iPhone 15 Pro.
The bigger question looming over Apple is whether users care about AI enough to shell out for upgrade.
While it's partnered with ChatGPT maker OpenAI and put AI at the heart of its devices, it's not clear if users will be willing to buy a new phone for software that they might deem useful only for basic tasks such as writing emails and editing photos.
Apple won't have to wait long to find out.
