November 9, 2024 2:17 pm

Will Apple Make the iPhone Cool Again? All Eyes on Tomorrow’s Announcement

New York — Apple has faced scrutiny over the past four years for not offering a compelling reason for users to upgrade their iPhones since the introduction of 5G with the iPhone 12. This trend poses a significant challenge to the tech giant’s core business. However, this week could mark a pivotal shift.

Last year, the iPhone accounted for more than half of Apple’s total revenue, but sales growth has lagged as customers are increasingly delaying their upgrades. This prolonged upgrade cycle is a common issue in the tech industry but has been particularly problematic for Apple, exacerbated by fierce competition in China and a landmark antitrust lawsuit.

Apple is expected to unveil new artificial intelligence (AI) features at its annual Worldwide Developer Conference (WWDC) on Monday. These innovations could revitalize Apple’s product lineup and re-establish its competitive edge in a tech landscape that has rapidly adopted AI. The iPhone, Apple’s flagship product, stands to gain significantly from these anticipated AI enhancements.

Introducing new AI features that offer a compelling reason to upgrade when Apple releases the iPhone 16 in the fall could be crucial for the company at this juncture.

Regardless of Monday’s outcomes, Apple’s position as a tech leader remains strong. The company earned over $200 billion from iPhone sales last year, its stock (AAPL) has risen 9% over the past year, and its robust services business helps mitigate the seasonal fluctuations of hardware sales.

Analysts emphasize that reinvigorating iPhone sales is essential for Apple’s sustained growth.

“This can’t be another, ‘Oh, we’ll do something cool later on,’ kind of presentation. They know that,” D.A. Davidson analyst Gil Luria told CNN ahead of WWDC. “For Apple’s stock to perform, for the business to grow, we need to hear from them why we should buy iPhone 16.”

Investors are also eager to see if Apple can maintain its competitive edge in the fast-evolving AI market, especially as other tech giants have already defined their strategies for the next major wave of technological innovation.

“The timing is critical for Apple. Nvidia just leapfrogged it as the second most valuable technology company behind Microsoft,” said eMarketer senior analyst Gadjo Sevilla. “Any misstep by Apple at this juncture could see it lose its traction as a technology leader.”

Anticipating AI Innovations

For years, Apple has integrated AI into its products in subtle, often invisible ways that enhance user experiences. Now, the company is set to introduce its most significant consumer-facing AI updates yet.

On Monday, Apple is expected to announce new generative AI capabilities for iOS, potentially transforming its Siri personal assistant. An AI-enhanced Siri could perform tasks like retrieving specific photos, providing detailed weather updates, or answering complex trivia questions. Over time, Siri could learn user preferences and personality traits, offering more personalized responses.

Drawing on the integration of generative AI by competitors, Apple might also introduce features such as summarizing or drafting emails using AI.

Apple’s traditional approach has been to roll out new technology at a slower pace, prioritizing a premium user experience. Now, the pressure is on for Apple to unveil features that surpass those of competitors like Samsung and Microsoft.

A crucial question is whether these new AI features will be available on older iPhones or if they will require new models launching this fall, possibly due to the need for advanced chips or faster processors.

If the new features are compelling and exclusive to new models, it could trigger a significant iPhone upgrade cycle, benefiting the entire company.

Luria noted that underwhelming features or AI capabilities accessible on older iPhones could cause Apple’s stock to drop to $160 per share. Conversely, exciting new technology that prompts users to upgrade could push shares to $240 each. (Apple shares closed just shy of $197 on Friday.)

“That’s the key: if it’s compelling and not backward-compatible, Apple will have the first upgrade cycle in four years,” Luria said. “And that will mean a lot for the stock because that was the last time they had a big jump.”