Apple’s iPhone 16 launch is a big test for consumer AI (Video)

Apple (AAPL) will hold its annual iPhone launch event on Monday, September 9, at its headquarters in Cupertino, California.

CEO Tim Cook is expected to deliver the keynote speech, during which he is expected to introduce the iPhone 16 series, the 10th anniversary model of the Apple Watch and the updated AirPods.

That’s a lot of hardware, but Wall Street isn’t counting on new iPhones or special-edition Apple Watches to move the company’s stock price. Instead, all eyes will be on Apple’s prolific AI-powered Apple Intelligence platform.

Apple Intelligence is the company’s big push to bring productive AI capabilities to consumers’ iPhones, iPads, and Macs. Wall Street didn’t like how long it took Apple to announce its AI initiative, and Microsoft’s (MSFT) and Google (Google, Google) introduced its own AI services aimed at businesses and consumers.

But investors changed their minds after Apple introduced Apple Intelligence at its WWDC developer conference in June. It boosted the company’s stock price by about 15% and put it ahead of Microsoft, Amazon, Tesla and Google in year-to-date performance.

Apple positions Apple Intelligence as one of the main selling points for its latest phones, as its software will only work on last year’s iPhone 15 Pro or newer phones. And analysts are banking on that distinction to boost iPhone sales.

“Apple Intelligence continues to be key to unlocking pent-up iPhone demand and accelerating the replacement cycle, and we expect Apple’s… event to feature AI integration in the new iPhone 16 heavily,” Morgan Stanley analyst Erik Woodring wrote in an investor note.

But Apple Intelligence could prove to be more than just a catalyst for iPhone sales. It could also serve as a turning point for generative AI in the eyes of everyday consumers.

Apple’s AI Opportunity

Just take a look at Apple’s invitation for its September 9th show, and it’s clear that the company is focused squarely on AI. From the slogan “It’s Time to Shine” to the multicolored Apple logo used to evoke Siri’s revamped look, the company is sending the message that this show will be an AI showcase.

Apple is integrating AI into its software products with features that summarize text message threads, show priority emails in the Mail app, provide an improved Siri experience, and provide access to OpenAI’s ChatGPT.

Apple is also including AI essentials like writing tools that will help you polish up your emails and documents by proofreading your text or making it more professional or concise. The company also expects developers to jump on the AI ​​bandwagon by creating new apps that leverage the technology via Apple’s devices.

“We estimate this could result in $10 billion of annual Services high-margin growth for Apple and mark the start of a new, multifaceted AI revenue stream focused on both hardware and software,” Wedbush analyst Dan Ives wrote in an investor note.

“We believe that AI technology being introduced to the Apple ecosystem will bring monetization opportunities on both the services and iPhone/hardware fronts,” Ives added. And with that, a $30 to $40 per share increase — that would push the company’s market cap into the $4 trillion mark.

Apple isn’t the only company bringing generative AI to its smartphone lineup. Samsung has its Galaxy AI software that combines its own AI with some of Google’s AI. Google is also offering its own Gemini AI platform through its new Pixel 9 lineup of devices, including the Pixel 9 Pro Fold foldable phone.

But Apple has done a much better job explaining its AI offerings than either of its rivals. At its developer conference in June, it portrayed the software as a must-have for users and explained how it integrates across the company’s various apps and services in a way that Samsung and Google have failed to do. Making AI seem more personal.

Artificial intelligence risk

But Apple will need to do more than that to get people excited about its AI efforts. I’ve been using Apple’s beta software on my iPhone 15 Pro Max, and while I appreciate the ability to summarize long text threads between friends (nobody wants to go through 40 messages to find out what they did for dinner) and find the priority email feature in Mail useful, it’s hard to say whether this will be enough to motivate consumers’ interest in the technology.

Apple will also need to take great care to ensure that Apple Intelligence is accurate and not prone to the hallucinations that have led to criticism of AI software like Google’s AI Overview, which tells people: They added glue to their pizzas and started eating rocks.

First and foremost, Apple needs to make sure that Apple Intelligence is something consumers will actually want to use, and not a feature the company is forced to force into its portfolio to keep investors from fearing Apple will get caught up in the next tech craze.

Email Daniel Howley at [email protected]. Follow him on Twitter at: @DanielHowley.

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