Apple Needs to Make the iPhone Trendy Again: This is Their Chance

Apple hasn’t given users a compelling reason to upgrade their iPhone in four years, since the iPhone 12 introduced 5G. This is concerning for their main business, but things might change this week.

Last year, more than half of Apple’s revenue came from the iPhone, but sales growth has slowed because people are taking longer to upgrade their devices. This delay in updates affects many tech companies, but it’s especially tough for Apple, which also faces strong competition in China and a historic antitrust lawsuit.

Apple is expected to announce new AI features at their Worldwide Developers Conference this Monday, which could boost their products and put Apple back in the global tech race. And no product is more crucial for Apple than the iPhone.

New AI features that give a solid reason to upgrade when Apple launches the iPhone 16 this fall could be key at this critical moment.

The point is, no matter what happens on Monday, Apple isn’t going to lose its tech giant status anytime soon. The company earned over $200 billion just from iPhone sales last year, its stock has risen 9% in the past year, and its services business remains strong.

But analysts say revitalizing iPhone sales is essential for Apple’s growth.

«It can’t be another presentation like ‘we’ll do something cool later’. They know that,» said Gil Luria, an analyst at D.A. Davidson, to CNN before WWDC. «For Apple’s stock to work, for the business to grow, we need to hear why we should buy the iPhone 16.»

Investors also want Apple to prove it can stay in the fiercely competitive AI race at a time when many of its peers have already clearly articulated their strategies for the next big wave of technological development.

«This is a critical moment for Apple. Nvidia just surpassed Apple as the second most valuable tech company behind Microsoft,» said Gadjo Sevilla, senior analyst at eMarketer, in an email. «Any misstep by Apple at this point could make it lose traction as a tech leader.»

Waiting for the AI-Powered iPhone

Apple has been integrating AI into its products in small and often invisible ways that still make life easier for its users. But now, Apple is about to introduce its most consumer-focused AI updates yet.

The company is expected to announce new generative AI capabilities for iOS on Monday, which could especially benefit Siri. An AI-powered Siri could recall photos taken years ago, answer detailed questions about the weather, news, or trivia, and learn users’ preferences and even personalities over time.

With competitors already incorporating generative AI into their devices, Apple might also introduce tools like email summarization or drafting.

Historically, Apple isn’t usually the first to introduce new technology, preferring to roll out a premium experience more slowly. Now, the iPhone giant is under pressure to wow people with features that go beyond what competitors like Samsung and Microsoft have already introduced in their smartphones and computers.

But beyond the features themselves, the biggest question heading into WWDC is which Apple devices will be able to use them: Will the new AI tools be accessible on older iPhones or only work on upcoming devices released this fall, perhaps due to the need for new powerful chips or faster processors?

If the new features are compelling, this could drive the next iPhone upgrade cycle, benefiting the entire company.

Luria said that boring new features or AI capabilities available to anyone with an older iPhone could make the company’s stock fall as low as $160 per share. But exciting new technology that encourages users to upgrade this fall could push shares up to $240 each (Apple’s stock closed just below $197 on Friday).

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

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