At 1am Beijing time on Tuesday, September 10th, Apple will launch the first batch of iPhones specifically designed for generative AI (i.e. iPhone 16) at its annual product launch event, while announcing major updates to the Apple Watch and AirPods. According to the official poster released earlier, the name of this press conference is "It's Glowtime", but Apple has remained silent on the specific meaning of the name.
Based on the information available before the press conference, as usual, the iPhone 16 does not have many new hardware features except for the most obvious size changes and chip speed upgrades. Therefore, the current market generally expects Apple to make its new AI system, Apple Intelligence, a major selling point.
Due to being criticized for lagging behind in the field of generative AI, Apple also needs to demonstrate its AI capabilities at this press conference. According to financial report data, the last time Apple's iPhone went on a big sale was in the 2021 fiscal year (as of September 25, 2021), and the iPhone sales cycle at that time benefited from promotions and upgrade subsidies from wireless carriers.
Some sales analysts are shouting that the launch of iPhone 16 will bring a "super iPhone replacement cycle" to Apple. Daniel Ives, Managing Director and Senior Stock Analyst at Wedbush, an American investment bank, stated in an interview with the Daily Economic News that Apple's iPhone sales for the fiscal year 2025 may exceed 240 million units.
However, according to well-known technology journalist Mark Gurman, in recent days, Apple has decided to postpone the launch of some key features of Apple Intelligence. Meanwhile, from the practice of Samsung Electronics' AI phones, AI functionality has not yet become a major driving force for consumers to switch to new phones.
Apple needs a press conference to prove itself
According to various foreign media reports, as in previous years, Apple will launch four new iPhone models this time: iPhone 16, 16 Plus, 16 Pro, and 16 Pro Max. The Financial Times quoted insiders as saying that Apple also plans to release the A18 chip based on Arm's latest design architecture at the press conference.
As with last year, the Pro version of the iPhone is expected to incorporate more new designs, while the non Pro version of the iPhone will have relatively fewer changes. In terms of appearance, the most obvious change is the size: the iPhone 16 Pro and iPhone 16 Pro Max will be equipped with larger 6.3-inch and 6.9-inch displays (compared to the previous generation models which were 6.1-inch and 6.7-inch), while the borders will be reduced by about one-third, making their overall appearance more fashionable.
The Wall Street Journal reported that apart from routine actions such as chip speed and size upgrades, the iPhone 16 series is unlikely to have too many hardware upgrades. It is expected that Apple will use its new AI system, Apple Intelligence, as a major selling point.
In fact, prior to this press conference, Apple was under immense pressure to prove that its new AI features and other updates to the iPhone were worth the investment of consumers to upgrade, but it was not an easy task. At the same time, Apple also needs to convince investors that the company is not lagging behind in the global AI arms race.
Earlier, Apple abandoned its 10-year Apple Car project and turned to the AI track, demonstrating its determination. However, Apple's AI debut at WWDC (Apple Worldwide Developers Conference) on June 11th did not achieve great success, and compared to domestic mobile phone manufacturers, the company did not showcase disruptive AI features.
From the perspective of stock price performance, Apple's cumulative increase since the beginning of the year (18.95%) lags far behind Microsoft (41.49%) and Meta (44.47%).
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According to a CNN report, since the release of the 5G enabled iPhone 12 in 2020, Apple has provided consumers with almost no convincing reasons to switch devices. The camera of the old iPhone has largely developed to meet the daily needs of most consumers without the need for significant hardware upgrades, let alone to some extent, the human eye cannot perceive the higher screen resolution of the iPhone camera. As a result, the iPhone, which accounts for half of Apple's revenue, has been experiencing sluggish sales in the past few years.
According to financial report data, the last time Apple's iPhone went on a big sale was in the 2021 fiscal year (as of September 25, 2021), when the product's sales increased by 39% year-on-year. The iPhone sales cycle back then benefited from promotions and upgrade subsidies from wireless carriers.
Apple's iPhone Revenue Statistics from Q3 2007 to Q3 2024
The reporter from the Daily Economic News noticed that before Apple's press conference tonight, its stock price also performed averagely - Apple fell 4.06% cumulatively last week (September 2-7), while the S&P 500 index fell 3.64% cumulatively last week and the Dow Jones Industrial Average fell 2.47% cumulatively.
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Can iPhone 16 stimulate the 'super upgrade cycle'?
But can the blessing of AI really initiate the "super cycle" of iPhone?
From the practice of Samsung Electronics, Apple's main competitor in the smartphone field, this answer may be negative. So far, AI functionality has not yet become a major driving force for consumers to replace their phones.
Samsung had previously heavily promoted the AI capabilities of its latest devices, but a survey conducted by market research firm BayStreet Research in US operator stores showed that AI did not become a major selling point for operators after the initial batch of device sales.
In addition, according to another recent survey conducted by market research firm Canalys, only 7% of consumers are highly inclined to purchase smartphones based on AI features.
Apple's competitors have invested heavily in developing models that can chat and interact with users, write content, and create images and animations in a human like manner. However, the profit prospects of many companies remain uncertain, and investors have become more cautious about AI spending since the beginning of this year.
Therefore, there is currently significant disagreement in the market regarding whether Apple will usher in a wave of iPhone super replacement cycles.
Daniel Ives, Managing Director and Senior Stock Analyst at Wedbush, a US investment bank, stated in a comment email to the Daily Economic News that he believes this will initiate the largest upgrade and replacement cycle in Apple's history.
We estimate that in the next few years, about 20% of consumers worldwide will access and interact with generative AI applications through the Apple ecosystem. For some consumers, the iPhone 16, which will be released this week, is just the beginning, "Ives wrote.
Ives also pointed out, 'We believe that the initial shipment of iPhone 16 will be close to over 90 million units, while the initial market expectation was only between 80 million and 84 million units.'. We have found some signs in the supply chain in Asia that the iPhone upgrade cycle this time may be a historic cycle, creating conditions for Apple's super cycle, as we estimate that there are approximately 300 million iPhones worldwide that have not been upgraded for over 4 years. We believe that with the arrival of the AI driven upgrade cycle, Apple's iPhone sales for fiscal year 2025 may exceed 240 million units
We believe that the industry is gradually recognizing that with the arrival of Apple's intelligence, Apple will become the gatekeeper of the consumer AI revolution. Looking ahead, developers and other tech powerhouses may now need to integrate their AI models/technologies into Apple's intelligent system, as Apple and its iOS ecosystem are the only key to 2.2 billion iOS devices and 1.5 billion iPhones worldwide. We expect that within the next 6-12 months, developers will develop hundreds of generative AI applications, which will become a key part of Apple's success secret, "Ives added.
However, there are also analysts who are not so optimistic. Bloomberg's renowned technology journalist Gulman revealed on September 8th local time that Apple's intelligence is not yet fully mature. The initial version will lack many features and cannot be used in the European Union. Gurman stated that ChatGPT will not be integrated into Apple's smart system until later this year, while all major new features of Siri will not be released until next year, and the AI image generation function will also be postponed until next year.
The report also stated that Apple has decided to postpone its new image generation feature to iOS 18.2 (scheduled to be released in December this year), which includes the Image Playground app and the Genmoji feature, the latter of which uses AI to create emoticons based on input text.
Gulman believes that this phased launch plan means that Apple's smart platform is unlikely to have enough appeal this year to drive a major upgrade to the iPhone. On the contrary, Apple will have to promote some changes to the phone itself. This includes a new camera button and the addition of an action button on low-end models.
Even more dramatic is that on the day of Apple's new product launch event (September 10th), the company may face huge fines - about eight years ago, the European Commission accused Apple of cooperating with Ireland to help it evade over $100 billion in corporate taxes between 2004 and 2014. September 10th is the date when the European Commission determines whether to announce whether Apple must pay the fine. It is currently unclear whether Apple will be fined or the specific amount of the fine.
