Apple’s Risky Decisions Could Affect iPhone 16 Pro

Updated August 11 with details on the new iPhone 16 design and Apple’s financial guidance.

Tim Cook and his team will launch the iPhone 16 and iPhone 16 Pro smartphones next month, and Apple will finally introduce a new set of AI tools to its loyal followers. But will Apple’s decision to rely on Apple’s intelligence be rewarded?

During the last Apple conference Quarterly Earnings CallIt has been noted that iPhone sales have been a smaller percentage of the company’s total sales over the past four years. In the third quarter, Sales are down. From $39.67 billion in 2023 to $39.30 billion in 2024.

There was one topic on the call that Cook championed strongly: generative AI. Apple Intelligence was announced in June at its Worldwide Developers Conference, with the first apps now available in developer betas for iOS, ahead of a general release alongside the iPhone 16 and iPhone 16 Pro in September.

With the exception of the iPhone 15 Pro and 15 Pro Max released last year, any iPhone user who wants to try an AI-powered smartphone and stay within the Apple ecosystem will have to buy a new iPhone because of the high-end specs required to run the software. Apple must assume that the iPhone 16 series will open the door to demand for AI, and a series of sales will follow.

However, Apple’s decisions regarding implementation and the immediate need for AI may not be enough to lift the iPhone 16 out of its doldrums.

Update: Sunday, August 11Writing for: Power On NewsletterMark Gurman weighs in on the upcoming four iPhones and why Apple may not be as bullish on their sales potential as some hope.

When naming the iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max, Gurman looks at the design of the devices and how little has changed in terms of design and relative capabilities compared to older iPhone models. The offering remains largely unchanged since 2020’s iPhone 12. For iPhone users with an iPhone 11 or older who might feel the need to upgrade, the iPhone 16 family is a solid choice, but for newer owners, there’s nothing special.

While Cook has been bullish on the potential of Apple’s generative AI to boost sales, Apple’s latest financial guidance doesn’t mention any expected increase in iPhone sales in the fourth quarter. The words are nice, but there’s no indication that they’ll be useful.

Don’t forget that Apple is late to the generative AI party. Just two weeks after the iPhone 15 series went on sale, Google launched the Pixel 8 and Pixel 8 Pro. These were the first smartphones to come with AI, and Google’s choice of AI tools has become the baseline for expectations. With Samsung rapidly expanding with Galaxy AI, buoyed by Qualcomm’s move to include AI in Snapdragon specs and other manufacturers embracing its vision for AI, Google has set the tone for generative AI on smartphones in 2024.

Next week, Google will unveil the Pixel 9 series and its next generation of AI tools. That’s a full month before the iPhone 16 launches. Apple’s iOS will be two major versions behind Android OS when Apple Intelligence finally arrives.

Apple’s AI won’t arrive with the iPhone 16. It’s due to be included in an iOS update in October 2024. And when that time comes, its capabilities will be limited. Apple won’t release the full suite of tools to consumers until the first quarter of 2025 at the earliest. And not only will Google be ahead of the curve with the Pixel 9, which is about six months away, Samsung’s AI will also get its own annual upgrade alongside the Galaxy S25 family.

The competition will be years ahead of Apple, Apple’s intelligence will be extremely limited when it launches, and anyone hungry for AI will have already moved on to a more efficient platform.

iPhone sales won’t collapse. But continuing the same sales volumes as the past few years is not something Apple wants to see. Tim Cook has been unusually candid about how AI will be a “super feature” that will unlock sales from pent-up demand… assuming Apple can overcome its self-imposed obstacles to success.

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