Apple's iPhone 16 Launch: A Strategic Shift Towards AI Integration

With iPhone 16 launch, Apple shifts strategy to monetise AI capabilities

Apple's latest iPhone shifts focus from incremental hardware tweaks to integrating AI, aiming to boost sales. The iPhone 16 handles basic AI tasks while more complex processes are managed by cloud servers. This move could redefine smartphone design and user interaction, potentially revitalizing the market.The latest iPhone has turned away from Apple's famous/notorious 'micro-incremental' hardware tweaks and is, instead, putting AI in the buyer's palm. This is Apple's effort to monetise AI on its proprietary hardware and improve flagging iPhone sales in the bargain. Only that the chips that go into iPhones, and the batteries that power them, are nowhere nearly equipped to handle full-blown AI. Yet. Generative AI that trains on LLMs needs extraordinary amounts of data, processing and power. None of these is available in a handheld device. Again, yet. The workaround is that iPhone 16, which was launched this week, handles basic AI tasks, such as identifying a medicine in a photograph, while Apple sends the more complicated jobs, such as profiling the drug's therapeutic use, to its cloud servers. If Apple - or, for that matter, Samsung - finds success in this effort, mobile handset-makers will have brought AI to the market. They should be able to monetise human queries to bots, which can cover some of the costs of training them. Customers will be willing to pay for this feature. Stripped-down versions of bots that don't need the energy, computing or data resources can eventually reside on handheld devices. These can train themselves through user interactions to a level of sophistication that makes queries cost-effective. More intensive processes can be freed up for challenging AI tasks. Smartphones will, for a while, remain the principal interface for human interaction with AI. It makes sense to instal the ticketing system on these devices and offer an enhanced user experience. Privacy concerns will also arise as interactions switch between devices and the cloud. The direction for smartphones is clear: become smarter to be able to deliver value to the buyer. Their hardware evolution may have arrived at a fork in the road where computing power prevails over, say, more sensitive cameras. A revival of sales through AI could provide Apple a new direction in product design to reimagine the iPhone as it approaches the end of teenage.

Apple's new iPhones could boost AI usage inside companies. But CIOs have questions.

Apple on Monday introduced a new generation of iPhones that put AI at the forefront of the device's operating system, a test of consumer appetites for such tools. The new tools -- called "Apple Intelligence" -- include an improved Siri voice assistant and a variety of text-generation and photo-editing capabilities, and they will be compatible with the new iPhone 16 and the iPhone 15 Pro. Apple announced most of the AI functions in June. A beta, or early version, of some of the Apple Intelligence features will be available next month. The company's shares fell by more than 1% during Monday's presentation, reflecting the market's skepticism of AI-centric products. But for enterprises that remain bullish on AI's potential, the devices represent a new era of possibilities and concerns. Shawn Malhotra, chief technology officer of mortgage originator and financial services company Rocket Cos., said he is excited to let employees experiment with on-device AI, which allows users to run AI algorithms without the need for a remote cloud server. "It would be a mistake to prevent people from using new technologies," he said. Still, Rocket needs to make sure its data isn't at risk, and that any usage meets information security requirements. The new iPhone line includes a chip that Apple executives say will help power the new AI features. Kunal Anand, chief technology and AI officer of application security and delivery company F5, has been running a beta test of Apple Intelligence since August. So far, he's seen less clarity and transparency and fewer systems for monitoring exactly when and where AI apps will be running on the device itself versus on the cloud -- where CIOs typically want to avoid having sensitive data. "It's extremely unclear," said Anand. Apple said that for Apple Intelligence, which runs on Apple's proprietary AI models, users will be able to access a transparency log that shows them which requests were processed on device versus which were processed on Apple's Private Cloud Compute, its cloud intelligence system designed specifically for private AI processing. The company also said that it has strict security controls around its Private Cloud Compute setup, so that data requests processed on its Private Cloud Compute essentially have the same level of security as those processed on device. It's a slightly different story when it comes to ChatGPT, the company said. Apple earlier announced a deal with OpenAI, where the startup's chatbot would handle some functions that Apple's own AI can't. For some features, such as full-out text generation, the phone might suggest that it's a request better handled by ChatGPT, and then ask the user's permission before sending it out to ChatGPT's servers. Apple also said that this feature will be off by default, and require users to actively turn it on. Additionally, Apple has said that the devices include systems that allow IT departments to manage users' access to Apple Intelligence features, including the ChatGPT integration. Anshu Bhardwaj, senior vice president and chief operating officer of retailer Walmart's global technology unit, said both enterprises and tech providers are motivated to work together to embed the controls required to get these devices to the point where they're enterprise ready. Enterprises -- not consumers -- are the ones that will ultimately drive the use of AI at scale, Bhardwaj said. "Once the device manufacturers figure out those things from a data privacy security standpoint, then I feel like you'll see the adoption go faster," she said. Bhardwaj added there is significant potential for on-device AI at Walmart, where on the floor associates are already equipped with Samsung devices. Ultimately, getting AI into employees' hands from a consumer perspective could also drive greater adoption on the enterprise side, said Christian Frank, technology director of credit-rating provider S&P Global Ratings. "Apple is going to do a lot of work here with consumers," Frank said. "They're very good at customer experience, so I feel like they're going to figure out some use cases to get into consumers' hands that will perform well" and that would also benefit the enterprise. One of the biggest stumbling blocks to AI adoption in enterprises right now is just the lack of familiarity with the technology as well as what it can do, how to use it and what use cases are best. "The smartphone players, I think, can help broaden the number of those use cases," he said.

Mint Primer: Is the iPhone 16 really a seminal moment for generative AI?

On Monday, Apple chief Tim Cook introduced the company's latest lineup of iPhones, calling them the "first iPhones designed for AI from the ground-up". While this isn't the first ever smartphone with native AI features, Apple's history of impacting and shaping consumption of technologies can make this a seminal moment for generative AI for the masses. In June, Apple showed generative AI for its phones. At the time, it restricted the feature's rollout to only its top-tier 'Pro' iPhones. On 9 September, Apple brought its AI features to its entire new iPhone lineup, which is important because Apple is one of the world's biggest consumer technology companies. Last year, IDC estimated that Apple sold over 234 million iPhones worldwide, with nearly 10 million of these in India. Globally, its active user base is estimated at over 1.3 billion people, nearly 16% of the world's population. This scale means Apple massively impacts how any technology is perceived. In 2001, Apple launched its iPod music player and iTunes digital music platform. These proved seminal in the history of the global music industry, creating the world of online music streaming as we know today. A similar moment occurred in 2007, when the late founder Steve Jobs unveiled its iPhone with a touchscreen interface. The device created the modern smartphone industry, in turn wiping out erstwhile market leaders Nokia and BlackBerry in the course of a decade. The company's focus on design is closely aped across industries, which gives it the pedigree to also bring generative AI into the mainstream fold. Yes. Google has already launched two successive generations of AI-first Pixel phones since last year. Samsung, one of the world's largest electronics conglomerates, has also launched three lineups of AI-specific smartphones since January this year. Others, including China's BBK Electronics, which retails brands such as OnePlus, Vivo, and Oppo, are also in hot pursuit of AI in smartphones. Market experts believe natively integrated AI features will be a part of most new smartphones by the end of 2025. Apple's scale and influence in global consumer markets tilts the scales in Apple's favour. Generative AI, while creating immense global hype, is yet to become all-pervasive among users and businesses alike. With nearly one in every seven people globally touted to use an Apple product, the iPhone maker offers a ready-made platform for the world to get used to AI. Also Read: Apple Intelligence will come to iPhone, iPad, and Mac soon. But there's a catch Experts of semantics and behaviours state that the iPhone could help AI break into the habit of how we use gadgets. This can turn AI from a buzzword to a mainstream technology that we become reliant upon. Yes, but the biggest counter-argument is that while music and touch-based phone screens were essential, generative AI -- at least in its current form -- is assistive at best. Experts argue that most generative features are surplus, making it unfair to be compared with something as all-pervasive as music. However, on the other side, the evolution of consumer habits are heavily based on convenience -- the rise of India's quick commerce industry being an ideal example. We're also still in the early days of generative AI. In the long run, and with voice interfaces steadily rising, it can become essential in more ways than one.

Apple's iPhone 16 ignites record-breaking anticipation in India for festive quarter | Mint

Apple Inc.'s new lineup of smartphones drew lukewarm reactions from its shareholders but in India the company's artificial intelligence-powered iPhone 16 has rung in anticipation of a record quarter. Analysts and retailersMint spoke with expect Apple to register up to a 20% boost in iPhone sales in India in the next three months as retailers unleash discounts and product launches to celebrate the country's peak festive season. This, in turn, could help Apple close in on the $15-billion revenue milestone in India in 2024-25, driven by consumer thirst for the benchmark-setting company's latest AI offerings, a natural consumer upgrade cycle, better pricing, and more affordable instalment plans. Sales of iPhones, despite their premium pricing, or because of it, have been rising exponentially in India the past five years -- from around $1.5 billion in 2020-21 to $7.5 billion in 2023-24. Apple's overall India revenue in 2023-24 jumped to over $8 billion from $4.8 billion in the year before. Over the next three months, Apple could sell up to 3.3 million units of its iPhones in India, an 18% year-on-year increase, as per consensus estimates of four top market analysts surveyed by Mint. Apple's overall revenue in India, including iPhone sales, is projected to rise even faster -- up to $3 billion in the December quarter, up 30% from a year earlier, with the average selling price of iPhones tipped to increase by 5-8%. That would make for an annual increase of nearly 30% in Apple's quarterly revenue from iPhones sold in India. "This year marks a natural upgrade cycle for consumers, after 2020 and 2021 being the last calendar years when most users bought new smartphones," said Navkendar Singh, associate vice-president at market researcher International Data Corporation, India. "With iPhones largely seeing a usage cycle of 3-4 years, Apple is anyway tipped to see stronger buyer interest this year. This can help the company cement a market share of nearly 8% in India, at over three times the average price per smartphone in the rest of the industry." Also read | Is the iPhone 16 launch really a seminal moment for generative AI? And yet, Apple investors in its home market, the US, however, were underwhelmed by the company's over-reliance on AI for its new phones. Some quarters also expected a price hike globally but reacted negatively to Apple holding on to its pricing. Apple's shares fell 1.1% on Nasdaq through its annual event on Monday (in the US), and declined a further 0.5% in pre-market hours on Tuesday. But several brokerages including JP Morgan have retained a 'buy' rating on the stock in anticipation of the market impact when the new devices go on sale later this month. As against an introductory price of ₹134,900 for the iPhone 15 Pro launched in September last year, Apple has priced its iPhone 16 Pro in India at ₹119,900. The new pricing, which takes advantage of import duty reduction on imported devices, also suggests that localization of the production of Apple's latest 'Pro' phones are expected to commence soon, experts said. All of this could add up to a record quarter, and, in turn, a record fiscal year, for Apple India. Each of the four analysts Mint spoke with said that thanks to the upcoming festive quarter, Apple could end up selling up to 13 million iPhones in India this fiscal year, generating upward of $11.5 billion in revenue from one of its fastest-growing markets. iPhones account for nearly 90% of Apple's India revenue, with the Mac line of personal computers the next closest contributor at around $1 billion. Also read | Better deals, bigger discounts: Smartphone market preps for festival revival "The brick-and-mortar retail market is also seeing increased push from distributors this year, and offline retail is expected to match e-commerce firms in terms of offers and promotions," said Tarun Pathak, research director at market researcher Counterpoint India. "All of this spells good for Apple, since because of the natural upgrade cycle, more users will prefer opting for the latest-generation iPhone 16 instead of the older models," he added. "Access to easy affordability and sure-to-be-offered festive season promos will further help Apple's case here." To be sure, Apple's iPhone 16 launch comes shortly after Google's launch of its new AI-heavy phones. Samsung is also expected to launch its next generation of AI phones at the start of the new year. Yet, the October-December quarter is expected to be generally one of the best periods for all phone brands, Singh and Pathak said, adding that the cyclical upgrade cycle may help bring more buyers to the table this year. Also read | Google Pixel 9 Pro XL: Can a smartphone become your AI companion? A top Delhi-based multi-brand retailer, who requested anonymity, said consumers had already phoned asking for potential delivery dates of the iPhone 16. "After at least four years, we found heightened consumer interest, especially in the 'Pro' iPhones -- which are now priced better," he said. "This can help us a lot, since until last year most buyers of the top iPhones would look for ways to purchase their smartphones from the UAE, the US or the UK." Another retailer, who runs two multi-brand consumer appliances and electronics outlets in Kolkata, indicated similar demand, saying the reduced pricing of the Pro model as a key factor fuelling early indicators of demand for the iPhones. Manish Khatri, partner at Mumbai-based retailer Mahesh Telecom, also said consumer interest was strong in the new iPhones. Also read | Will XR glasses, Neuralinks kill smartphones? "The iPhone 16 could be the star of the show this time... distribution channels are already promising substantial shipments to cater to demand. While this isn't really new and Apple has remained strong, it now remains to be seen how the sales play out between online versus offline channels," Khatri said. The heightened expectations from Apple's new iPhones come even as AI remains premature. Generative AI "is still gimmicky", said IDC's Singh. "Once the features roll out, we may see more interest in the new iPhones from the start of next year."