Apple’s AI Push: Revitalizing iPhone Sales Through Enhanced Siri
Apple’s recent foray into artificial intelligence (AI) has been met with both enthusiasm and scrutiny. The company’s focus on upgrading Siri, its virtual assistant, through ‘Apple Intelligence’ aims to address a significant challenge – declining iPhone sales.
Despite positive public reception to the recent Apple Intelligence announcement and the WWDC24 event in general, Wall Street’s initial reaction was lukewarm. However, Apple’s stock price rebounded the next morning, rising over 7%.
At the heart of Apple’s strategy is a major upgrade to Siri, their virtual assistant, through advanced AI capabilities now branded as “Apple Intelligence.” Apple relies heavily on iPhone sales, which made up 58 per cent of its revenue in the first quarter of 2024. However, interest in iPhones has been dropping, with global demand falling by 10 per cent in the first quarter of 2024, hitting a six-year low. Despite branching out into services like Apple TV+ and Apple Fitness+, the iPhone remains Apple’s main revenue source. Historically, iPhones have contributed up to 70 per cent of the company’s income between 2015 and 2018.
The challenge for Apple hasn’t been the quality of its iPhones — new models consistently get high ratings, especially from tech reviewers and journalists. However, customers don’t usually find a good reasons to upgrade their devices every year. JPMorgan analysts have noted that the upgrades in recent iPhone releases have been relatively small, because of which people haven’t exactly been enthused in getting the newer models as soon as they launch. Apple hopes that Apple Intelligence changes this.
This is why Apple’s AI features are have been made exclusive to the latest iPhones equipped with the A17 Pro chip or newer. This exclusivity could drive sales of both current models like the iPhone 15 and the new ones expected later this year. Even if the hardware doesn’t change much, the new AI features embedded in the software could give consumers a strong enough reason to upgrade, or so Apple hopes.
Apple’s new AI features are tailored to its typical users — those who value simplicity, privacy, and functionality. For e.g. Siri’s improvements include better understanding of user commands, enhanced abilities to perform tasks within apps, and new functionalities in image and text creation, transcription, summarization, and on-device search. These upgrades are designed to make Siri more practical and responsive, addressing long-standing criticisms.
Apple’s partnership with OpenAI further highlights its commitment to AI. While integrating OpenAI’s technology, Apple maintains its focus on user privacy and security. In essence, Apple’s latest AI initiatives are about more than just technological advancement; they’re about making the iPhone more appealing to consumers again. By enhancing Siri and ensuring these capabilities are available only on the latest devices, Apple aims to drive upgrades and maintain its leadership in the competitive smartphone market. The improvements to Siri, along with strategic use of advanced AI hardware, position Apple to not only enhance its products but also potentially reshape consumer expectations for personal digital assistants.
