In late 2022, OpenAI’s launch of ChatGPT sparked an explosion of interest in the potential of artificial intelligence.
Within months, some of the world’s largest technology companies Microsoft, Meta and Googlehas joined forces to launch its own AI chatbot and generative AI tools. By the end of 2023, NVIDIA The company has proven that it is the only company in the world that can make huge profits by focusing on these services.
Fast forward to 2024, and the big AI theme is surrounding consumers’ favorite gadgets, with tech companies looking to bring AI to smartphones and laptops.
Earlier this year, Samsung launched its AI-powered Galaxy S24 smartphone. Microsoft Dell, Home page and Qualcommbegan selling a new AI computer called Copilot+ PC over the summer, and a few weeks ago, Google launched its Pixel 9 series of AI smartphones.
So far, these new devices have been disappointing: Rather than creating entirely new experiences, they’ve merely introduced features that make it easier to edit photos, talk to chatbots, and provide live captions for videos. Then there’s Humane’s AI Pin, a clip-on gadget that launched in April and quickly became popular. Panned In review. By August, Reports It became clear that daily returns were exceeding sales.
apple Try to change the narrative.
The company is expected to show off a new line of iPhones on Monday that will be equipped with the AI ​​features it unveiled in June. The system, called Apple Intelligence, will be rolled out over the next few months and will be available on current Apple devices, including the iPhone 15 Pro and some new iPads and Macs.
But Apple Intelligence will be free, so the company will need to convince hundreds of millions of iPhone users that it’s time to upgrade.
That’s what Wall Street will be watching with the newest iPhones launching this month: Will Apple Intelligence help boost iPhone sales even further, or will post-pandemic sales slumps continue?
“The reality is that GenAI is still in its early stages and the use cases announced are probably just the tip of the iceberg of what’s to come,” said Nabila Popal, mobile analyst at IDC.
Apple is rolling out Apple Intelligence in stages. It will initially be available only in US English and may be blocked in countries with strict AI restrictions, such as China. Also, many of the features Apple announced in June won’t be ready on day one. They’ll be rolled out gradually over the coming months.
Because of Apple’s cautious rollout strategy, even the most bullish analysts expect it will be years before the company can bring AI to its roughly 1 billion iPhone users.
Do consumers want AI gadgets?
Every year, Apple makes modest enhancements to the iPhone: a slightly better camera, a faster processor, better battery life. None of these features are compelling enough for consumers to rush out and upgrade every year or two, as they were in the early days of the iPhone, when big hardware innovations were the norm. We can expect similar iterative hardware improvements in this year’s phones.
This puts even more pressure on Apple Intelligence to deliver, but consumer appetite is in question.
Recent survey results by research companies Canalis The survey found that only 7% of consumers are “highly willing” to make purchasing decisions thanks to AI. Interest is much higher in the United States and China, Apple’s two most profitable markets, but there are big disparities between the two countries.
In the US, 15% of respondents said they were likely or very likely to buy a gadget because of AI. In China, where consumers tend to care more about tech specs, the figure was 43%. The relatively muted interest, particularly in the US, suggests Apple will need to use its marketing power to tell a compelling story about what AI brings to the average iPhone user.
“There are a lot of interesting features out there, but they need to be delivered to the average user in a repeatable context, not as a one-off,” said Gerrit Schneemann, an analyst at Counterpoint Technology Inc. “It’s hard to tell that story in a store poster or a two-second sales pitch.”
Apple CEO Tim Cook speaks at Apple’s annual Worldwide Developers Conference in Cupertino, California on June 10, 2024.
Nick Cooley | AFP | Getty Images
Apple Intelligence uses personal data stored on your phone to power Siri into a more capable assistant. And Apple Intelligence is available to app developers so they can be used everywhere on your phone. Schneemann said this is a new approach to AI compared to Google and Samsung.
“There’s potential to accelerate the education curve and penetrate the market,” he said.
Samsung’s latest flagship phone, the Galaxy S24, is selling better than last year’s model, but there’s little evidence that AI is the main driver, said IDC’s Popal. Apple is in a different category.
“The psychology of premium Apple customers is different,” Popal said, adding that many iPhone customers buy their phones on installment plans that make it easier to upgrade.
Recently, Google launched its Pixel 9 series of smartphones, which have Gemini, the company’s digital AI assistant, built directly into the software. Google’s smartphones have never been big sellers, but they often show what Android phones can do before those features are available on Samsung or Motorola devices.
The Pixel’s flagship feature is a version of Gemini that can carry out natural conversations rather than responding to one command at a time, and it’s expected to come to other Gemini-equipped Android phones in the future.
While the Pixel 9 has received positive reviews, it remains to be seen whether AI can ultimately boost sales.
In the PC market, Microsoft’s Copilot+ PC launched this summer but without the company’s flagship AI feature, Recall. (Microsoft learned the hard way that releasing a product that takes screenshots of everything you do on your computer every few seconds is not a good idea.) Recall will be coming to this market later this fall to a limited number of early testers.
Without Recall, this set of AI PCs has very little AI.
The real benefit at this point seems to be the power and performance of new PC chips. Qualcomm This first appeared on the Copilot+ PC, and because this processor is based on the same technology as your phone’s chips, it provides plenty of power without draining your battery.
“This is a shift that makes a traditional PC look like a mobile device,” said Alex Katoujian, general manager of mobile and wearable technologies at Qualcomm, who said Microsoft is working to develop more AI capabilities and address the recall’s privacy concerns.
Microsoft said it expects to ship 50 million Copilot+ PCs this year, roughly one in every five PCs it expects to sell, and Katoujian said the Qualcomm-powered Copilot PCs are “doing well” so far.
Still, Copilot PCs accounted for a “relatively small percentage” of PC sales. Best Buy Customers aren’t necessarily looking for or paying top dollar for AI-enabled devices, “they just want to replace and upgrade,” CEO Corey Barry added on the company’s latest earnings call this summer.
Apple’s AI Deployment
If Apple can buck this trend and wow customers with Apple Intelligence, the next step will be to roll it out globally and help sell the iPhone in markets outside the US.
There are other obstacles along the way.
In China, where Apple makes up about a fifth of its revenue, the company needs government approval to launch AI models there, and Apple CEO Tim Cook told CNBC in August that his team was working with Chinese regulators to make that happen.
Additionally, the EU has many strict laws restricting the world’s largest technology companies, and Apple said this summer that it would not immediately launch Apple Intelligence in the EU due to those restrictions.
In the meantime, Apple Intelligence users will be members of a relatively exclusive club, and Apple’s job will be to convince customers to join by paying for a new device.
“We’re very excited about the value that Apple Intelligence provides to our users,” Cook told CNBC in August. “So we think this is another compelling reason to upgrade. We don’t know how the season will play out once shipments start, but we’re very excited.”
Correction: Humane’s AI Pin launched in April. An earlier version listed the month incorrectly.
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