iPhone 16 launch key takeaways: Will Apple Intelligence prove to be a hit?

Some analysts sceptical as tech giant pins hopes on sales turnaround

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Apple's latest generation of flagship smartphones is now powered by generative artificial intelligence as the company adopts the latest technology that is fast gaining traction. But it remains to be seen whether or not it will appeal to users.

Apple Intelligence on the new iPhone 16 series looks very promising: it can perform tasks you would associate with generative AI, aiding in productivity and creativity, within a tightly-controlled ecosystem that includes security measures to protect user privacy.

But with generative AI limited to a small segment of mostly high-end smartphones – Samsung's new Galaxy S and Z lines and Google's Pixel 9 series – it may take a while for consumers to appreciate what the technology can do for them.

Still, Apple has the tools to help the generative AI crusade gain traction. “Apple used its marketing genius and power of storytelling to drive the 'generative AI message' home to the average consumer,” Nabila Popal, a senior research director at the International Data Corporation, told The National.

“This is a long-term play for Apple, and while we may not see the bigger impact immediately, Apple Intelligence will eventually change the smartphone user experience completely, like with the first iPhone.”

Apple's rather belated entrance into generative AI comes after OpenAI's ChatGPT took off early last year. After its meteoric rise, Apple could have opted to develop and release something on last year's iPhone 15, but it stuck to its strategy of waiting out and studying the market before finally making a move with Apple Intelligence this year.

Generative AI

It was only a matter of time before generative AI came to smartphones. Samsung started it with the Galaxy S24, extending it to the Galaxy Z foldables. Google followed suit with the Pixel 9 last month. Now it's Apple's turn.

“It is precisely the new services related to AI that have aroused the most enthusiasm among consumers,” said Hani Abuagla, a senior market analyst at Dubai-based investment firm XTB Mena.

“Although it is not yet expected to be able to match other major tools, such as ChatGPT, with its new releases Apple will seek to demonstrate that it will also be a major player in generative AI.”

The generative AI-powered mobile market is projected to rise more than four times to capture an 18 per cent market share of the overall smartphone industry this year, the IDC said in a report last month.

Singapore-based research firm Canalys has a close prediction of 16 per cent this year – a figure expected to jump to 54 per cent of the market by 2028, when smartphone shipments are projected to pass 1.2 billion units.

For Apple to move the needle on how generative AI is perceived by consumers, it would have to raise awareness, said Nicole Peng, senior vice president at Canalys.

“The majority of consumers right now don't know what AI can do for them,” she told The National in Cupertino.

Apple's influence on the market may also convince developers to work more closely with them. The potential for the company to spruce up the technology, as well as its allure, may be a big opportunity for app makers.

“Developers should adopt [Apple Intelligence] as it is native to Apple's apps,” especially as the company has a huge install base for certain widely used services, Ms Peng said.

Software over hardware?

In the past, smartphone makers used to entice consumers with hardware upgrades, most notably with the camera, a tool that has become omnipresent and is a key selling point to users.

With the latest shift towards generative AI, will consumer preferences shift towards the software aspects of a device?

“The days of smartphone makers solely touting megapixel counts and processor speeds are over. Now, it's about how intelligently a device can enhance your life,” Andreas Hassellof, chief executive of Dubai-based technology firm Ombori, told The National.

Sid Bhatia, regional vice president at New York-based AI company Dataiku, argues that smartphone makers need to strike the right balance between hardware and software. This may be done by creating a “symbiotic relationship where hardware enables AI's potential and AI enhances the software’s functionality”, he said.

Generative AI also provides an opportunity for smartphone original equipment manufacturers to rethink their strategies in trying to appeal to more users. There will be more hardware innovations coming in the future, but for now, AI appears to be the name of the game, experts say.

“True AI integration goes beyond enhancing existing features. The technology is about transforming user experiences in ways that are intuitive, anticipatory and contextually aware, potentially without even using a screen and icons to interface with,” Morey Haber, chief security adviser at US cyber security company BeyondTrust, told The National.

“The real question is how mobile manufacturers will balance AI advancements with the hardware evolution that has historically driven consumer decisions, legal regulations and data privacy concerns.”