Apple's New iPhone: The A.I. Revolution in Your Pocket

Shortly before Steve Jobs' death in 2011, Apple employees gathered in a small auditorium in Cupertino, California, to present the fifth iPhone. At that time, the software feature Siri was the highlight and led to a significant increase in iPhone sales. Now, more than a decade later, Apple seeks to apply the same success formula again. For the first time in over ten years, the tech giant will unveil a series of iPhones whose standout feature is not an improved camera or redesigned exterior, but new software functionalities. The system, called Apple Intelligence, will sort messages, suggest writing prompts, and introduce a more powerful Siri assistant driven by generative artificial intelligence. These new iPhones mark an important moment for generative A.I., which can answer questions, create images, and write software code. After years of watching Microsoft, Meta, Google, and Samsung integrate A.I. into their products, Apple has the opportunity to firmly establish this technology in the mainstream or raise new doubts about its viability. The initial enthusiasm for A.I. was tempered by questions regarding its usefulness. Microsoft delayed some A.I. computer functions this spring due to security vulnerabilities, and the $240 million start-up Humane was criticized by tech reviewers for its systems processing requests slowly and sometimes inaccurately. Amid these issues, Wall Street looks to Apple to dispel doubts and demonstrate that customers want A.I. Apple has proven it can enter and redefine markets retroactively, whether in digital music players, smartphones, or smartwatches. Apple hopes that A.I. can rejuvenate the iPhone. The significance of this technology is underscored by the fact that Apple canceled a $10 billion self-driving car project, redirecting hundreds of engineers to work on A.I. Consumers are now keeping their iPhones longer as compelling new features become rarer. According to TD Securities, an investment bank, the interval between iPhone replacements has extended from three years in 2018 to nearly five years. This has impacted Apple's business, which relies on the iPhone for more than half of its total revenue. In addition to Apple Intelligence, which will be available on the iPhone Pro and Pro Max, the new iPhones are expected to feature a new photo button, a slightly larger screen, and faster processors, according to analysts. Wall Street analysts predict these features could help Apple sell a record 240 million iPhones next year, an increase of twelve percent from this year. Optimistic forecasts concerning A.I. have, however, ended disappointingly for other tech companies. Shares of Nvidia, Microsoft, and Google have recently been impacted by weaker-than-expected sales of A.I. products. These setbacks have dragged down the entire stock market, as artificial intelligence has become a central focus for investors. For Apple, which introduced its first iPhone 17 years ago, it remains unclear if new features still matter. Nearly three-quarters of users say they buy a new iPhone because their current one is outdated, lost, or damaged, according to a survey by Consumer Intelligence Research Partners. Only one-fifth buy a new phone to get the latest features. "Cool new features used to drive a huge number of replacement purchases, but that is no longer the case," said Josh Lowitz, a partner at Consumer Intelligence Research Partners. "It’s become like replacing your clothes dryer or your running shoes. You replace them when they’re worn out." Apple distinguishes itself with its A.I. application by emphasizing the ability to handle personal requests more privately. The company stated that most requests are processed directly on the iPhone, where the risk of compromising personal information is lower. Other requests would be sent to a cloud-computing network with Apple semiconductors that do not store information. When a user asks Siri when their mother's flight arrives, Apple’s A.I. system can provide a real-time estimate by retrieving flight information from an email and matching it with current flight data. The company is also collaborating with OpenAI, the maker of ChatGPT, to answer impersonal user requests, such as recipe suggestions for specific ingredients. Apple has not yet announced when its array of A.I. features will be available for the new iPhones, and it is unclear how the technology will be introduced internationally, especially in China. Governments are pushing for the personal data of their citizens to be stored locally. China has previously mandated that the iCloud data of its citizens be managed by a state-controlled company. It remains unclear whether this would also apply to an Apple cloud network for A.I. "This is a real challenge," said Ben Bajarin, CEO of Creative Strategies. "They have to be adapted culturally or regionally, as each country has to be treated differently. There’s a lot of uncharted territory here.