Weight of AI Expectation Weighs Heavy as iPhone 16 Launch Becomes Pivotal for Apple

2024 has been a challenging year so far for Apple’s embattled stock, but could the launch of the iPhone 16 and arrival of generative AI capabilities for iOS help the smartphone giant recapture its status as a market leader?

Apple’s well-documented problems have been playing out on Wall Street throughout the year, and the stock finished the first quarter more than 7.5% lower after Barclays issued a downgrade owing to a lack of innovation and slowing sales in China.

"The iPhone 15 has been lackluster and we believe iPhone 16 should be the same," warned Barclays analyst Tim Long in a client note in January.

Owing in part to geopolitical tensions between the United States and China, Apple fell to fifth place in the nation’s smartphone market as shipments declined by 25% to 10 million units, with Huawei claiming a 17% market share at the top of the pile.

It’s a similar story among global markets for Apple. Once an undisputed leader in terms of smartphone sales, Korean firm Samsung claimed the top spot for sales volumes worldwide in Q1 2024, shipping 60 million units, outstripping Apple’s 48.7 million units.

This indicates that 2024 is shaping up to be a key battleground in determining Apple’s future, and the company that’s typically at the forefront of innovation will be well aware that the iPhone 16 must be a hit to recapture its former glories.

As global competition continues to grow, the generative AI boom will likely be seen as the solution for Apple’s difficult start to the year, but will it be enough to recapture the Silicon Valley firm’s lost market share?

Embracing the Generative AI Boom

The expectation of Apple’s emergence into the world of generative AI is growing. Stock market analysts Morningstar has even sought to raise forecasts for iPhone revenue in 2025 owing to the generative AI functionality that it anticipates will be added to the iPhone 16.

Apple appeared to have taken a more steady approach towards embracing generative AI in the months that followed the launch of ChatGPT and its widespread introduction to the vast potential of large-language models (LLMs) and their limitless industry capabilities.

However, CEO Tim Cook highlighted that the implementation of generative AI tools for iPhone and other Apple products would soon be on the way. Earlier this year, Cook claimed that substantial investment in "a tremendous amount of time and effort" towards GenAI has been taken, and we recently saw the launch of OpenELM, or ‘Open-source Efficient Language Models’ as a tool that could ramp up Apple’s bid to embrace the emerging technology.

It’s clear that the best of Apple’s generative AI bid will be found in the iPhone 16, which is due to be launched in the second half of the year. But will it be capable of turning the tide of Apple’s falling market share?

Turning the iPhone 16 Into a Success

The launch of the iPhone 16 this year is going to be a significant moment for Apple because it will provide the answer to many questions currently being asked about the company.

Can Apple recover its market dominance? How will Apple use generative AI to improve iOS? Is Apple suffering from a lack of innovation?

The latter question is becoming increasingly crucial for the company and its various stakeholders. Echoing Barclays analyst Tim Long’s sentiment off the back of Apple’s worrying downgrade on Wall Street, there’s a growing school of thought that CEO Tim Cook isn’t as innovative as his iconic predecessor, Steve Jobs.

Now, as generative AI emerges as a key opportunity for Apple to embrace exciting new technology and utilize it within its products, Cook has the chance to outperform Apple’s rivals in delivering meaningful innovation in a smartphone industry that’s ripe for growth following the arrival of 5G connectivity.

So, can we use what we already know about the iPhone 16 to anticipate whether it will be a success? Available information suggests that the screen size of the iPhone 16 will be 6.9 inches, which is 0.2” larger than the iPhone 15 Pro Max.

At 48 megapixels, the iPhone 16’s camera is likely to be similar in spec to the iPhone 15, but with an ultra-wide lens and ‘pixel binning’ to combine data from four pixels into one single ‘superpixel’ to improve quality overall.

The expectation of a larger battery and an A18 Pro chipset weighs in at an improvement on the iPhone 15 Pro, but so far, there isn’t much evidence of innovation that appears ready to threaten the dominance of Huawei and Samsung in Chinese and global markets respectively.

However, the expectation of generative AI features throughout many existing apps and a series of new ones will make the iPhone 16 a watershed release for Apple. This raises the question, are we waiting for the next iteration of the iPhone? Or a major iOS update?

Will iOS 18 Save Apple’s Slump?

Apple’s biggest launch of 2024 will be its integrated LLMs into the next major iteration of its iOS operating system.

The reason that this is exciting is because of the sheer effort that Apple has been undertaking in making its generative AI capabilities truly transformative. The company’s recent AI acquisitions include DarwinAI and Datakalab, which specialize in building AI models on limited hardware.

Implementing generative AI capabilities into the next generation of iOS will open the door to unprecedented intelligence for users. Because of their generative nature, apps can work alongside one another to actively update calendars the moment plans are made on WhatsApp, emojis or GIFs will be created using text-based prompts, and users will be capable of automatically responding to messages with GenAI algorithms capable of mimicking their writing style and personality.

This is only a glimpse at some of the transformative capabilities offered by generative AI, and it’s not only a matter of time before they become commonplace throughout iOS.

Whether the scale of Apple’s generative AI strategy means that an iPhone 16 would be essential to unlock the full capabilities of the technology remains to be seen, but this could be crucial in the company’s overall market performance in 2024 and beyond.

According to a recent report from Economic Daily News, “this year, [Apple] will not only greatly strengthen the AI computing power of M3 and A17 processors, but also significantly increase the number of AI computing cores and performance of the new generation of M4 and A18 processors.”

Could this mean that the iPhone 16 will be essential to fully utilize generative AI? Considering that Bloomberg has suggested generative AI will become a $1.3 trillion market by 2032, the lure of GenAI within the next generation of iPhone could be strong enough to spark a market revival.

The Long Road to Recovery

Apple’s future performance will depend on other factors as well as its rollout of generative AI capabilities. The current geopolitical issues between the United States and China threaten the firm’s global dominance, but recapturing its sense of innovation can be a major stepping stone in Apple’s recovery.

Although the iPhone remains a Western powerhouse, recapturing the spirit evoked by Steve Jobs in the launch of the iPhone 16 could go some way in transforming the sentiment surrounding Apple.

In a market that’s full of capable global players, the next generation of iPhone and iOS has never been more important.