Apple is preparing to unveil the iPhone 16 next week, a device that analysts say could be the most important since its predecessor, the iPhone 15. With a market capitalization of more than $3 trillion, the company relies significantly on the iPhone line, which generates more than 50% of its revenue.
Despite efforts to diversify, such as with services, the Apple Watch and AirPods, the iPhone remains the centerpiece. In a year of subdued sales, Apple still sells over 200 million phones, with an average price close to $1,000. According to The Wall Street Journal, if the iPhone business were independent, it would be the 15th largest company in the S&P 500 index, beating giants like Chevron and Ford.
However, the iPhone business has shown a slowdown. In the last fiscal year, sales fell by 2%, and according to FactSet data, a slight decline is expected for the current year. This trend has generated high expectations for the iPhone 16, the first to integrate Apple's new artificial intelligence technology, Apple Intelligence.
The market has responded with optimism. Apple shares have risen 25% in the last six months, outperforming its competitors in the technology sector. However, it is still being determined whether the new artificial intelligence will be able to boost iPhone sales significantly. The Wall Street Journal notes that historically, strong iPhone sales cycles have coincided with major hardware changes, such as larger screens or the introduction of 5G.
However, Apple's new artificial intelligence technology will not be a surprise. In June, during its Worldwide Developers Conference, the company showed a preview of what Apple Intelligence would look like. Moreover, the technology is expected to launch in October, so it will not be available on the first iPhone 16s.
Mastering Copilot for business efficiency
Adopting artificial intelligence is expected to be critical to the company's future. Wall Street predicts a split sales cycle, with iPhone unit sales up 4.5% in FY2025. However, analysts such as David Vogt of UBS believe that artificial intelligence will need to be more attractive in the near term to generate a significant increase in demand.
Despite the caution, many iPhone users have older models, which could naturally increase demand for the new iPhone 16. Moreover, Apple maintains an advantage over other tech giants, as its hardware-based business model does not require massive investments in artificial intelligence components like Nvidia's chips. Apple's success in this new chapter will depend on its ability to generate revenue with artificial intelligence without significantly increasing costs.
