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Apple’s AI Spending Lags Behind its Silicon Valley Counterparts, despite Increased Investments

Apple is betting big on its new AI services, Apple Intelligence, to drive up iPhone 16 sales. The company is optimistic about achieving a 10 per cent increase in shipments, thanks to advanced AI features and significant hardware upgrades.

Apple introduced its Apple Intelligence during WWDC 2024. According to the company, its new personal intelligence system will be deeply integrated into iOS 18, iPadOS 18, and macOS Sequoia, offering powerful generative models combined with personal context to provide relevant and useful intelligence to users.

One standout feature of Apple Intelligence is its advanced language understanding capabilities. The new Writing Tools will be available across Mail, Notes, Pages, and third-party apps and will be helping users rewrite, proofread, and summarize text effortlessly.

Apple Intelligence will also be enhancing the Mail experience on Apple devices, including iPhones, with Priority Messages, Smart Reply, and streamlined Notifications. For multimedia, Apple Intelligence will introduce Image Playground, a tool for creating fun images in Animation, Illustration, or Sketch styles.

The Photos app will also benefit from natural language search capabilities, making it easier to find specific photos and moments within videos. The new Clean Up tool will remove unwanted objects from photos without affecting the subject.

Despite the excitement, some analysts expressed skepticism, with Dipanjan Chatterjee of Forrester predicting consumers would not rush to Apple stores to acquire more AI on their phones. However, Dan Ives of Wedbush Securities saw this as a significant opportunity, estimating that approximately 270 million iPhones had not been upgraded in the past four years.

Apple’s fiscal year 2023 iPhone revenue totaled $200.6 billion, a decrease from $205.5 billion the previous year, according to the company’s annual report. However, AI is just one aspect of Apple’s appeal to consumers, and the AI updates would attract early adopters and distinguish Apple for its ability to take actions within and across apps.