09/14 2024 362
"The launch of Apple Intelligence will depend on regulatory approval."
Author | Xue Xingxing | Editor | Jiang Jiao | Cover | Apple
On the morning of September 10, Beijing time, Apple unveiled its latest flagship smartphone, the iPhone 16 series. As predicted, AI emerged as the biggest highlight of this generation of iPhone upgrades. During the 1-hour and 40-minute event, Apple dedicated nearly half of the time to showcasing the power of Apple Intelligence. In Tim Cook's words, the new iPhone is thoroughly designed for Apple Intelligence.
These AI-related upgrades are essentially a repeat of what was shown at the WWDC conference in June, and even now, they are still in the pipeline. The iPhone 16 series will officially go on sale on the 20th of this month, but the first system version to support Apple Intelligence won't be released until next month, and will only support some features.
Apart from some English-speaking countries, Apple Intelligence is temporarily unavailable in other language regions, including China. A small line appears on Apple's iPhone pre-order page in China stating, "Apple Intelligence is not currently available for iPhone models purchased in mainland China." Apple states that the launch of Apple Intelligence will depend on regulatory approval.
Screenshot from Apple's official website
Cook believes that the addition of AI features will attract more consumers to purchase the iPhone, helping alleviate its global sales slump. Some market analysts are cautious about the iPhone 16 series, partly due to the long wait for Apple Intelligence, as Android phone brands like Samsung have already implemented AI features.
Apple's share price fell initially but then rose yesterday. The biggest decline occurred after the announcement of the new iPhone, dropping from $220.72 to $216.96 before gradually recovering to close with a slight increase of 0.041%.
01 | Image upgrades may be more tangible than AI
Since 2020, Apple has abandoned its decade-long tradition of live-streaming events in favor of prerecorded videos. Even though digital media outlets were still invited to Apple's headquarters, they watched prerecorded videos on-site – the only advantage being earlier access to the new iPhone.
This event was no exception, with even less screen time for Tim Cook. He played more of a linking role, as various product launches, including Apple Watch, AirPods, and the iPhone 16 series, were introduced by their respective product line leaders.
Screenshot from Apple's official website
The Apple Watch and AirPods lines mostly received routine upgrades. For example, the latest Apple Watch Series 10 boasts a larger screen, lighter weight, and longer battery life. The newly introduced Apple Watch Ultra 2 adds a Space Black Titanium finish, but there are no other significant changes.
The biggest update to AirPods 4 is the addition of active noise cancellation, with the same price as the previous generation, although the noise cancellation effect is still inferior to AirPods Pro. The base version of AirPods 4 without active noise cancellation has been priced $400 lower. AirPods Max, which had poor sales last year, was barely mentioned at the event, with only a few new color options mentioned.
The biggest change is in the iPhone 16 series, but not in its appearance but rather in the built-in Apple Intelligence. Similar to what was shown at the WWDC conference, Apple aims to embed generative AI services into every aspect of the system.
The iPhone 16 Pro introduces a new gold color option, which Apple calls Desert Gold.
For example, you can use Apple Intelligence's text rewriting function on any interface to help you polish emails, chat with friends, and respond to work messages. Most current Android phones have similar features, but they are often limited to GPT-style chat windows and cannot be invoked within any app.
Apple believes that their combination of hardware and software enables such a seamless smart experience. As they put it, this is a personalized intelligence system deeply integrated into the iPhone.
At the event, Apple depicted a system experience akin to an AI butler, which helps manage complex emails, lists summaries, highlights app notifications, and prioritizes tasks. It also remembers your interactions with friends, such as automatically finding and sending photos of your Saturday barbecue to them or reminding you of a TV show recommended by a friend last week.
Apple Intelligence / Source: Apple's official website
Similar to the visual perception capabilities demonstrated at the GPT-4 launch, Apple Intelligence can also use the phone's camera to recognize real-world objects, such as inquiring about a restaurant's reviews, identifying a bicycle's brand, or recognizing a dog's breed. This isn't a particularly novel feature – Android phones have supported flower recognition for years, and Apple's restaurant recognition may also require localization support.
Compared to the still-pending AI features, the iPhone series' upgrades to its camera system may be more tangible. The iPhone 16 changes the arrangement of the rear cameras, enabling the capture of spatial photos previously demonstrated by Vision Pro. The iPhone 16 Pro now supports up to 4K 120 fps Dolby Vision video recording and even adds audio mixing capabilities, significantly enhancing the iPhone's already impressive camera capabilities.
Apple has even added a dedicated camera button to the iPhone, similar to a camera's shutter button, which can control photo-taking, zooming, and other camera functions – this is probably the most noticeable upgrade for average consumers in this generation of iPhone. Nokia and Sony have also previously introduced dedicated camera buttons on their smartphones.
The iPhone 16 adds a dedicated camera button
Embarrassingly, however, the base storage for the powerful iPhone 16 Pro is still 128GB. This may not be sufficient for 4K video recording.
The newly upgraded A18 Pro chip also appears to have hit a performance bottleneck. Using TSMC's second-generation 3nm process, it offers only around a 15% CPU performance boost and a 20% GPU boost compared to the A17 Pro.
The iPhone 16 series' pricing in mainland China remains the same as the previous generation, with Apple adding a note on the pre-order page stating that it is "ready for Apple Intelligence." Since Apple has integrated many locally running edge models to process data, previous iPhone models may not be compatible with Apple Intelligence.
This is one reason to attract people to order the new models, but consumers in mainland China will still have to wait. Apple's official website states that the launch of Apple Intelligence will depend on regulatory approval. In comparison, the new colors, enhanced photography capabilities, and the added camera button may be more appealing to people.
02 | A cautious market and the aggressive Huawei
Market commentary on the latest iPhone 16 series is mixed, even though Apple Intelligence may be the most significant update to the iPhone in recent years. Still, some commentators are concerned about the long wait for Apple Intelligence.
Apple plans to release a system version with some Apple Intelligence features as early as next month, initially only in the US. English-speaking regions such as Australia, Canada, New Zealand, South Africa, and the UK will follow in December.
Apple has not provided specific launch dates for features, stating only that the first batch of features will be introduced in the Beta version next month, with more features to follow in subsequent months. It won't be until next year that Apple Intelligence supporting other languages like Chinese, French, Japanese, and Spanish will be available.
Generative AI services are strictly regulated in various countries, and outside observers predict that Apple may partner with domestic manufacturers to implement Apple Intelligence. Samsung has already partnered with Baidu on the Galaxy 24 series. After the June WWDC conference, rumors circulated that Apple might partner with Baidu, but neither company has made further statements.
Baidu's Robin Li previously expressed some pessimism at an internal company meeting, stating only that they hoped to provide cloud model capabilities to phone manufacturers. Li said that Apple Intelligence has little to do with them, "It mainly emphasizes large models on the device, and we have little control over the device… As for future innovations in edge models, I'm not that concerned, so I haven't thought much about it."
Guo Mingqi, an analyst at TF International Securities who has been tracking Apple for a long time, predicts that iPhone 16 shipments in the third quarter of this year will increase by 10% year-on-year compared to the previous generation, but not due to strong demand for the iPhone 16 series. Instead, it's because last year's best-selling iPhone 15 Pro Max had low initial production yields for its periscope camera, resulting in weak shipments. Guo predicts that iPhone 16 series shipments in the fourth quarter will decrease by 5-7% year-on-year.
This year, iPhone sales have been weak globally. According to third-party statistics from IDC, iPhone global sales declined by nearly 10% in the first quarter of this year, the steepest decline among the top five mobile phone brands. Apple's financial report showed that revenue from the iPhone also declined by 10% year-on-year in the first quarter.
The Chinese market saw the largest decline. According to Counterpoint, iPhone sales in China declined by nearly 20% year-on-year in the first quarter. Huawei's Meta 60 series, which returned to the market with 5G last year, may be one reason for the decline in iPhone sales. Huawei phone sales increased by 69.7% year-on-year in the first quarter.
The latest news is that Huawei's HarmonyOS has surpassed Apple's iOS to become the second-largest operating system in China. According to Counterpoint, HarmonyOS's market share in China increased to 17% in the first quarter of this year, while iOS's share declined to 16%.
Since the beginning of the year, Apple has frequently discounted its products in China. In January, Apple offered a "New Year Sale" on its official website, but the discounts were modest, with a maximum savings of only $128. During the mid-year 618 shopping festival, Apple offered even steeper discounts, with savings of over $320 on the iPhone 15 series – the most significant price cuts Apple has ever offered.
The iPhone 16, which cannot yet launch Apple Intelligence in mainland China, faces an even more competitive market. Since last year, domestic phone manufacturers have continuously launched flagship phones with AI capabilities – albeit with less capability than Apple's but still functional.
On September 10, Huawei will also hold a product launch event, introducing the new HUAWEI Mate XT, a tri-foldable phone. Yu Chengdong calls it Huawei's pinnacle work, turning science fiction into reality.
Screenshot from Huawei's official store
Pre-orders for this phone are booming, with over 3.3 million reservations already made. However, no deposit is required for pre-orders.
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