AI iPhone lands with a 'meh'

Apple unveiled a variety of AI-powered services for its ecosystem of devices. But some in the industry weren't terribly impressed.

Mike Dano, Editorial Director, 5G & Mobile Strategies

June 11, 2024

4 Min Read
People taking photos of an AI experience at the MWC Barcelona trade show
(Source: GSMA)

Apple announced a variety of new AI-powered features for its iPhone at a media event this week. But some in the industry weren't excited by the news.

"Disappointing," summarized the financial analysts at KeyBanc Capital Markets in a note to investors. "They are not compelling, in our view, for the average consumer to purchase a new device. ... We believe consumers will hold onto their devices longer to save money given the lack of compelling features."

Other investors disagreed, however. For example, Apple's stock rose on the unveiling of its Apple Intelligence offerings, from around $200 per share to around $205 per share this week.

Further, research firm Counterpoint suggested that Apple rival Samsung "gained good mind share" from the launch of its AI-capable Galaxy S24 earlier this year. And the firm suggested Apple will capitalize on growing AI interest among shoppers.

"Once Apple enters [the AI phone sector], we expect AI to immediately become a must-have feature in all mid-to-premium smartphone launches starting 2025," said Counterpoint analyst Tarun Pathak in a recent release.

When asked about Apple's AI announcement at an investor event Tuesday, AT&T CFO Pascal Desroches didn't comment directly on how it might impact the operator's iPhone sales. Apple said its new AI services would only be available on its iPhone 15, released last year, or newer models. Nor did Desroches speculate how the release of a new iPhone in the fall – as is widely expected – might impact AT&T's business.

"We're going to be able to navigate it," he said of Apple's expected fall iPhone release. "We're going to be competitive."

The question is important to AT&T and other operators because US wireless providers in general often work to capture market share from their rivals in the fall via hefty iPhone-focused promotions and discounts.

Desroches suggested there could be "friction" affecting some AT&T customers if they try to switch to another provider in the fall. He said some AT&T accounts sport customers who are ready for a phone upgrade, but others on that same account may not yet be eligible. Desroches said that situation could slow the number of customers who might consider leaving AT&T for a rival provider's fall iPhone promotion.

The data angle

Desroches also faced questions over whether Apple's new AI services would generate more traffic over AT&T's network. Desroches didn't directly address the question, but he said AT&T's network was uniquely positioned to transmit AI-related services to and from Apple's data centers.

Some networking equipment vendors offered a more bellicose outlook on the topic. "This move will also bring massive demand to communication service provider networks and AI inference sites, be it on device, on-premise, at the network edge or in a metro data center," Jurgen Hatheier, international CTO of Ciena, said in a statement delivered to the media. Ciena sells a variety of networking products and services to operators like AT&T.

Continued Hatheier: "As a result, service providers are investing to upgrade and fortify their networks and connect the data center sites that process all of this data, to ensure users can experience a reliable and positive AI experience."

Ciena, for its part, recently predicted a possible upswing in demand from service providers and others.

At least one prominent tech executive remained unimpressed by Apple's announcements. Billionaire Elon Musk said he would ban Apple devices from his collection of companies, citing privacy concerns over Apple's AI agreement with OpenAI.

In a discussion with The Washington Post, Apple CEO Tim Cook defended his company's new agreement with OpenAI.

"I think they're a pioneer in the area, and today they have the best [AI] model," Cook told the publication. "And I think our customers want something with world knowledge some of the time. So we considered everything and everyone. And obviously we're not stuck on one person forever or something. We're integrating with other people as well. But they're first, and I think today it's because they're best."

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About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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