Adding AI to iPhone 16 is no magic bullet

Next to the annual reemergence of pumpkin spice lattes and David S. Pumpkin skits, the fall excites the masses with the prospect of each new iPhone.

Ahead of the anticipated launch of the iPhone 16, which is expected to debut in September, is speculation around which features will turn heads. In the past, battery life, screen size or camera quality might have taken center stage. But this year, AI could be the star differentiator.

Apple needs more than AI to market iPhone 16

The appearance and design of the iPhone 16 likely won't look much different from current versions, but the main feature Apple will market is its platform of AI capabilities, dubbed "Apple Intelligence," predicts Bloomberg's Mark Gurman. The iPhone 16 and iPhone 15 Pro will include Apple Intelligence, but Gurman doesn't think the AI features alone are enough of a reason to upgrade.

Other new features of the iPhone 16 are the Action button on non-Pro versions, a new camera control button, bigger screens on the Pro models and new backplate colors, but Bloomberg's Gurman noted he doesn't see these features as enough to garner a windfall of sales.

"And, if the latest financial guidance is any indication, the company doesn't either," added Gurman. "It declined to give a prediction for iPhone growth in the current quarter. If Apple had expected a meaningful bump, we probably would have gotten an indication."

Related:Apple pushes AI into ecosystem, boasts of satellites and RCS

Light Reading's Mike Dano shared this sentiment in a recent article on Apple Intelligence. While the AI features will be available on Apple's newer devices, he explained that it's "unclear whether that will drive a bigger phone-upgrade cycle in the fall when Apple is expected to release an updated iPhone. Wireless network operators often use the release of a new iPhone as a chance to introduce new promotions in an effort to steal customers from rivals."

Consumers that do purchase the iPhone 16 for the new AI features could be in for an added cost. While Apple has said the Apple Intelligence AI features will debut on the new smartphone for free, AI is expensive to deploy and companies including Google and Samsung already – or plan to – charge for AI plans, explained Forbes.

Neil Shah, partner at Counterpoint Research, told CNBC that Apple could pass along the expensive cost of AI to its users, potentially charging between $10 and $20.

AI becoming a necessity in smartphones

Regardless of the potential cost of AI to both Apple and its users, AI is emerging as both a differentiator and must-have in the smartphone market.

Related:Apple needs AI to find footing in China – Canalys

In the China smartphone market, for example, research group Canalys told Light Reading that Apple should focus on developing AI features that are of interest to that market to compete with local smartphone vendors.

Apple is experiencing challenges in China "due to a lack of a proper answer in AI against its competitors," said Canalys Analyst Le Xuan Chiew, in an email to Light Reading.

While Apple currently ranks at the bottom of the market share list for top smartphone vendors to Mainland China, investing in AI could boost Apple's ability to gain market share, explained analysts.

At one time, each new iPhone enticed consumers to line up in the hopes of getting their hands on the latest model. However, factors such as the expense of a new phone, minimal carrier subsidies and the quality of existing iPhone features has lessened the urgency for users to upgrade, according to Business Insider. The allure of "newness" isn't enough for many users to part with their current iPhone if it meets most of their needs.