Apple is revealing its iPhone 16 lineup at its Sept. 9 event, dubbed “It’s Glowtime.” While Apple fans are awaiting details, plenty is already understood about how the iPhone 16 lineup and other Apple devices are expected to use Apple Intelligence, which Apple described in some detail at its WWDC event in June.
One new detail will be closely watched: Some analysts including IDC predict that GenAI smartphones could cost much more, even double, of non-GenAI smartphones, on average. Presumably, that increase in cost includes some models in the iPhone 16 lineup, although many other analysts believe the average prices will indeed be higher, but not double.
In June, Apple revealed most of its approach to generative AI with Apple Intelligence, which generally relies on models trained on limited data relevant to user experiences. By comparison, OpenAI and Google’s Gemini rely on much larger black box models. As some analysts have said, Apple’s Intelligence will surely be a work in progress.
The company’s broad concept combines generative AI with personal context in iPhone, iPad and Mac to “deliver truly helpful intelligence” to users, CEO Tim Cook said at WWDC in June. “This is AI for the rest of us,” said software chief Craig Federighi.
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The hardware behind this AI achievement will be, for now, built on acceleration processors like the A17 and M family, Apple said in June. To recall, A17 Pro was part of the iPhone 15 launch in September a year ago. The A17 Pro was the first 3nm smartphone chipset, designed for iPhone 15 Pro and iPhone 15 Pro Max. It has six CPU cores, with two performance cores that can run 10% faster, and more efficient cores. It also has a new GPU design with six cores that are 20% faster than before as well as a Neural Engine.
Since A17 Pro was a part of iPhone 15 Pro and iPhone 15 Pro Max, those devices are expected to be able to run Apple Intelligence, assuming a user upgrades to iOS 18.
Apple is widely expected to upgrade iPhone 16 and iPhone 16 Plus with a new more powerful A18 chip, as well as an A18 Pro chip for iPhone 16 Pro and Pro Max models. And to accommodate on-device AI, Apple is expected to include more RAM, perhaps up to 16GB.
What does Apple Intelligence get you?
What would a user get with Apple Intelligence? WWDC presenters gave some examples, including making Siri smarter and able to understand corrections a user makes in natural language commands. For example, if someone tells Siri, “I meant we should meet at Muir Woods instead of the beach,” the user’s intent would be understood with AI. In that example, the user could follow up with Siri to create an invitation to be emailed, based on time and place and with driving directions to “there,” which Siri would understand to be the previously-mentioned Muir Woods.
Another example would allow an iPhone user to send a message to a friend with GenMoji and Image Playground, generating an image on the fly with, perhaps, that person’s image found in the phone database and stylized with colors and themes. Apple has also provided examples of using AI to make suggestions for writing emails and texts, using content from previous messages, as well as correcting grammar and sentence structure.
Apple also said a connection to OpenAI v.4.0 will be possible when OS updates happen later this year. On-device processing of data is meant to prevent any personal data contained on a user’s iPhone from being used by a cloud provider without a user’s permission. But Apple has also created Private Cloud Compute where Apple silicon runs on certain cloud servers.
Cook said at the time that Apple Intelligence “is the beginning of an exciting new chapter…We think AI is going to be indispensable.”
But it is also likely to be pricey, but the price tag is yet to be announced.
“GenAI-cable devices won’t come cheap initially,” said Anthony Scarsella, research director at IDC in a recent note.
He predicted the average selling price for GenAI smartphones will be “more than double” the cost of non-GenAI capable devices. As for what iPhone is planning to release or its cost, Scarsella said he could not comment until after the Monday Apple announcement.
Here’s what IDC’s “more than double” the cost could mean for iPhone 16
Based on Scarsella’s analysis, an iPhone 15 Pro that now costs $1,000 at retail (without Apple Intelligence because that is part of an upcoming OS upgrade) could mean an iPhone 16 Pro could cost $1,800-$2,200. But some non-GenAI smartphones are in the $400- $800 range, especially certain Android devices, which would mean far less in price for an Apple iPhone 16 model ready for Apple Intelligence.
Other Apple analysts, indeed, are predicting far less than a 2X price increase, putting the top-of-the-line iPhone 16 cost at the higher end of current smartphone prices, like the Google Pixel 9 Pro XL Porcelain with 512 GB, going for $1,300. To complicate matters, some reports have quoted Apple sources saying pricing will remain about the same even with significant improvements in iPhone 16 models. In a somewhat related fashion, some analysts have said the Apple Intelligence features in iOS 18.1 could cost $10 to $20 a month, but none of this pricing is official.
In an email to Fierce Electronics, Scarsella said IDC actually doesn't expect prices to change "drastically," and added, "Cheap phones won't have it [GenAI] and expensive phones will. The mid-tier will most likely adopt it over time, but for now, it will utilize basic AI via an NPU."
He added: "If you were planning on buying the latest iPhone because you need a new iPhone, now you have an AI phone. It was kind of like when 5G launched. Most consumers didn’t need 5G, but the next phone they bought had it by default. AI could possibly speed up your refresh cycle if consumers feel it is a benefit." IDC offered insights about AI smartphones more generally in February.
Whatever the cost and value of a GenAI iPhone provides to consumers, Apple Intelligence has great value in the smartphone market and to Apple itself. IDC expects Apple’s iPhone growth to improve 4% in 2025 over 2024 thanks to Apple Intelligence, added Nabila Popal, senior research director at IDC. Popal said Apple Intelligence “is already creating a lot of excitement and is expected to gain momentum [in 2025] and encourage faster upgrades.”
Scarsella noted the newness of GenAI smartphones but predicted premium phones from Apple and Samsung and others will “continue to adopt GenAI features to help separate them from the pack.” IDC has forecast a robust 344% growth for GenAI smartphones, capturing 18% share of the total market by the end of 2024, because most flagship phones will adopt some on-device GenAI features.
Smartphones overall have lately seen a reprieve from a downward trend. Shipments are set to grow 5.8% year-over-year in 2024 to 1.2 billion, IDC said in August. The segment experienced 12% growth in the first quarter, followed by 9% growth in the second quarter. Newer GenAI smartphones such as the Samsung Galaxy S24 Ultra and the Google Pixel 9 Pro XL running Gemini were indeed a factor, but so was growth in affordable Android smartphones in emerging markets, IDC added.
IDC defines GenAI smartphones as devices that feature a system-on-a-chip (SoC) capable of running on-device GenAI models more quickly and efficiently leveraging a neural processing unit (NPU) with 30 tera operations per second (TOPS) or more performance using the int-8 data type.
But Apple Intelligence may need time to work properly over future generations
If history of new smartphone features is any guide, it will take one or two generations for Apple Intelligence to work out kinks and work effectively, said Jack Gold, analyst at J. Gold Associates. It took time for Siri and Maps to work well, for example.
“What’s more important is how easy it will be for users to learn how to use it,” he added. “Apple is known for user experience excellence, but sometimes they’ve not hit the mark right away. It will be important to see how they do this, especially since the other players in the Android space are going down the same path, especially Google, which is already shipping and promoting their capabilities on device AI.”
Apple is in a better position than competitors to do well with AI features, partly because it has such a loyal customer base, one that adopts new devices more often than the Android camp. “It’s likely that whatever Apple does, the competitors will respond and that kind of competition is good for users overall."