| | By all accounts, the iPhone 17 is a return to form for Apple Inc. and selling briskly in key markets.
Apple Chief Executive Officer Tim Cook is penciling in double-digit revenue growth for the company in the December quarter, while third-party research points to Chinese consumers buying the new iPhones about 29% faster than last year’s models.
The reasons are many: a new design with better heat dissipation, improved battery life, more advanced cameras, and the best bang-for-the-buck $799 iPhone in years. Lots of people who bought a smartphone during the pandemic, with all the spare cash they couldn’t spend on vacations or dining out, are due for an upgrade and are drawn in by the quality-of-life improvements.
You’ll have to go a long way down that list to find anyone talking excitedly about Apple’s AI as an attraction. Apple Intelligence is still not even a thing in China, the market where the iPhone 17 is beating its predecessor like a drum.
“In September, we surveyed 4,400 consumers in the Asia region who had purchased smartphones in the past 18 months, and the top reasons for choosing their phones were price, brand, and user friendliness rather than AI, which ranked toward the bottom,” IDC analyst Bryan Ma told me.
The smartphone industry is giving consumers what they want. Xiaomi Corp.’s 17 Pro model is drawing eyes with its novel extra screen on the back, Oppo’s Find X9 Pro has an extremely dense battery that fits much more capacity than most phones, and Vivo and Huawei Technologies Co. are pouring their investment into pioneering camera tech. Artificial intelligence has done nothing to change the smartphone market. Yet.
I recall Samsung Electronics Co. talking early last year about how its Galaxy AI would drive a major cycle of upgrades. In the months since, I’ve listened closely to its post-earnings conference calls and heard only talk of seasonal weakness in demand and economic uncertainty. The company was, and is, investing heavily in the promise of AI as an enhancement to the user experience — but there’s no evidence of that investment translating to bottom-line improvement.
Now, to be clear, I’m not declaring AI a total flop — it just hasn’t lived up to the promises of the hardware vendors who told us it would revolutionize the way we use electronics. This also applies to personal computers: Microsoft Corp.’s Copilot+ PCs are some marketing executive’s magnum opus, I’m sure, but people have been buying those for the improved battery life of the new chips they run, not because Windows can now chitchat while Excel continues to frustrate us.
Most notable of all, perhaps, is the example of Alphabet Inc.’s Google. If there were ever a company that could blend hardware, software and AI into a coherent and cohesive whole, Google would be it. CEO Sundar Pichai was talking about AI’s promise a decade and a half ago, Google’s Android operating system is even more mature, and the company has been making smartphones under its own brand for a long time.
This summer’s Google Pixel 10 made AI its calling card. Consumers took a look, and largely shrugged it off.
“AI isn’t yet the trigger for a purchase, but it’s fast becoming the baseline expectation that drives brand stickiness,” says Ivan Lam of Counterpoint Research, adding helpful nuance to my doomsaying. “Consumers are increasingly discussing what tasks a device’s smart AI assistant will actually perform. Over time, these capabilities will shift toward agent-style AI experiences that all brands will be expected to offer.”
The consensus across the tech industry that AI will be revolutionary is overwhelming, and the depth of conviction is manifest in the hundreds of billion of dollars now being spent to secure a leading position. But that same industry knows its best path to success has always been to marry appealing software with ever-evolving hardware. Most consumers are still willing to spend more on something they can hold in their hands.
The biggest gap that AI system builders have to close now is the one with consumers. Businesses are already finding efficiencies from deploying AI across their offices, warehouses, vehicle fleets and shop floors.
For AI to fulfill its immense promise — most recently elevated to a $100 trillion opportunity, by the estimation of Nvidia Corp. CEO Jensen Huang — it will have to appeal to consumers in a more concrete, tangible, everyday way that makes it a must-have when picking electronics.
| |
|
