Apple Inc. (NASDAQ:AAPL) is reportedly focusing more on artificial intelligence and software as its hardware innovation slows down.
What Happened: In his latest weekly “Power On” newsletter, Bloomberg columnist Mark Gurman said that Apple’s devices are now designed to last longer, making it harder to entice consumers to upgrade regularly.
The company’s latest report on product longevity reveals that devices from as far back as 2017 can still run Apple’s current operating systems.
This trend has led to a decline in sales over the past six quarters, but it has also opened up opportunities for Apple to focus on software and AI. The upcoming iPhone 16 lineup, for instance, will not feature significant hardware changes but will require a recent model for users to access new Apple Intelligence features.
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Apple’s AI capabilities, including an upgraded version of Siri, are expected to be a major selling point for the iPhone 16. Similarly, new software enhancements could encourage Mac and iPad users to upgrade their devices.
“Though Macs from seven years ago will still run the next version of the Mac operating system — macOS Sequoia — features like iPhone Mirroring and Game Mode require newer hardware,” the analyst noted.
As hardware upgrades slow down, Apple is also expected to rely more on service fees and subscriptions for revenue. The company is exploring the potential of turning AI features and other software into paid services, which could eventually lead to offerings like “Apple Intelligence+,” Gurman noted.
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Why It Matters: Apple’s choice to restrict features such as a supercharged Siri, image editing enhancements, and text-related improvements, to its latest iPhone models has ignited debates about the company’s intentions and the effects on its user base.
Earlier this month, Apple’s top executives said that limiting Apple Intelligence features was not a tactic to boost iPhone sales. The features, part of iOS 18, iPadOS 18, and macOS Sequoia, leverage on-device, generative large-language models to enhance the user experience across Apple devices.
“You could, in theory, run these models on a very old device, but it would be so slow that it would not be useful,” said Apple's AI/machine learning head John Giannandrea.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
