What a disappointment…
At least, that’s what the media proclaimed almost unanimously after one of the biggest tech events of the year yesterday – the announcement of the latest iPhone, the iPhone 16.
Yes, the new iPhone looks a lot like its predecessor, the iPhone 15. It’s an Apple smartphone after all.
Source: Apple
The user interface (UI) is also the same, which makes sense. Apple’s form factor, design, and UI transformed the mobile phone industry in 2007, and Apple has been leading the industry since then.
And because of Apple’s tight vertical integration from the software that runs on the smartphone all the way down to the design of key semiconductors, the result is a fantastic product with incredible utility for consumers.
And yet, the media seemed more impressed with China-based Huawei’s $2,800 Mate XT trifold smartphone.
Source: Huawei
The media loved the fact that more than 4 million pre-orders had been placed for the trifold device. It’s different, after all, compared to a smartphone that doesn’t fold.
I’m being sarcastic of course. Smartphones with one fold didn’t sell very well, so why not add two folds and three screens?
It reminds me of the razor blade industry. One blade evolved to two blades, and then the next great innovation was to jump to three blades. Today, razors have as many as five blades.
Brilliant right?
Is that all they could come up with?
Sure, Huawei will sell a few million of the trifold smartphone at $2,800 each. But is that a mass-market product? No, it’s not.
For comparison, Apple sold 232 million iPhones in 2023. And it will certainly sell more than 200 million more this year. That’s a mass-market product.
The media completely missed the point. They were looking for something superficial, shiny, and new; and by doing so they missed the big story.
Apple designed its new iPhone 16 from the ground up to support artificial intelligence (AI).
Its new custom semiconductor, the A18, is two generations ahead of the A16 used in the iPhone 15. This results in a central processing unit (CPU) that is 30% faster and a graphics processing unit (GPU) that is 40% faster than the iPhone 15.
It’s the new hardware that enables the real innovation which is the Apple Intelligence software powered by artificial intelligence. And because of Apple’s powerful semiconductor design, much of the AI functionality can be run locally on the iPhone.
This is an important distinction.
Rather than having to send a query to a data center somewhere in “the cloud” to have it processed and returned to the phone over a wireless network, the Apple Intelligence software and the A18 chip process most tasks locally, never leaving the phone.
Not only does this result in a quicker response, it’s also great for privacy.
But what is it that Apple Intelligence will be able to do? For one, it will be a great boost for productivity.
Source: Apple
Anywhere there is text, including in third-party applications, Apple Intelligence can rewrite or summarize text at the touch of a button.
And if we use the ‘record’ feature in Notes or the Phone app, Apple Intelligence can capture, understand, and synthesize any audio recording. Imagine sitting in a meeting or a classroom and having Apple’s AI produce a summary of the most important information discussed in just a second.
Technology like this renders note-taking unnecessary. Action items for work can be produced instantly, and it can provide students of any age with a condensed study guide after class.
Apple is also incorporating generative AI features like text-to-image creation that can be used for photos, illustrations, emoji creation, and sketching. We can even remove objects from photos that we prefer not to be there.
But these are just novel, fun features. They will be widely loved, but they aren’t the most exciting aspect of this upgrade.
The real innovation that Apple users will become addicted to is the personalized contextual understanding that Apple Intelligence will have for each user…
Source: Apple
Apple Intelligence and its AI assistant, Siri, can contextually understand both our environment through the camera lenses, as well as our lives through our conversation, calendar, and text/e-mail communications.
Again, this understanding happens locally on each user’s iPhone.
For example, Apple’s AI can understand our physical location using GPS data, our daily schedule from our calendar, and important time-sensitive meetings or events throughout communications that might require our actions, even our preferences in terms of lifestyle.
Apple is just scratching the surface right now, but this new Apple Intelligence software is the precursor to what will become an incredibly useful personalized AI assistant that will help us throughout the day, and night, become more efficient.
It won’t be long before this technology will be just as capable and functional as a human executive assistant.
The industry is rapidly moving towards employing AI “agents” that can transact and interact with the real world, as well as on the internet. This was a topic I explored in more detail in July in Bleeding Edge – The Agentic AI Undercurrent.
Just imagine having the productivity and capabilities of a high-paid executive assistant who knows our needs, inside and out, at our fingertips.
This is what mass adoption of AI technology looks like… integration into our computing devices and our everyday lives to make things easier, smarter, and more efficient.
And Apple will likely make this technology available as part of its overall strategy to lock consumers into the Apple ecosystem of products.
Once a consumer has access to something this powerful and useful, it would be highly unlikely for them to change.
Apple could potentially introduce a paid subscription tier as well for those who want to utilize something like the agentic capabilities. I can envision how this could be wrapped into an Apple One subscription, which would increase Apple’s monthly recurring software and services revenue.
And the even more fundamental development that the media missed in Apple’s announcement yesterday is that Apple Intelligence is being rolled out not just in Apple’s smartphones, but in Apple’s iPad OS, and its MacOS operating systems.
And that’s the point.
Artificial intelligence has become part of Apple’s operating systems across its suite of products. Its personalized AI will be available whether we’re “connected” with a smartphone, laptop, iPad, desktop, or even Apple Watch.
Even bigger, every Apple developer, of which there are more than 34 million, can now incorporate AI into their applications that run on Apple software.
As popular as artificial intelligence has become over the past couple of years now, Apple is introducing a level of access and convenience yet unseen for these types of applications. With this upgrade, iPhone users will be able to access AI anytime, anywhere, so long as they have their smartphones on them.
All Apple iPhone 15s, iPhone 16s, and future Apple iPhone versions will be capable of running Apple’s AI software. That means that probably 450 million iPhones will be AI-enabled by the end of this year, and more than 1 billion iPhones in about 30 months.
A billion people with powerful AI running on a device that sits comfortably in the palm of their hands.
That’s the power of Apple. Its ecosystem of products is a preexisting distribution channel for the rapid adoption of artificial intelligence.
And it will be so simple to use that a 5-year-old or a 75-year-old will have no trouble at all.
It will feel human and helpful and will be something we won’t be able to live without.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
