CNN
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Apple is expected to unveil the iPhone 16 Monday. Although the new phone will probably get a few small upgrades on the outside, Apple is betting that significant changes to what’s on the inside will excite customers who haven’t been given a convincing reason to upgrade in years.
The company is set to introduce the first lineup of iPhones purpose-built for generative artificial intelligence (which lets users create text and images) during its annual hardware event, which kicks off at 1 p.m. ET.
The event was teased with the cryptic motto of “it’s glow time,” and Apple is staying mum thus far on what it means.
Apple faces immense pressure ahead of the event to prove the new AI features and other iPhone 16 updates are worth shelling out for an upgrade. Apple also needs to convince investors that it hasn’t fallen behind in the AI arms race, as rivals have already released similar features with the new technology.
Since the launch of the iPhone 12 with 5G connectivity in 2020, the company has given customers few reasons to buy the latest generation. Phone cameras have largely advanced to the point where they’re sufficient for most people’s day-to-day needs without major hardware changes, and at some point the human eye isn’t even capable of perceiving higher screen resolutions.
As a result, iPhone sales, which make up half of the company’s revenue, have been sluggish.
The company’s shares had been relatively stagnant, too, until the Apple Intelligence unveiling, a sign that investors are counting on AI to convince people to buy new iPhones. Apple’s stock is up 14% since the June 10 event, and nearly 18% since the start of this year.
If Apple delivers, it could cash in – roughly 300 million iPhones worldwide have not been upgraded in more than four years, according to a research note from analyst Dan Ives of investment firm Wedbush last month.
So, while Apple will likely highlight changes to various products and services like AirPods or, even Apple TV+ on Monday, “everything is about the iPhone upgrade cycle. Everything else is subplot,” D.A. Davidson analyst Gil Luria told CNN.
Subplot or main character, here is everything we’re expecting from the Apple event.
The company has already hinted at some of the things Apple Intelligence will be able to do: it will enable more natural conversations with Siri, help draft emails, make it easier to find specific moments in your photo albums and incorporate users’ personal information into its responses. The company’s task on Monday will be to show iPhone users what that will look in real life.
“Expect to see demos about how, within your text chain, you can get summaries,” Luria said. “You’ll know why did Tiffany M have beef with Tiffany R, and you’ll be able to ask that within the chat and get a response. Those are the kinds of things that will get people excited … to show some concrete examples of how folks will be able to use Apple Intelligence to do things they weren’t previously able to do.”
And while it’s not unusual for new iPhones to get an updated processor chip, that change may be especially important this year to ensure the iPhone 16 can handle the increased data processing needs that will come with the new AI features without compromising battery life.
Luria added that he thinks there could also be a subtle change to the appearance of the iPhone, such as a wider screen or updated edges, “to drive home the point of an upgrade cycle.”
“Something distinct about the new iPhones that will communicate to consumers that, ‘I have the new iPhone and you don’t,’ which was not the case for the last four years,” he said.
The iPhone 16 is also set to feature a dedicated camera button, according to a report from Bloomberg’s Mark Gurman.
A major question heading into Monday’s event is how Apple will price the iPhone 16 lineup. For the last four years, the starting price at launch for the new iPhones was $799.
Apple enthusiasts have debated for years whether iPhone models should be cheaper, while investors would prefer maximum profit.
Many analysts, including CFRA Research’s Angelo Zino, say Apple could modestly raise prices “across the board” for the iPhone lineup because of the new AI features and the cost to the company of delivering them.
However, it almost certainly won’t be a major hike because “they don’t want to lose the (customer) enthusiasm because of sticker shock,” Luria said.
Rumor has it that Apple may also announce updates to the Apple Watch and AirPods.
The Apple Watch Series 10 is expected to be thinner than its predecessors but with a larger screen, and the company is also set to roll out new low-end and mid-tier AirPod offerings, Gurman reported, citing unnamed people familiar with the situation.
Those updates would follow new software offerings for both devices that Apple announced at its annual developers conference in June.
AirPods users will be able to answer or decline a call with just a nod or shake of their head. And new vital sign tracking on Apple Watch can notify users when they may be getting sick, based on signals like body temperature and heart rate.
–Samantha Kelly and Ramishah Maruf contributed to this report.
