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Apple's Intelligence aims to get users to pony up for new iPhones

Apple (AAPL) kicked off its big push into generative AI with the debut of its Apple Intelligence platform at its Worldwide Developers Conference on Monday.

But if you own an iPhone 15 or older, you’re out of luck.

Apple says you’ll need an iPhone 15 Pro and 15 Pro Max or future iPhone to take advantage of the software. That’s because the iPhone 15 Pro and Pro Max are the only iPhones with processors powerful enough to handle the AI platform.

And despite coming out at the same time as the iPhone 15 Pro and Pro Max, the iPhone 15 and iPhone 15 Plus are equipped with older, less capable chips.

That’s certainly a letdown for people who bought an iPhone 15 this year expecting it to stay updated with the latest software for at least more than a year.

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Apple, however, wins by ensuring that anyone who wants to use Apple Intelligence and doesn’t have its top-of-the-line phones will need to pay up or go without.

Apple is taking a more holistic approach to generative AI than its peers, spreading its Apple Intelligence software out across its existing apps like Photos and Messages and improving the functionality of apps like Siri, which will now be far more responsive and intelligent thanks to both Apple’s AI models and help from OpenAI’s ChatGPT.

It’s an enormous upgrade, and one the company hopes will make older iPhone users want to upgrade sooner than later.

Apple CEO Tim Cook attends the annual developer conference event at the company's headquarters in Cupertino, California, U.S., June 10, 2024. REUTERS/Carlos Barria
Apple CEO Tim Cook attends the annual developer conference event at the company's headquarters in Cupertino, Calif., June 10, 2024. (REUTERS/Carlos Barria) (Reuters / Reuters)

See, one of Apple’s biggest problems is that its phones last a long time. IPhones get years' worth of security and operating system updates. And unless their batteries die or their screens crack, users hold on to them without feeling the need to upgrade every year.

According to a 2023 survey by Consumer Intelligence Research Partners, 61% of iPhone users had their previous iPhones for two or more years. Another 29% held onto their previous phone for three years or more.

UBS analyst David Vogt, meanwhile, says that a recent analysis of 7,500 smartphone users from the US, UK, China, Germany, and Japan found that the average age of consumers’ iPhones is 21 months, up from 19.9 months last year.

By only bringing its AI features to the iPhone 15 Pro and 15 Pro Max, Apple is incentivizing users to ditch their older phones for newer offerings more quickly, speeding up the usual replacement cycle.

“With the advent of Apple Intelligence, we see replacement cycles shrinking, creating a stronger replacement dynamic,” BofA Global Research analyst Wamsi Mohan wrote in a recent investor note.

Still, Apple Intelligence isn’t even available to users yet, and a big part of whether it will drive any sales comes down to how Apple delivers on the promises it made about the software during WWDC.

We’ve seen companies like Microsoft (MSFT) and Google (GOOG, GOOGL) announce and debut their own AI offerings only to have to rework or pull them back following consumer pushback. Microsoft had to make changes to its Recall feature before it even hit the market over concerns that it presented a security risk.

Recall is designed to take screenshots of what you’ve been doing on your PC so you can go quickly and easily access it. But security researchers said it could lead to hackers being able to view your data with ease.

Google, meanwhile, had to address problems with its AI Overview for Search that told users it was alright to do things like add glue to pizza to keep the cheese from sliding off and eat rocks.

Apple will need to ensure that its own AI products don’t run into similar problems, which could keep some users from upgrading.

Now the company just has to wait and see how well its Apple Intelligence works during its early beta periods. We’ll learn how many people actually want to buy their next smartphone based on the software when it lands later this fall.

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Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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