By Max A. Cherney, Kenrick Cai
CUPERTINO, California (Reuters) -Apple on Monday unveiled its artificial intelligence-boosted iPhone 16, showing off the long-awaited device hours after Chinese rival Huawei's tri-fold phone began racking up orders.
"The next generation of iPhone has been designed for Apple Intelligence from the ground up. It marks the beginning of an exciting new era," Chief Executive Tim Cook said at a product launch.
Apple and technology companies around the world are racing to add AI to products, and phones are expected to be one of the most important battlegrounds. The Cupertino, California-based company also is betting the AI feature will drive consumers to upgrade amid a slowdown in iPhone sales.
Apple Intelligence, the company's AI software, will be used to improve its personal assistant, Siri, as well as enhancing features such as understanding and identifying objects captured by the phone camera.
"Apple Intelligence marks the start of a new era for Siri and makes it more natural, more contextually relevant and more personal to you," said Apple's software engineering chief, Craig Federighi.
A test version of Apple Intelligence will be available in the U.S. version of English next month. It will be available for other localized versions of English in December, with versions in languages including Chinese, French, Japanese and Spanish next year.
The iPhone 16 will use the new A18 chip and have an aluminum back, as well as a new customizable button that can be used for camera controls. The iPhone 16 will start at $799 and the iPhone 16 Plus will start at $899.
Apple also unveiled iPhone 16 Pro and 16 Pro Max, titanium models with a faster chip, the A18 Pro, and more AI capability, such as offering suggestions on how to set up a photo shoot more effectively and audio-editing capabilities aimed at professional-level video production. The iPhone 16 Pro will start at $999 and the 16 Pro Max starts at $1,199.
Apple's new iPhone chips use the latest version of Arm's architecture that includes specific features to speed AI applications.
"Existing iPhone users who have had their device for 3-4 years will definitely be enticed to upgrade, even if some things are rolling out later, as this will future-proof their device for AI," said International Data Corp analyst Nabila Popal.
"While it's a great list of upgrades, it's a long-term play and will have a huge impact starting next year once language support extends and more use cases roll out," Popal added.
Apple shares (NASDAQ:AAPL) were down 0.2% in late afternoon trading.
Huawei's website showed on Monday that it had garnered more than 3 million pre-orders for its Z-shaped tri-fold phone. This underscores Huawei's ability to navigate U.S. sanctions and solidifies its position against Apple in China, where consumers are hankering for more AI features and are willing to pay for them.
WATCHES AND AIRPODS
Apple also unveiled new Watches and AirPods with health-focused capabilities, as well as hardware-design improvements. Apple highlighted the Watch's ability to discover longer-term health conditions such as sleep apnea as well as detecting and responding to emergencies such as a fall.
As it updated AirPods, Apple rolled out hearing-aid features that it has submitted for U.S. regulatory review.
Apple fans globally have been waiting to see the new phones with AI. IPhones accounted for more than half of Apple's $383 billion sales last year.
"While most of the features will start in the U.S., they will also help Apple stay competitive against fast-moving competitors in China," said D.A. Davidson analyst Gil Luria. "While Android phones may have some of these features, Apple has packaged them well and will be able to market them far more broadly."
Apple Intelligence must be approved by Beijing in order to be released in China. In July, OpenAI blocked access to ChatGPT in China, and Apple has not announced an AI partner for China.
"Apple fell out of the list of top five smartphone vendors in China in Q2," said eMarketer senior technology analyst Gadjo Sevilla. "It was the first time that China's domestic smartphone firms held all five spots. Since Apple Intelligence still needs to be approved by Beijing for a rollout in China, it will likely not initially be a key driver for adoption in the region."
In China, Apple aggressively slashed prices earlier this year, prompted by government restrictions and increased domestic competition.
The iPhone 16 lineup is the first Apple smartphones designed around these AI features though those are expected also to be available on iPhone 15 Pro and Pro Max, the top-end versions of the previous-generation devices.
Rivals including Alphabet (NASDAQ:GOOGL)'s Google are also showcasing AI features to try to upend Apple's dominance in the high-end smartphone market.
Google, developer of the Android operating system which competes with Apple's iOS, focused its Pixel smartphone rollout event in August on AI features including Gemini Live, which allows users to hold live voice conversations with a digital assistant. Many of the AI features Google announced were also rolled out to the Android-based devices made by manufacturers such as Samsung (KS:005930) and Motorola (NYSE:MSI).
In June, one week after its developer conference, Apple said it would delay the release of AI-powerd features in Europe due to European Union tech rules.
Huawei has scheduled an official announcement of its Mate XT phone on Tuesday in China.