There are many announcements at WWDC, but the spotlight is on AI news
Ming-Chi Kuo believes Apple will announce big AI improvements requiring the iPhone 16 at the WWDC keynote, but it may be a while before the bigger features are fully rolled out.
In an online Q&A post on Medium, Kuo summarized that Apple's WWDC AI strategy is based on integrating useful, on-device AI into nearly every aspect of the OS and apps, though he predicts that bigger benefits like server-side LLM and iPhone update cycles will be fully realized by the end of this year.
Kuo expressed confidence that Apple's focused efforts to integrate Apple Intelligence technology into its apps and OS will give it an “advantage” over competitors in user interface design. While improvements to Siri will be a key highlight, the next iPhone lineup may see on-device LLM technology constrained by the 8GB RAM limit.
Apple is expected to utilize both on-device and server-side LLM to significantly improve Siri's responses to user inquiries.
Think long term
Users will see noticeable improvements after the release of iOS 18. However, Kuo doesn't believe the company has yet achieved a breakthrough that will exceed market expectations.
Kuo was skeptical that the new iPhone hardware and operating system coming in fall 2024 will spark a supercycle of user turnover, but he expects that Apple's investments in recent years to strengthen its machine learning and AI capabilities will pay off over time.
Kuo noted that his research suggests that iPhone shipments in the second half of 2024 may be slightly lower than the same period in 2023. He suggested that sales of the new iPhones could improve if additional features are introduced in OS updates through 2024 and 2025.
He added that cloud-based LLM models typically take longer to train, which could mean that the full rollout of Apple's server-side AI solution will be phased rather than fully implemented at launch.
Kuo said the significant revenue and profit growth from upcoming AI capabilities may take longer to be fully realized. He predicted the company will soon achieve “parity” with its competitors in the AI space, but expected WWDC to dispel any notion that the company is rushing to “catch up” to its industry peers.
When asked about partnerships with AI companies, Kuo downplayed the importance of using outside companies, saying he believes Apple will focus such partnerships primarily on a “wrapper model” that interfaces with users and apps.
Apple recently reportedly signed a deal with OpenAI to power on-device AI services.
