iPhone 15 prices plummet, Apple is in a hurry

Author | Huang Yu

After many years in China, Apple seems to have never encountered such a huge dilemma. On October 23rd, the prices of the entire iPhone 15 series skyrocketed on Weibo's hot search.

On major e-commerce platforms in China, shortly after the release of the iPhone 15 series, the prices dropped below the official website price. By the eve of the Double 11 shopping festival, the unofficial prices of all versions of the iPhone 15 series had fallen, with discounts of nearly a thousand yuan.

In terms of sales, Huawei has surpassed Apple in the single week sales from October 2nd to October 8th. According to Counterpoint, the sales of the iPhone 15 series in China decreased by 4.5% compared to the same period of the iPhone 14, excluding the impact of the iPhone Plus, which was released three weeks later than previous years. The decline in sales exceeded 10%.

This has made Apple, which has been a dominant player in the Chinese market for many years, feel anxious. On October 16th, Cook announced his visit to Chengdu, marking his second visit to China this year, demonstrating the importance of China as a key market for Apple.

Apple urgently needs to regain the hearts of consumers. And Apple's weapon is still innovation, especially in AI.

For many people, their first interaction with AI was "teasing" Apple's Siri. This intelligent voice assistant made its debut on the iPhone 4s 12 years ago as a key feature, making chatbots popular at the time.

However, over the years, Siri's intelligence level seems to have not made significant progress and is often ridiculed as "artificially stupid". In the AI race, Apple seems to have missed the opportunity to lead.

As the world's largest technology giant by market value, Apple has fallen behind competitors such as Google, Microsoft, Meta, and Amazon, mainly in generative AI.

Apple is working hard to catch up, which is a necessary choice for it to maintain its global leadership in smart terminals.

Facing the trend of generative AI, Apple is catching up and is internally developing a product similar to ChatGPT, as well as a generative AI chatbot called "Apple GPT".

The new and improved version of Siri, which uses AI technology, is expected to be released as early as 2024 and will incorporate AI into as many applications as possible, including Apple Music and productivity applications.

The latest news also shows that Apple plans to spend $1 billion annually to develop its generative AI products.

This is not a large enough number. Guo Mingchi, an analyst at TF International Securities, believes that Apple needs to invest at least billions of dollars annually to have a chance to catch up with its competitors. If Apple really only intends to spend $1 billion a year on developing generative AI, he is very worried about the prospects of Apple's generative AI business. Guo Mingchi's judgment is based on the fact that Apple's annual cost of purchasing AI servers alone exceeds $1 billion, not including labor costs, infrastructure, and operational expenses.

His latest survey indicates that Apple is expected to purchase 2,000-3,000 units of AI servers in 2023 and 18,000-20,000 units in 2024. Assuming Apple purchases the most common NVIDIA HGX H100 8-GPU used for generative AI training and inference, at a cost of approximately $250,000 per unit, Apple will spend at least $620 million and $4.75 billion on AI server procurement in the next two years, respectively.

However, regardless of the cost, as Apple increases its investment and application of generative AI, more of Apple's products will be empowered by AI.

Wang Peng, Deputy Researcher at the Beijing Academy of Social Sciences, told Wall Street News that in the fierce competition in the smartphone market, smartphone manufacturers can seek differentiation and open up new areas of innovation by developing their own AI models, thereby enhancing their brand image and market competitiveness.

Therefore, in the current context where both hardware and software innovation in smartphones have encountered bottlenecks, the application of AI models is an important trend for major smartphone brands to innovate.

Ivan Lam, Senior Analyst at Counterpoint, told Wall Street News that the application of AI models is a topic that smartphone manufacturers must take seriously. Each manufacturer has differences in the progress of AI model implementation, research and development investment, and adaptation nodes.

Currently, Huawei has made rapid progress in the application of AI models, which is related to Huawei's investment scale in the AI model industry and its closeness in the AI industry chain construction. In addition, manufacturers such as Vivo and Xiaomi are also accelerating the application of AI models.

Guo Mingchi stated that Apple's AI infrastructure computing power is lower than that of major competitors such as Google and Microsoft, and in order to catch up with competitors, Apple must have superior software development capabilities.

However, Guo Tianxiang, Senior Analyst at IDC China, also pointed out that the actual usage scenarios of AI models by smartphone manufacturers have not been seen yet, and most of them are still accessed through voice assistants. It will take time for widespread consumer applications. At the same time, there are challenges for manufacturers in terms of processor computing power distribution and power consumption.

Apple, which has been leading the trend of technology and applications for many years, is facing setbacks in the Chinese market, which is forcing the company to make changes in research and development and the supply chain.

Whether it is smartphones or artificial intelligence, the challenges and competition faced by Apple are also increasing, and Cook will have to face strong competitors such as Huawei and Microsoft. A new wave of technology is emerging.