Apple embraces the AI craze with its newly unleashed iPhone 16 lineup

Apple on Monday charged into the artificial intelligence craze with a new iPhone lineup that marks the company's latest attempt to latch onto a technology trend and transform it into a cultural phenomenon.

The four different iPhone 16 models will all come equipped with special chips needed to power a suite of AI tools that Apple hopes will make its marquee product even more indispensable and reverse a recent sales slump.

Apple's AI features are designed to turn its often-blundering virtual assistant Siri into a smarter and more versatile sidekick, automate a wide range of tedious tasks and pull off other crowd-pleasing tricks, such as creating customized emojis within seconds.

After receiving a standing ovation for Monday's event, Apple CEO Tim Cook promised the AI package will unleash "innovations that will make a true difference in people's lives."

But the breakthroughs won't begin as soon as the new iPhones—ranging in price from $800 to $1,200—hit the stores on Sept. 20.

Most of Apple's AI functions will roll out as part of a free software update to iOS 18, the operating system that will power the iPhone 16 rolling out from October through December. U.S. English will be the featured language at launch but an update enabling other languages will come out next year, according to Apple.

It's all part of a new approach that Apple previewed at a developers conference three months ago to create more anticipation for a next generation of iPhones amid a rare sales slump for the well-known devices.

Since Apple's June conference, competitors such as Samsung and Google have made greater strides in AI—a technology widely expected to trigger the most dramatic changes in computing since the first iPhone came out 17 years ago.

Just as Apple elevated fledgling smartphones into a must-have technology in 21st-century society, the Cupertino, California, company is betting it can do something similar with its tardy arrival to artificial intelligence.

In an attempt to set itself apart from the early leaders in AI, the technology being baked into the iPhone 16 is being promoted as "Apple Intelligence." Despite the unique branding, Apple's new approach mimics many of the features already available in the Samsung Galaxy S24 released in January and the Google Pixel 9 that came out last month.

"Apple could have waited another year for further development, but initial take up of AI-powered devices from the likes of Samsung has been encouraging, and Apple is keen to capitalize on this market," said PP Foresight analyst Paolo Pescatore.

As it treads into new territory, Apple is trying to preserve its longtime commitment to privacy by tailoring its AI so that most of its technological tricks can be processed on the device itself instead of relying on giant banks of computers located in remote data centers. When a task needs to connect to a data center, Apple promises it will be done in a tightly controlled way that ensures no personal data is stored remotely.

While corralling the personal information shared through Apple's AI tools inherently reduces the chances the data will be exploited or misused against a user's wishes, it doesn't guarantee iron-clad security. A device could still be stolen, for instance, or hacked through digital chicanery.

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For those seeking to access even more AI tools than being offered by the iPhone, Apple is teaming up with OpenAI to give users the option of farming out more complicated tasks to the popular ChatGPT chatbot.

Although Apple is releasing a free version of its operating system to propel its on-device AI features, the chip needed to run the technology is only available on the iPhone 16 lineup and the high-end iPhone 15 models that came out a year ago.

That means most consumers who are interested in taking advantage of Apple's approach to AI will have to buy one of the iPhone 16 models—a twist that investors are counting on will fuel a surge in demand heading into the holiday season.

The anticipated sales boom is the main reason Apple's stock price has climbed by more than 10% since the June developers conference, including a slight uptick Monday after the shares initially slipped following the showcase for the latest iPhones. Wedbush Securities analyst Dan Ives was so impressed with what he saw Monday that he predicted the new AI iPhones will propel Apple's market value through the $4 trillion threshold next year for the first time. That forecast translates into increase of roughly 20% from Monday's closing price of $220.91 for Apple's stock.

Besides its latest iPhones, Apple also introduced a new version of its smartwatch that will include a feature to help detect sleep apnea as well the next generation of its wireless headphones, the AirPods Pro, that will be able to function as a hearing aid with an upcoming software update.

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