Apple has announced a significant upgrade to Siri, the digital assistant that has been around for nearly 15 years, showcasing the company's intention to compete more aggressively with AI offerings from OpenAI and Google. This new version of Siri is set to roll out in beta later this year—marking a pivotal shift towards enhancing app functionality, answering queries based on the iPhone screen content, and personalizing responses using user context.
In recent years, Apple has faced mounting pressure to revitalize its AI strategy after lagging in the rapidly evolving AI landscape. Investors are particularly keen to see if the company can harness its revamped AI to not only drive iPhone sales but also increase service revenue and develop innovative products. A lingering question remains: Can Apple effectively monetize AI in a way that resonates with consumers?
Barclays analysts conveyed skepticism in a post-event note, stating that while updates seemed progressive, Apple continues to be viewed as a follower in the AI domain, lacking standout applications and a clear monetization approach. There was no immediate response from Apple regarding potential revenue strategies for Siri AI and its broader AI initiatives.
Apple is not alone in grappling with doubts about AI performance; similarly, OpenAI and Anthropic have attracted critical scrutiny regarding their ability to generate sufficient revenue in the face of lofty valuations as they approach public offerings.
Notably, Apple’s revenue has largely stemmed from strong iPhone sales, with the company reporting record earnings driven primarily by demand for the iPhone 17. However, analysts are seeking indications that these AI advancements will lead to increased iPhone upgrades or higher subscriptions for services like iCloud+. Morgan Stanley acknowledged that Apple’s announcements show clearer potential for monetizing AI but characterized the journey as long-term rather than immediate.
The Siri AI features will be accessible on devices as recent as the iPhone 15 Pro. However, estimates indicate that over half of all iPhones in circulation currently lack the necessary hardware for Apple’s latest AI capabilities. Analysts suggest that even if existing users opt for new iPhones this fall, their motivations might revolve around battery life and performance rather than AI functionality.
Paul Schell, a senior analyst with ABI Research, expressed doubts about AI being a primary driver for phone upgrades, contrary to manufacturer expectations. Nevertheless, Apple’s recent developments hint at how new AI features could persuade users to choose higher-end iPhones and subscription plans.
Certain capabilities of Siri AI, such as improved voice recognition and customizable expressive talking styles, will only be available on Apple’s premium models—namely, the iPhone Air and iPhone 17 Pro series. Morgan Stanley estimates that over 1.3 billion iPhones in use lack the processing power required for these enhanced features.
Some AI functionalities related to image generation and home camera descriptions through Apple’s HomeKit will necessitate an iCloud+ subscription.
Apple is setting its sights on transforming Siri from simply answering questions to becoming a vital component of the iPhone ecosystem, similar to the efforts of competitors like Google and Samsung with their respective AI integrations.
The practical applications for Siri AI focus primarily on everyday activities rather than professional productivity—a clear departure from the focus of AI models like ChatGPT and Claude, which cater to business users. According to Carolina Milanesi, a principal research analyst, Siri will assist with common tasks such as responding to texts or locating addresses, reflecting Apple’s intent to prioritize everyday usability over workplace efficiency.
During the announcement, Apple demonstrated Siri’s ability to reference recent text conversations, enabling users to inquire about a friend's new address derived directly from messages. Additionally, Siri can recognize on-screen content, allowing tasks such as retrieving directions based on a visible landmark in a photo, as showcased by Mike Rockwell, Apple's vice president of Siri engineering.
While Apple's latest features may not yet be compelling enough to justify an expensive iPhone purchase or a premium iCloud plan, they could be instrumental in retaining current users. Nabila Popal, a senior director at IDC, noted that the contextual understanding of Siri AI might discourage users from switching to Android, emphasizing the value of the personalized experience built with Siri.
