Apple needs to make the iPhone cool again. Today is its chance

Apple's iPhone has not offered significant reasons for users to upgrade in the past four years, causing concern for the tech giant's core business. However, the upcoming Worldwide Developer Conference (WWDC) presents an opportunity for Apple to reverse this trend and regain its competitive edge.

Last year, the iPhone generated more than half of Apple's total revenue, but sales growth has been sluggish as customers delay upgrading their devices. This prolonged upgrade cycle has been particularly problematic for Apple, given the challenges it faces in the Chinese market and the ongoing antitrust lawsuit.

To revitalize iPhone sales, Apple is expected to unveil new artificial intelligence (AI) features at the WWDC. These AI capabilities have the potential to enhance Apple's products and align the company with its tech rivals that have already embraced AI. Considering the importance of the iPhone to Apple's overall business, introducing compelling AI features ahead of the release of the iPhone 16 in the fall could be a game-changer for the company.

While Apple remains a formidable tech powerhouse, analysts emphasize the need to rejuvenate iPhone sales for sustained growth. With the WWDC presentation, Apple must communicate why consumers should invest in the iPhone 16 and avoid just promising future innovations.

Investors are also eager to see how Apple competes in the rapidly evolving landscape of AI technology. The company faces stiff competition, as demonstrated by Nvidia surpassing it as the second most valuable tech company. Failure to showcase Apple's AI capabilities and strategies against its competitors could undermine its position as a technology leader.

Apple has previously incorporated AI subtly into its products, benefiting users without drawing much attention. However, this time the focus is on consumer-facing AI updates. The introduction of generative AI capabilities for iOS, potentially improving Siri, could be a significant development. By harnessing AI, Siri could perform tasks like searching pictures from years ago or answering detailed queries about various topics. Creating a more personalized and intelligent assistant would be a substantial leap forward.

In line with competitors, Apple could also introduce additional tools that utilize generative AI, such as email summarization or drafting. While Apple may not always be the first to adopt new technology, it typically excels in delivering a premium experience. This time, however, Apple must exceed consumer expectations and offer features that outshine those of rivals like Samsung and Microsoft.

Apart from the features themselves, whether these AI tools will be accessible on older iPhone models or exclusively on newer devices slated for release in the fall remains a major question. In the latter case, assuming the features are captivating, it could potentially trigger a significant iPhone upgrade cycle and have a ripple effect throughout the company.

The market response hinges on Apple introducing compelling features and limiting backward compatibility. An underwhelming release with backward compatibility for older iPhones may lead to a drop in Apple's stock, while exciting new technology that prompts users to upgrade in the fall could lead to a substantial stock boost. As Apple's stock currently hovers around $197, an enticing upgrade cycle could drive the shares up to $240, whereas lackluster features may result in a decline to $160 per share.

Ultimately, the unveiling of AI advancements at WWDC presents a crucial opportunity for Apple to reignite customer interest in the iPhone and reinforce its position in the technology landscape. The company needs to demonstrate its commitment to innovation and deliver features that not only match but surpass those of its competitors. By doing so, Apple can regain momentum and foster a new wave of iPhone upgrades, benefiting both its business and investors.