Apple, having established its presence in China for years, seems to be facing an unprecedented challenge. On October 23, the drastic price drop of the iPhone 15 series became a trending topic on Weibo.
On various major e-commerce platforms in China, the iPhone 15 series saw its prices fall below the official website's listed prices shortly after its release. By the eve of the "Double 11" shopping festival, all versions of the iPhone 15 were selling at discounted rates, with some offering nearly a thousand yuan off.
In terms of sales, Apple was surpassed by Huawei in the weekly sales from October 2 to October 8. According to Counterpoint, the sales of the iPhone 15 series in China dropped by 4.5% compared to the iPhone 14 over the same 17-day period after launch. Excluding the impact of the iPhone Plus, which was released three weeks later than usual last year, the decline exceeds 10%.
This has caused Apple, a dominant player in the Chinese market for years, to grow anxious. On October 16, Tim Cook announced his visit to Chengdu, marking his second trip to China this year, underscoring the importance of China as a key market for Apple.
Apple urgently needs to win back the hearts of consumers. And its weapon remains innovation, especially in AI.
Many people's first interaction with AI (Artificial Intelligence) was "playing" with Apple's Siri. This intelligent voice assistant debuted on the iPhone 4s 12 years ago, making chatbots a sensation.
However, over the years, Siri's intelligence seems to have stagnated, often being jokingly referred to as "artificially dumb." Apple appears to have missed the boat in the AI race.
As the world's most valuable tech giant, Apple is lagging behind competitors like Google, Microsoft, Meta, and Amazon, especially in generative AI.
Apple is striving to catch up, which is essential for it to maintain its global lead in smart devices.
Facing the wave of generative AI, Apple is catching up, developing a ChatGPT-like product internally and introducing a generative AI chatbot named "Apple GPT."
A revamped Siri, powered by AI technology, is expected to debut by 2024, with AI being integrated into as many apps as possible, including Apple Music and productivity apps.
Recent reports also suggest that Apple plans to spend $1 billion annually to develop its generative AI products.
However, this doesn't seem to be a substantial investment. Analyst Guo Mingchi from Tianfeng International Securities believes that Apple needs to invest several billion dollars annually to catch up with competitors. If Apple truly plans to spend only $1 billion annually on generative AI development, he's concerned about the prospects of Apple's generative AI endeavors.
Guo's assessment is based on the fact that Apple's average annual cost of purchasing AI servers alone exceeds $1 billion, not including labor costs, infrastructure operating expenses, etc.
His latest survey indicates that Apple expects to purchase 2,000-3,000 AI servers in 2023 and 18,000-20,000 in 2024. Assuming Apple buys the most common NVIDIA HGX H100 8-GPU for generative AI training and inference, costing about $250,000 each, Apple will spend at least $620 million in 2023 and $4.75 billion in 2024 on AI server procurement alone.
Regardless, with Apple increasing its investment and application in generative AI, more of its products will be AI-powered in the future.
Wang Peng, Deputy Researcher at the Beijing Academy of Social Sciences, told Wall Street News that in the fiercely competitive smartphone market, mobile manufacturers can seek differentiated competition and open up new innovative fields through self-developed AI models, thereby enhancing their brand image and market competitiveness.
Therefore, against the backdrop where both hardware and software innovations in current smartphones have hit a bottleneck, the application of AI models is an important trend for major smartphone brands.
Ivan Lam, a senior analyst at Counterpoint, told Wall Street News that the application of AI models is a topic that mobile manufacturers must take seriously. Each manufacturer varies in terms of the progress, R&D investment, and adaptation points of AI models.
Currently, Huawei is making rapid progress in the application of AI models, which is related to its investment scale in the AI model industry and its closeness in the construction of the AI industry chain. In addition, manufacturers like vivo and Xiaomi are also accelerating the application of AI models.
Guo Mingchi stated that Apple's AI infrastructure computing power is lower than major competitors like Google and Microsoft. To catch up, Apple must possess superior software development capabilities.
However, IDC China's senior analyst Guo Tianxiang also pointed out that the actual use scenarios of AI models by mobile manufacturers have not yet been seen, and most are still accessed through voice assistants. It will take time for widespread consumer applications. Meanwhile, manufacturers face challenges in processor computing power distribution and power consumption.
Apple, which has always led technological and application trends for years, is being forced to make changes in R&D and the supply chain due to its setbacks in the Chinese market.
Whether it's smartphones or artificial intelligence, the challenges and competition Apple faces are growing. Cook will inevitably have to confront formidable opponents like Huawei and Microsoft, as a new tech wave emerges.
