(CNN) – Earlier this year, Apple excited its fans with its artificial intelligence system, Apple Intelligence. Now it's time to prove that it works.
The company is set to unveil the first line of iPhones built specifically for generative AI (which allows users to create text and images) during its annual hardware event, which kicks off Monday at 1 p.m. ET. You can watch the live broadcast here.
The event was advertised with the cryptic tagline “It’s time to shine,” but Apple has so far been tight-lipped about what it means.
Apple is under a lot of pressure ahead of the event to prove that the iPhone 16's new AI features and other upgrades are worth the hype. Apple also needs to convince investors that it hasn't fallen behind in the AI race, as rivals have already rolled out similar features using the new technology.
Since the launch of the 5G-enabled iPhone 12 in 2020, the company has given users few compelling reasons to buy the latest model. Phone cameras have largely advanced to the point where they are sufficient for most people's everyday needs without major hardware changes, and at some point the human eye isn't even capable of perceiving higher screen resolutions.
As a result, sales of the iPhone, which account for half of the company's revenue, have been weak.
The company's stock had also been relatively stagnant until the unveiling of Apple Intelligence, a sign that investors are counting on AI to convince people to buy new iPhones. Apple's stock is up 14% since the June 10 event and nearly 18% since the beginning of the year.
If Apple succeeds, it could profit: About 300 million iPhones worldwide have not been upgraded in more than four years, according to a research note from analyst Dan Ives of investment firm Wedbush last month.
So while Apple is likely to highlight changes to a number of products and services on Monday, such as AirPods or even Apple TV+, “it’s all about the iPhone upgrade cycle, everything else is secondary,” DA Davidson analyst Gil Luria told CNN.
Supporting or starring, this is all we expect from Apple's event.
The company has already hinted at some of the things Apple Intelligence will be able to do: It will enable more natural conversations with Siri, help compose emails, make it easier to find specific moments in photo albums and incorporate users' personal information into its responses. The company's job on Monday will be to show iPhone users what that will look like in real life.
“Expect to see demonstrations of how, within your text thread, you can get summaries,” Luria said. “You’ll know why Tiffany M is fighting with Tiffany R, and you can ask that question within the chat and get an answer. That’s the kind of thing that will get people excited…showing some concrete examples of how people will be able to use Apple Intelligence to do things they couldn’t do before.”
And while it's not unusual for new iPhones to receive an upgraded processor chip, that change may be especially important this year to ensure the iPhone 16 can handle the increased data processing needs that will come with new AI features without compromising battery life.
Luria added that he thinks there could also be a subtle change to the iPhone's appearance, such as a wider display or updated borders, “to get the point across of an upgrade cycle.”
“Something different about the new iPhones that communicates to consumers that ‘I have the new iPhone and you don’t,’ which hasn’t been the case for the last four years,” he said.
The iPhone 16 will also feature a dedicated camera button, according to a Report by Mark Gurmanfrom Bloomberg.
One of the big questions heading into Monday's event is how Apple will price the iPhone 16 line. For the past four years, the launch price for new iPhones has been $799.
Apple enthusiasts have been debating for years whether iPhone models should be cheaper, while investors would prefer to make maximum profits.
Many analysts, including CFRA Research’s Angelo Zino, say Apple may modestly raise prices “across the board” for the iPhone lineup because of the new AI features and the cost to the company of offering them.
However, it is almost certain that it will not be a significant increase because “they do not want to lose the enthusiasm (of customers) because of the price shock,” Luria said.
Apple is also rumored to be announcing updates to the Apple Watch and AirPods.
The Apple Watch Series 10 is expected to be thinner than its predecessors but with a larger display, and the company is also set to launch new low- and mid-range AirPods offerings, Gurman reported, citing unidentified people familiar with the situation.
These updates would follow new software offerings for both devices that Apple announced at its annual developers conference in June.
AirPods users will be able to answer or reject a call with a simple nod of the head. And the new Apple Watch vital signs tracking system will be able to alert users when they are sick, based on signals such as body temperature and heart rate.
-Samantha Kelly and Ramishah Maruf contributed to this report.
