Star Metro - AI and iPhones likely stars of Apple event

The Silicon Valley powerhouse has remained tight-lipped about what is in store at an event dubbed "Awe Dropping" in invitations, but it comes at the time of year Apple typically introduces a new generation of iPhones that drive its revenue.

Despite iPhones maintaining their premium market position, Apple faces mounting pressure to prove it is keeping pace in the generative AI race.

"Apple's perception as being 'late to the AI party' presents a significant challenge," market tracker Canalys said in an analyst note.

While iPhone challengers powered by Google-backed Android have "aggressively advanced AI integration, Apple's slower rollout of first-party AI features has created adoption gaps," with people delaying new iPhone purchases, Canalys added.

Apple introduced its "Apple Intelligence" AI features late last year, but the features underwhelmed users -- particularly the long-awaited improvements to its Siri voice assistant, which remained disappointingly basic.

Looking ahead, Apple reportedly plans to integrate AI into online search next year alongside a Siri overhaul, though the company has not confirmed these reports. Apple is also reported to be partnering with Google to leverage its search and AI expertise.

"I will be surprised if there is a major announcement regarding Apple's AI strategy," Forrester analyst Thomas Husson said in a note.

"I am afraid that Apple's incremental innovation approach with the iPhone 17 will start reaching its limits – especially for those who are hungry for more innovation," he added.

Tuesday's main attraction should be the new iPhone models, headlined by an ultra-thin "Air" variant.

Most analysts view this as a strategic pivot -- Apple is positioning thinness, rather than screen size, as the new premium differentiator.

A super-thin iPhone could also lay the foundation for a foldable version of the smartphone, expected in the coming years.

But the engineering demands of thin phones can make them more costly to produce and shrink battery space.

Prices of the new iPhones in the United States are expected to climb as President Donald Trump's tariffs add to Apple's production costs. Since China remains Apple's primary production hub, these trade policies directly impact costs.

"Apple is navigating a delicate balance between its two largest markets – the US and China – amid rising trade tensions," Canalys said.

"A weaker US dollar now allows Apple to increase prices in the US while maintaining competitive pricing abroad."

The financial impact is already substantial: CEO Tim Cook disclosed that Trump's tariffs cost Apple $800 million last quarter, with an estimated $1.1 billion hit expected in the current quarter.

T.Murray--SMC