[New York Diary] Apple's First AI Phone Lacking 'AI'... Is Apple Past Its Prime? Or Still Apple?

$3.3829 trillion, approximately 4,506 trillion Korean won. This is the market value of Apple, the world's largest company by market capitalization. There is a considerable gap compared to Microsoft (MS, $3.2006 trillion), ranked second, and Nvidia ($2.9215 trillion), ranked third. However, judging solely by the 'iPhone 16' unveiled on the 9th (local time), it does not seem easy for Apple to maintain its position as the number one company by market cap. Since the death of its founder Steve Jobs, Apple has consistently faced criticism for a lack of innovation, but the market reaction to the iPhone 16 is particularly cold.

Apple has emphasized innovation points every time it released a new iPhone in the past. The introduction of the new display design 'Dynamic Island,' the adoption of a USB-C charging port, and the use of titanium materials all received considerable praise in the market. However, the iPhone 16 series announced this time is being evaluated as lacking noticeable improvements. Various online communities have many voices saying they will wait for the 'iPhone 17' series, which is expected to be released next September.

Apple's ambitious first artificial intelligence (AI) service has also been met with disappointment. The much-anticipated AI service, 'Apple Intelligence,' will only be available about a month after the iPhone 16 launch. Apple CEO Tim Cook's statement that the iPhone 16 was designed for Apple Intelligence now seems hollow. Critics argue that the launch of the iPhone 16 and the AI service should have been synchronized. The AI service is scheduled to be piloted in the U.S. starting with English in mid-October. AI services based on Chinese, French, Japanese, Spanish, and other languages will be released next year. The release date for the Korean language AI service has not even been announced. This late AI service launch is particularly disappointing, especially as Apple is already trailing behind competitors like MS and Google in the generative AI race, earning the label of an 'AI latecomer.'

It is ironically another crisis Apple faces that Korea was included as a first-wave launch country for the first time. Analysts interpret this as a strategy to boost initial sales by including Korea as a first-wave launch country after Apple's market share in China, where it had consistently invested effort, declined. The iPhone has been hit hard by the 'patriotic consumption' trend in China due to the U.S.-China trade conflict. According to market research firm Counterpoint Research, Apple's market share in the Chinese smartphone market fell from 19.7% in Q1 last year to 15.7% in Q1 this year. Its smartphone sales ranking also dropped from first to third during the same period. Considering that China accounts for about 20% of Apple's total revenue, the patriotic consumption trend in China is a critical blow to Apple. It also seems no coincidence that Berkshire Hathaway, led by investment guru Warren Buffett, sold Apple shares worth as much as $90 billion in the first half of the year.

Of course, in the IT industry, the phrase "Don't worry about Apple" has circulated like a proverb since the first iPhone launch in 2007. Some on Wall Street are optimistic that Apple could surpass a $4 trillion market cap depending on the performance of Apple Intelligence, which is set to launch next month. This expectation reflects the hope that the increasingly lengthening iPhone replacement cycle could shorten again depending on the competitiveness of the new AI service. The market's attention is focused on Tim Cook, who has led Apple for 13 years since Steve Jobs' passing. When he became Apple's CEO in August 2011, Apple's market cap was $341 billion, about one-tenth of today's level. After the release of the iPhone 16, which shows no signs of innovation, opinions are divided between "Apple is past its prime" and "Still, Apple is Apple." It remains to be seen where Apple under Tim Cook's leadership will go.