Apple ‘Let Loose’ New iPads, But Revenue And AI Direction Still On The Loose

At its ‘Let Loose’ event on Tuesday evening (or early morning for the Americas), Apple unveiled two new iPad models – an OLED iPad Pro with the new M4 chip and the iPad Air – along with Apple Pencil Pro and the new Magic Keyboard.

The ‘all about iPads’ announcement was a departure from its streak of regular updates to the iPad since 2010. The last iPad announcement came in October 2022.

Also, the short turnaround time between its ‘rocket chip’ M4 and the M3 chip, which came out about six months ago, didn’t go unnoticed. Is Apple trying to finally get its share of the AI pie?

If we were to sum up the event, everything is now "smarter than ever" and "thinner than before," fulfilling every teenage girl's wish, metaphorically speaking.

The ‘Let Loose’ event also comes weeks ahead of the Microsoft Build event slated for the end of this month, where the Satya Nadella-led company is expected to release an AI chip expected to kick M3’s ass. It looks like Apple may have beaten them to the punch.

Ahead of Build 2024, Microsoft will also be holding an AI event on May 20th in which Nadella is expected to speak about the company’s “AI vision across hardware and software,” reported The Verge.

Financial Woes

CEO Tim Cook labelled it the "biggest day for iPads," a statement underscored by the iPad's recent revenue decline to US$5.56 billion last quarter, missing the analyst estimate of US$5.91 billion.

In the hopes that today’s announcement would revive the sales for iPads, Apple's finance chief Luca Maestri expressed optimism during an earnings call on May 2, stating that the company anticipated double-digit year-over-year percentage growth in iPad sales for the current quarter.

Investors are worried about Apple's slowdown in China, which accounts for about 20 per cent of the company’s total sales, because consumers there are favouring local smartphone brands, and the government is restricting foreign technology in some places.

The other reason for Apple’s fall in revenues is the surmounting legal troubles over the anti-trust lawsuits in two key markets -- Europe and the US.

For Indian users however, the big question is: When will India become a major market for Apple? Even though Apple’s global sales remained flat in 2023, some stability to revenues was maintained by countries like India, which became the fifth smartphone market to exceed 10 million iPhone unit sales in a year, highlighting the market’s growing importance for Apple, as per Counterpoint Research. 

When comparing India’s growth to China’s, we must look at what the company made from China in 2023 -- US$72.5 billion. To match that in India even by 2030, Apple's revenue here would need to grow by around 40 per cent every year for the next six years. 

While it's technically possible, it's quite unlikely as India's wealth is concentrated among a small group, and there are challenges in growing sales to the wider population.

AI Push

Apple said that the iPad Air is “an incredibly powerful device for AI.” When it comes to artificial intelligence, Apple has been keeping its cards pretty close to its chest.

During the peak of the AI frenzy when companies raced to release products, Apple, known for its reluctance to follow trends, has been deliberate in showcasing its generative AI capabilities.

Cook said in the earnings call that Apple will stand out from its AI rivals by tightly integrating hardware and software, using in-house chips, and making privacy and security a priority.

There has been much clamour and speculation, like how it’s spending upwards of US$1 billion on AI or the ‘Ajax’ framework for large language models, but the company doesn’t have much to show for it.

Currently, most of its AI offerings run on either the iPhone or Apple Watch.

The investors too have grown impatient due to the lack of any AI headway by the company. Microsoft's stock has been the biggest beneficiary of its AI announcements and partnership with OpenAI. So much so that it even overtook Apple as the most valuable company in the world.

Rumour has it, Siri might finally get an AI brain or Apple might get in bed with Google or OpenAI. Till then, these are just murmurs down the rumour mill.