Apple Could Charge Up to $20 for Advanced AI Features, Analysts Say
Apple, known for its hardware prowess, is looking to boost its services business with the potential introduction of a paid subscription for its forthcoming Apple Intelligence AI system. This strategic move, potentially charging users between $10 and $20 for premium AI features, signals a shift in Apple’s approach to monetizing its software and services.
Key Takeaways:
- Apple Intelligence could be a game-changer for Apple’s services division, which already brought in $24.2 billion in the June quarter, highlighting the company’s success in monetizing software beyond hardware.
- Apple could integrate Apple Intelligence into the Apple One subscription model, priced at $19.95 a month, offering users access to various Apple services including Apple Music.
- Apple’s decision to charge for AI features is not unusual, with companies like OpenAI and Microsoft already implementing subscription models for their advanced AI offerings.
Apple’s AI Ambitions: A Strategic Shift
Apple announced its Apple Intelligence system in June, promising a more advanced Siri voice assistant and features such as automatic email and image generation. However, the rollout will be gradual, with regions like China and Europe initially excluded.
Analysts believe that charging a subscription for advanced AI features could be a strategic move for Apple, citing the high cost of AI investments and the potential for increased revenue.
Neil Shah, partner at Counterpoint Research, stated that “Software and services makes it more lucrative for Apple to pass it on with the Apple One subscription model.”
This move would further solidify Apple’s positioning as a company that successfully monetizes its value-added services, building upon the precedent set by their existing subscription model.
Navigating the AI Landscape: A Comparison With Competitors
Apple’s potential move to charge for AI features aligns with the current trend in the tech industry. OpenAI, for instance, charges a subscription fee for accessing more advanced ChatGPT features, and Microsoft charges for its AI Copilot tool.
However, Samsung, Apple’s biggest rival, is still exploring revenue models for its Galaxy AI services, as confirmed by its mobile boss in a recent interview.
The Power of Personalization: Locking in Customers
The personalized nature of AI, which learns from a user’s behavior, presents a unique opportunity for Apple to further lock in its loyal customer base.
“The beauty of AI is as you use [it] more and more, it learns about you, and you get used to it more and that is where Apple monetization hits,” Shah explained, highlighting the potential for AI to increase user engagement and dependence on Apple’s ecosystem.
The Future of Apple Intelligence: Potential and Challenges
While Apple is poised to capitalize on the ongoing AI revolution, it faces certain challenges. The company will likely need to strike a delicate balance between creating an attractive AI offering and preventing potential revenue dilution from individual product subscriptions.
Analysts believe that Apple could introduce a bundled subscription service with various services under a single price. However, the ultimate success of Apple Intelligence will depend on how successfully the company can position its AI features within its broader services ecosystem while maintaining user satisfaction and retaining its loyal customer base.
