2 weeks Ago By Ben Lovejoy
I’m often skeptical about survey results. There are small-scale ones, where the claimed trends are actually within the margin of error for the sample size, and even in larger ones there’s still ample scope for the results to be way less meaningful than they might seem. I have to say that Morgan Stanley’s survey on consumer attitudes to Apple Intelligence triggered my doubtometer, as the rosy picture it paints doesn’t seem a very good match for the current state of play .
.. Apple Intelligence survey is likely meaningless The investment firm found that nearly 80% of US consumers with a compatible iPhone have “engaged” with Apple Intelligence over the past six months.
That may or may not be true: the average non-techy iPhone user probably doesn’t have a good handle on which features are and aren’t powered by AI. Then there’s the perceived importance of AI features. Per Seeking Alpha’s summary: Nearly 42% of respondents said it’s extremely or very important for their next iPhone to have Apple Intelligence; and 54% of respondents who are likely to upgrade in the next 12 months said it’s extremely or very important for their next iPhone to have Apple Intelligence.
What do these numbers mean. Do they mean it’s important to have the existing AI features? Or the ones Apple has promised? If the latter, which ones? Or does neither apply, and they simply think that AI is a big thing in general so they ought to have it? Most bemusingly of all, the firm reports that 80% of iPhone users are willing to pay for Apple Intelligence features, and that the average price they would pay is $9.11 per month.
Again, the crucial question is: For what? I can’t believe anyone would pay nine bucks a month for the existing features, so what would they pay for? We don’t know. For all these reasons, I don’t think the survey tells us anything useful. We likely will pay for Apple Intelligence But will Apple at some point start charging for Apple Intelligence? Almost certainly, for two reasons.
First, generative AI models are expensive to run, and Apple isn’t exactly noted for its generosity when it comes to freebies. The free iCloud tier, for example, has remained at 5GB despite the fact that this would now back up 4% of the lowest storage tier iPhone the company sells. (Emergency SOS via Satellite is currently a rare exception, where the company clearly thinks it’s more valuable as a source of great PR than it would be as a revenue stream.
) Second, service revenue continues to grow ever more important to the company. Last year, for example, Services accounted for almost a quarter of AAPL revenue, with gross profit margins of 73%. Admittedly that has so far included $20B+ of revenue from Google, where the costs are essentially zero, but Apple’s other services are still a massive business on their own.
For both reasons, it’s a near certainty that Apple will end up adopting the same freemium model as other generative AI services: a free tier with limited usage, and one or more paid tiers for more extensive use. That may work out in our favor Of course, free is an excellent price, and we’d all rather Apple Intelligence remain so. But the company’s undoubted plans to make money from it may actually work out in our favor.
We’ve all seen how motivated Apple has been to improve Siri as a free service between 2011 and now, which is to say not at all. If Apple hopes to persuade us to pay for AI, then it will have to make it worthwhile. The company will need to be able to compete with the existing freemium AI services like ChatGPT and Gemini, and it will need to remain competitive as other services continue to develop new capabilities.
In short, the only way any of us are ever going to pay for Apple Intelligence is if the company starts delivering on those big promises for an all-new Siri. If it can do so, I’ll pay without too much muttering. I currently use several different AI models, paying for them sporadically when I hit the free usage limits.
(For the avoidance of doubt, this does not include using AI to do any of my writing.) If an all-new Siri could do everything they do, then the convenience of doing everything through that would be persuasive. The Apple ecosystem for the win again.
But only if Apple Intelligence delivers everything currently promised, and only if it continues to keep pace with competing AI systems. That gives Apple the motivation that has been missing for Siri all of these years. What features would persuade you to pay for a Siri Pro service? Let us know in the comments.
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