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apple Analysts told CNBC that the company is looking to grow its profitable services business and may charge users up to $20 for its advanced artificial intelligence features.
The Cupertino giant plans to roll out its upcoming AI system, “Apple Intelligence,” to select of its devices later this year.
When Apple unveiled its AI system in June, it also promised features like improved Siri voice assistant and automated email and image generation. These features will be rolled out gradually and won’t be available initially in places like China and Europe, analysts say, and Apple may charge subscriptions for more advanced apps.
Neil Shah, a partner at Counterpoint Research, said investing in AI is expensive and that Apple wants to pass the costs on to users.
“Software and services make it more advantageous for Apple to pass that on through the Apple One subscription model,” Shah said in an interview with CNBC last week.
Apple One costs $19.95 per month and gives users access to a range of Apple services, including Apple Music.
Shah said Apple could charge $10 to $20 for Apple Intelligence (possibly as part of Apple One), which offers more premium AI features.
Apple’s services division, which generated revenue of $24.2 billion in the June quarter, is an outlier as many hardware companies have struggled to monetize their software.
“Apple is one of the few connected-device companies that has successfully generated revenue from the value-added services it offers,” Ben Wood, research director at CCS Insight, told CNBC this week.
“As a result, Apple has set a precedent that users must pay for more premium services. Given this, it is possible that Apple may choose to charge for more advanced features within its Apple Intelligence offering.”
Wood added that Apple Intelligence could give the US giant the option to launch a subscription service that bundles a range of services together for a single price.
“But Apple will similarly be reluctant to dilute subscription revenues for individual products,” he said.
It’s not uncommon for technology companies to charge for AI services. OpenAI, for example, charges a subscription fee for its more advanced ChatGPT features. Microsoft The AI Copilot tool is available for a fee.
Apple’s biggest rival, Samsung, has already begun rolling out an artificial intelligence service known as “Galaxy AI” but is still considering different revenue models for the software, the company’s mobile chief told CNBC last month.
Shah said AI is an opportunity for Apple to further solidify its already loyal customer base, as Apple Intelligence learns from user behavior and becomes more personalized.
“The beauty of AI is [it] “Android is learning more and more about its users, and since you can’t bring your own models from Apple to Android, you’re locked into the model itself,” Shah said.
“So they start using it more and more, they get used to it, and Apple is successful in monetizing it.”
