Previously, it was common to hear opinions that Apple should focus on the iPhone, the product that brings the company the most profit and can “pull” many other initiatives of the manufacturer. However, according to analyst and well-known Apple insider Mark Gurman of Bloomberg, it is not the sales of the smartphone that the Cupertino company will have to “tinker” with this year.

Mr. Gurman writes about this in his weekly column Power On.

However, the iPhone is not doing as well as we would like. The desired sales growth has been absent for the fifth quarter in a row: since the iPhone 14, whose production was crippled by the remnants of COVID-19, and the launch of the new line did not significantly improve sales. The predicted absence of major changes in the next lineup is already calling into question the huge success of the smartphone category at the end of the year (there are few optimists on Wall Street). 

However, Apple is still confident that there will be no serious problems with smartphones (and such predictions are often quite correct). In addition, as Mr. Gurman notes, users still have many older models (such as the iPhone 12 or 13) that they would not mind updating. And it makes sense.

Apple has a lot of challenges for 2024, and iPhone sales are not the biggest of them – Gurman

That’s why, according to the analyst, the company faces more significant challenges for 2024. Among them, first of all, is artificial intelligence. Indeed, the frantic pace of AI development in recent years has made a lot of noise, and it is probably hard to find a modern person who hasn’t heard of or tried using a chatbot or image generation.

And Apple, in turn, is preparing. But the further along, the harder it is to jump on this train. By the time the company presents its solutions, ChatGPT will be almost two years old, the “battle” between Microsoft Bing/Copilot and Google Bard will be a year and a half old, and the updated Amazon Alexa will be a year old.

The presentation of Samsung’s new Galaxy S24 lineup is just over a week away, and the Korean competitor has already announced that AI will be the main focus of Galaxy Unpacked 2024. So in the near future, Samsung’s marketing will do its best to emphasize the new benefits.

Apple plans to try to catch up with all this, and it’s not hard to calculate the date of such announcements. Worldwide Developers Conference in early summer is the best event for this. Mr. Gurman has already spoken about this before. Since the beginning of last year, the company has been working on Ajax, its own version of LLM.

Apple has a lot of challenges for 2024, and iPhone sales are not the biggest of them – Gurman

This will significantly improve the Siri experience, add new support features to Pages and Keynote (proprietary Word and PowerPoint), improve playlist automation in Apple Music, etc. Of course, developers will not be forgotten, as Xcode will have more AI assistance, and Apple employees will be able to provide AppleCare assistance more conveniently. However, generative capabilities will still be delayed until next year. It will be difficult to maintain the title of “innovator” in this industry.

And it will not be easy with the hardware. The mixed reality headset, which became the biggest Apple news last year, is almost in stores. Apple Vision Pro is already reaching warehouses in small batches. Selected employees of Apple stores visit the central office to receive training and pass on the knowledge to their colleagues. By the end of the month, the retailers are planning to hold relevant events lasting 3-4 hours. A little later, the stores will start receiving the necessary new equipment.

Obviously, the launch of the headset is in full swing. However, Apple Vision Pro will not become a bestseller in the near future. After the US, Canada, the UK, and China are considered to be the next countries to launch. And we shouldn’t expect large batches anyway (just to remind you that the cost of the new gadget will be $3499, excluding taxes).

Apple has a lot of challenges for 2024, and iPhone sales are not the biggest of them – Gurman

And no matter how successful the launch is, it is what happens after it that matters. And there are plenty of potential problems here: the company will have to offer a convenient online ordering tool, because not every customer can visit an Apple Store (a face scanning app is being developed for this purpose); we should expect some negative feedback, because not every user will be satisfied, and there will be plenty of critics; developers should also be encouraged to work on a relatively small market… Work on this is still ongoing.

However, Apple may make a big announcement this week to “spite” the participants of CES 2024.

Also, don’t forget about iPad and Mac. Last year was the first year for the company’s tablets when they received no updates. Yes, work is underway, but only those inside the company know more about it. The iPad Pro should receive significant improvements, but its price tag is not for everyone (although it will affect the average sales price). The 15-inch MacBook Air was also not enough to maintain the “torque” of Apple Silicon’s first successes. So the marketing strategy for the M3 will have to be worked on.

To this should be added the patent problems with Masimo, which have not ended. Apple Watch disappears and returns to store shelves. Mid-January will continue this red tape. Mr. Gurman predicts the story will be over by the end of this month. And if the company’s legal options are exhausted, we will see a settlement agreement rather than a few more months of fighting.

Apple has a lot of challenges for 2024, and iPhone sales are not the biggest of them – Gurman

Finally, the European story of the DMA (Digital Markets Act) remains a separate challenge. At the beginning of spring, the company will have to share the App Store with third-party solutions in Europe. The same goes for payment methods. This means that users in Europe will be able to download applications not only from the App Store, but also pay for them through third-party payment systems.

An additional problem is that Europe will only be the beginning. Japan is already developing a similar initiative. It’s only a matter of time before other countries join the “party”. For Apple, this means the loss of significant sales revenue. And over time, the App Store may suffer significantly.

Despite all this, Mr. Gurman remains optimistic: 

Despite the challenges, Apple may benefit from the continuing consumer appeal of its products. While the Vision Pro will probably give the company more headaches than dollars, it’s still compelling hardware; the new AI features in iOS 18 will finally get Apple in the game; and major overhauls to the Apple Watch and AirPods will probably sell well over the holidays.

And if all else fails, there’s always old faithful: the iPhone and the $150 billion to $200 billion it brings in annually.