When new CEO John Ternus takes the stage Wednesday, Wall Street will be watching to see whether Apple can still produce game-changing hardware and turn virtual assistant Siri into a real contender in the AI race.
Analysts expect Apple to announce at its Cupertino, California, headquarters a new iPhone that folds open like a passport. They said it could quickly emerge as the category leader in the nascent folding phone market, despite an expected price of more than $2,500 and having cameras and processors that may not lead the market.
The company has already announced a deep overhaul of Siri – in part by tapping Google's AI tech behind the scenes – and that may prove to be Ternus' first big success after years of delays. A successful revamp by the end of this year could give Apple a good chance of pulling even with longtime rival Google's Gemini assistant, analysts said.
Investors have largely looked past Apple's slow start in generative AI because of the company's billion-plus device installed base and loyal customer base. Ternus now faces pressure to convince consumers that Apple's devices are the best way to use AI, which could determine whether he inherits former CEO Tim Cook's momentum or plays catch-up.
Apple is expected to update its premium iPhone Pro and Pro Max devices but hold off on refreshing the iPhone Air and the base and budget lines until spring. The aim is to drive interest in the real star of this week's show, the folding phone.
"Even with a $2,500 price tag, the Apple foldable is going to fly off the shelves, especially because Apple is excellent at creating an aura of exclusivity, luxury, and scarcity," Nabila Popal, senior research director at IDC, told Reuters.
Popal expects the phone to generate more than $45 billion in revenue for Apple by the end of next year, even as foldables overall remain a single-digit share of the phone market.
The main appeal of a folding phone is the sheer newness after nearly two decades of candybar-style phones.
While Samsung, Google and China's Huawei have sold folding phones since 2019, analysts expect Apple to benefit from entering late by solving key engineering challenges, such as a hinge that feels sturdy over thousands of uses and minimizing any crease in the screen when the device is open.
"They've seen what has worked and what hasn't worked with their competitors," said Anshel Sag, an analyst at Moor Insights & Strategy who has tested many folding devices.
Ternus' key challenge will be persuading customers to adopt the new Siri and convincing them and third-party developers that Apple can keep pace with rivals such as OpenAI, which roll out big improvements every few weeks, while Apple has traditionally moved more slowly.
"If Siri still sucked, then he would have a much more difficult Wednesday," said Carolina Milanesi of Creative Strategies. "Now they can comfortably say Siri is delivering and has value, but they need to just continue to work and make it better and keep up."
Analysts say Ternus, who kept a low profile as hardware engineering chief for five years, is likely to focus on delivering powerful devices as a base to expand on-device AI.
But he faces a steep regulatory challenge, said Gene Munster of Deepwater Asset Management: Apple's Siri update might take until 2028 to win approval in China and won't initially be available in Europe due to a regulatory dispute.
"It matters a lot that they get the U.S. out in time because it builds the confidence that they can do something in Europe," he said.
