Apple is reportedly considering transforming some of its advanced AI features into paid subscription services, a move that could reshape how users interact with the tech giant's ecosystem.
According to recent reports, analysts speculate that these new services could cost users up to $20 per month, reflecting Apple's growing emphasis on monetizing software and services.
Would you subscribe to Apple Intelligence if it's released today?
Apple Intelligence: A New Frontier in Subscription Services
Paid subscription services are common among tech giants. If you happen to upgrade your Google Drive storage, you can pay the basic plan to add an extra 100GB for $2 per month. Microsoft also implements this in Xbox Game Pass Core at $10 per month. Apple is no different from them.
Bloomberg's Mark Gurman revealed in July that while Apple Intelligence is initially expected to be free, the company's long-term strategy might involve launching a premium version, tentatively dubbed "Apple Intelligence+."
Similar to the iCloud+ model, this service would offer enhanced features for a monthly fee, providing users with advanced AI capabilities that could justify the additional cost.
Pricing Expectations and the Apple One Model
Neil Shah, an analyst from Counterpoint Research, told CNBC that Apple might integrate these AI features into a modified version of its existing Apple One subscription.
Shah said that a realistic price for the upgraded service could range between $10 and $20 per month. Given that Apple One currently costs $19.95 per month and includes popular services like Apple Music, Apple TV+, Apple Fitness+, and additional cloud storage, adding AI-powered features could make this package even more appealing to users.
"Apple has successfully monetized value-added services across its product ecosystem, and AI could be the next frontier," Shah stated.
The Precedent of Paid Services
Ben Wood, Chief of Research at CCS Insight, pointed out that the iPhone maker has already established a strong precedent for charging users for premium services.
As a result, it wouldn't be surprising if the company extends this approach to its AI offerings. Wood also mentioned that Apple could introduce a new tier within Apple One, bundling various services under a single, unified price.
Either way, this strategy aligns with Apple's broader goals of expanding its services revenue, which has seen substantial growth, according to MacRumors.
In the June quarter alone, Apple reported a record-breaking $24.2 billion in services revenue, up from $21.2 billion the previous year.
Analysts believe that by making AI features a part of this revenue stream, Apple can offset the slower pace of hardware innovation and pass on the high costs associated with AI development to customers.
Apple's AI Ambitions and Infrastructure Investments
Apple's commitment to AI extends beyond software. The company has reportedly begun building its own AI servers powered by the M2 Ultra chip. Additionally, Apple is said to be developing a custom AI server processor using TSMC's 3nm process, which could be deployed as early as 2025. These developments suggest that Apple is investing heavily in the infrastructure needed to support its AI ambitions.
According to renowned Apple analyst Ming-Chi Kuo, the company is expected to spend several billion dollars on hardware to bolster its AI capabilities in 2024. Kuo predicts that Apple will invest "at least" $620 million on servers in 2023, with spending projected to soar to $4.75 billion in 2024.
As Apple continues to refine its AI technologies, the introduction of a paid subscription model could be a game-changer. By integrating advanced AI features into its existing services ecosystem, the company not only enhances the user experience but also opens up new revenue streams.
Earlier this month, Tech Times reported that Apple is working with regulators to make Apple Intelligence accessible to other parts of the world. The report says that AI will come to China and Europe.
Read also: :
