[Source: Reuters]

Apple (AAPL.O), opens new tab unveiled its artificial intelligence-boosted iPhone 16, showing off the long-awaited phone hours after Chinese rival Huawei’s (HWT.UL) tri-fold phone began racking up orders.

“The next generation of iPhone has been designed for Apple Intelligence from the ground up.

It marks the beginning of an exciting new era,” Chief Executive Tim Cook said at a product launch.

Apple and technology companies around the world are racing to add AI to products, and phones are expected to be one of the most important battlegrounds.

The Cupertino, California-based company also is betting the AI feature will drive consumers to upgrade amid a slowdown in iPhone sales.

Apple Intelligence, the company’s AI software, will be used to improve its personal assistant as well as enhancing features such as understanding and identifying objects captured by the phone camera.

“Apple Intelligence marks the start of a new era for Siri and makes it more natural, more contextually relevant and more personal to you,” said Apple’s software engineering chief, Craig Federighi.

A test version of Apple Intelligence will be available in English as spoken in the U.S. next month.

It will be available for other localized versions of English in December, with versions in languages including Chinese, French, Japanese and Spanish next year.

The iPhone 16 will use the new A18 chip and have an aluminum back, as well as a new customizable button that can be used for camera controls.

The iPhone 16 will start at $799 and the iPhone 16 Plus will start at $899.

Apple also unveiled iPhone 16 Pro and 16 Pro Max, titanium models with a faster chip, the A18 Pro, and more AI capability, such as offering suggestions on how to set up a photo shoot more effectively.

The iPhone 16 Pro will start at $999 and the 16 Pro Max starts at $1,199.

Huawei’s website showed on Monday that it had garnered more than 3 million pre-orders for its Z-shaped tri-fold phone.

This underscores Huawei’s ability to navigate U.S. sanctions and solidifies its position against Apple in China, where consumers are hankering for more AI features and are willing to pay for them.

Apple shares were down 1.5% in afternoon trading.

WATCHES AND AIRPODS

Apple also unveiled new Watches and AirPods.

The new Series 10 Watch starts at $399, is thinner than its predecessor and has an up to 30% larger screen than previous generations.

Apple highlighted the Watch’s ability to help with sports and health issues, including finding longer-term conditions such as sleep apnea as well as detecting and responding to emergencies such as a fall.

Apple also launched a new version of the more rugged Watch Ultra 2, starting at $799.

The new AirPods 4 have a new design for more comfortable wearing and improved acoustics. And Apple rolled out hearing-aid features that it has submitted for U.S. regulatory review.

Apple fans globally have been waiting to see the new phones with AI.

“The Chinese market is hungrier for AI features than the U.S. market,” said Ben Bajarin, CEO and principal analyst at Creative Strategies. For Apple, “it will be very difficult to bring it to China immediately, so they’ll be going off the merits of the hardware.”

Apple unveiled Apple Intelligence at its developer conference in June, its take on generative AI that can conjure text, images and other content on command.

But these upgrades will take time to reach consumers.

Apple Intelligence must be approved by Beijing in order to be released in the Chinese market.

In July, OpenAI blocked access to ChatGPT in China, a move that could impact the chatbot’s integration into Siri. Apple has not announced an AI partner for China.

IPhones accounted for more than half of Apple’s $383 billion sales last year.

In China, Apple aggressively slashed prices earlier this year, prompted by government restrictions and increased domestic competition.

The iPhone 16 lineup is the first Apple smartphones designed around these AI features though those are expected also to be available on iPhone 15 Pro and Pro Max, the top-end versions of the previous-generation devices..

“The software side, and how Apple frames it, is the biggest question,” said Bajarin.

“Investors will look for if it’s compelling enough to have a larger-than-normal upgrade cycle.”

Rivals including Alphabet’s (GOOGL.O), opens new tab Google are also showcasing AI features to try to upend Apple’s dominance in the high-end smartphone market.

Google, developer of the Android operating system which competes with Apple’s iOS, traditionally announced its Pixel smartphones in the autumn.

This year, it pushed the event to August ahead of Apple’s announcement.

Google focused on AI features including Gemini Live, which allows users to hold live voice conversations with a digital assistant.

Many of the AI features Google announced were also rolled out to the Android-based devices made by manufacturers such as Samsung (005930.KS), opens new tab and Motorola (MSI.N), opens new tab.

“The question is who is going to be the first to combine a truly personal AI assistant with knowledge and information that is accurate and personalized,” said Bob O’Donnell, chief analyst for TECHnalysis Research.

In June, one week after its developer conference, Apple said it would delay the release in Europe due to European Union tech rules.

Apple’s event at the tech giant’s Apple Park headquarters started at 10 a.m. PDT (1700 GMT).

Huawei has scheduled an official announcement of its Mate XT phone on Tuesday in China.