Apple makes high-stakes Siri change as Services growth takes center stage

Core Viewpoint - Apple is leveraging a partnership with Google to enhance Siri using Google's AI technology, aiming to improve customer engagement and drive sales of iPhones and services, ultimately boosting Apple's income [1][2][5]. Group 1: Partnership and Technology - Apple and Google have formed a multi-year partnership to utilize Google's Gemini models and cloud technologies for developing the next generation of Apple Foundation Models, which will enhance Apple Intelligence services [2][6]. - The collaboration aims to expedite the long-promised update of Siri, with the goal of making it more personalized and effective, expected to be available this year [2][6]. Group 2: Financial Impact - Apple's net sales for fiscal year 2025 are projected to be $416.16 billion, reflecting a 6% increase from fiscal year 2024, with net income estimated at $112.010 billion [5]. - iPhone sales are expected to contribute significantly, with projected revenues of $209.586 billion for fiscal 2025, accounting for about half of the company's total revenues [7][8]. - The services segment is also anticipated to grow, with net revenues projected at $109.158 billion for fiscal 2025, marking a 14% increase from the previous year [8]. Group 3: Strategic Considerations - The enhancement of Siri is seen as a strategy to stimulate iPhone upgrades and increase service usage, which are critical for Apple's financial performance [10][19]. - The partnership with Google raises questions about Apple's control over its assistant layer, as it relies on a competitor's technology to improve its services [21][22]. - The potential for increased sales from a smarter Siri could lead to significant financial gains, with estimates suggesting that a 1% increase in iPhone sales could yield an additional $2.1 billion in sales and $0.77 billion in gross profit [24].