Apple faces a lingering question about the impact of its generative AI features on consumers who are becoming more budget-conscious. Counterpoint’s associate director Ethan Qi pointed out last month that the smartphone market in China experienced a slowdown in the last quarter of 2024, with a 3.2% year-on-year decline in overall smartphone sales due to consumers adopting a cautious spending approach. While Apple has pinned its hopes on generative AI to stimulate a new wave of upgrades, analysts remain unimpressed by what Apple Intelligence brings to the table, expressing doubts about how much value consumers will see in this technology.
Speculation about a potential partnership between Apple and Alibaba this week has sparked interest, with analysts at Jefferies suggesting that such a collaboration may not significantly boost iPhone 17 sales in China. Although Alibaba’s Qwen AI model has made a strong impact in the AI community by demonstrating impressive performance on global leaderboards, there are concerns that Apple might struggle to integrate this model to leverage data from its own applications and deliver the highly intelligent personalized services it aims to provide.
Notably, Chinese iPhone users tend to favor local apps such as WeChat and Baidu over Apple’s offerings. The market reacted positively to initial reports from The Information indicating a partnership between Alibaba and Apple, as Alibaba shares in Hong Kong surged by over 8% on Wednesday. Apple is yet to respond to Business Insider’s request for comment.
This potential collaboration between Apple and Alibaba is not the first time the two tech giants have explored working together. Back in 2014, Apple CEO Tim Cook openly discussed the idea of a partnership between Apple Pay and Alibaba’s payment platform, Alipay, emphasizing his admiration for Alibaba’s founder, Jack Ma. Cook highlighted the importance of collaborating with partners who challenge and inspire innovation, indicating that Alibaba fits this mold. Over a decade later, Cook will be hopeful that Alibaba can continue to be a valuable partner for Apple in their shared pursuit of progress and excellence.
