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<\/p>\nUpdate, Sunday June 7: This article has been updated with details on Apple\u2019s partnership with Google to provide AI services to iOS and the iPhone.<\/p>\n
<\/p>\n
Customers explore the features of the iPhone 17 Pro at an Apple Store (Photo by SAEED KHAN\/AFP via Getty Images)<\/p>\n
AFP via Getty Images<\/p>\n
Ahead of its Worldwide Developer Conference, Apple is expected to showcase new features in iOS 27 and Apple Intelligence, which will debut with the iPhone 18 Pro. While the price of the iPhone Pro may remain the same, consumers should be prepared to pay more over the life of their new phone.<\/p>\n
The Economic Pressure On The iPhone 18 Pro<\/p>\n
Apple must absorb escalating on-device component procurement costs during the initial iPhone 18 Pro lifecycle before passing infrastructure premiums to users.<\/p>\n
The reduced supply and increased demand for memory and storage continue to impact the consumer electronics industry. One of the most high-profile cases last month was Valve raising the price of the Steam Deck portable gaming console by more than forty%<\/a> to cover the increased production cost. The extra demands on these base specifications by artificial intelligence will see a mix of lower manufacturer margins and higher consumer prices.<\/p>\n Apple is expected to keep the iPhone 18 Pro at $1,099<\/a>, the same price as the iPhone 17 Pro. Apple will use its high iPhone margins to absorb the increased bill of materials, ensuring the smartphone is a \u2018day zero success\u2019 as the community buys the new model. <\/p>\n The broader adoption of Apple Intelligence and more complex generative AI will mean some tasks will be offloaded to the cloud. Its Private Cloud Compute will preserve user anonymity, but server costs across AI platforms are climbing. Apple should run these at a loss during a launch window, but will look to recover that cost through a device\u2019s lifetime. <\/p>\n Apple\u2019s Deal With Google To Bring AI To The iPhone 18 Pro<\/p>\n Update, Sunday June 7.<\/p>\n Writing for the Power On newsletter<\/a>, Bloomberg\u2019s Mark Gurman lays out how far behind Apple has been in implementing artificial intelligence tools. During the same period that Google was building out Gemini and integrating AI into the heart of Android, Tim Cook would not address Apple\u2019s structural issues around AI until an executive meeting in March 2025.<\/p>\n Crucially, Apple has decided against relying completely on an in-house solution. Instead, according to Gurman\u2019s reporting, it has asked Google for support:<\/p>\n “Rockwell, along with Federighi and Cue, were also able to execute a deal with Google to replace the underlying models and cloud computing systems powering Siri with Gemini and Google Cloud technology. That came after an investigation into using third-party solutions that Rockwell kicked off immediately after taking the new job.”<\/p>\n That will not come for free and is another cost that Apple will carry on the books. That has implications for consumers, because Apple will not want to subsidise sending its consumers to Google.<\/p>\n An iPhone displays the Siri and Google Gemini logos side-by-side (Photo by Matteo Della Torre\/NurPhoto via Getty Images)<\/p>\n NurPhoto via Getty ImagesThe Cost of Software Paywalls On The iPhone 18 Pro<\/p>\n Consumers expect complimentary access to software features to justify the high retail prices of premium smartphones.<\/p>\n There is growing consumer resistance to additional service charges after their smartphone purchase. This secondary toll-gate unlocks all the features advertised on a device, altering the relationship between the manufacturer and the owner. When long-term adoption and recurring revenue are the goal, any dissatisfaction immediately after the unboxing experience threatens that implicit relationship between the parties.<\/p>\n The total overall cost of owning a smartphone is obscured at several points in the chain. The sticker shock of a premium price is masked by multi-year carrier deals that absorb the cost into the monthly subscription, lowering or even eliminating any initial outlay.<\/p>\n Ongoing subscription services, such as Apple One<\/a>, will offer a free introductory trial<\/a> before switching to monthly billing. That moves the initial charging point away from the unboxing. Apple One also bundles multiple services, blurring the lines between Apple Music, Apple TV, iCloud storage, and more. Expect Apple Intelligence services to be bundled in a similar fashion.<\/p>\n Competing Ecosystems Forcing Subscription Parity<\/p>\n Google and Samsung are defining the competitive landscape by balancing subsidised core software services against specialised paid upgrades.<\/p>\n Google\u2019s Gemini and Samsung\u2019s Galaxy AI have leaned into extended promotional windows, leading to a corresponding increase in market share. Consumer expectations prevent Apple from implementing an immediate paywall without risking that its premium users consider an alternative platform.<\/p>\n Monetising AI will follow a similar path to other online services that are now simply accepted. Cloud storage started out as a sparse but free framework, before becoming a vital part of a smartphone package as data limits were reached. <\/p>\n The market is approaching a similar inflexion point in premium AI tiers, at which point Apple and others will ramp up their subscription efforts to lock in customers and drive long-term value.<\/p>\n The Rising Total Cost Of iPhone Ownership<\/p>\n It\u2019s not a given that Apple can hold the iPhone 18 Pro price at $1099; circumstances could be wildly different come the September release date, but it’s reasonable to assume it can. It\u2019s also reasonable to assume Apple will pass on its AI costs through a monthly surcharge.<\/p>\n It’s likely this will be rolled into Apple One, obscuring the true cost of Apple Intelligence behind a trial period and the sticky subscriptions of Apple Music and Apple TV. The addition of a new service, if priced similarly to others, could cost consumers $15 per month to fully realise AI on their smartphones.<\/p>\n Apple may take a lower margin on the iPhone 18 Pro, balanced out by an extra $100 to $150 in revenue per Apple One customer over the first year of ownership. It will not be visible in the Apple Store, but your iPhone will be more expensive in 2026.<\/p>\n","protected":false},"excerpt":{"rendered":"Update, Sunday June 7: This article has been updated with details on Apple\u2019s partnership with Google to provide…\n","protected":false},"author":2,"featured_media":576154,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[212489,212491,59,212488,212492,212490,86,56,54,55],"class_list":["post-626762","post","type-post","status-publish","format-standard","has-post-thumbnail","category-technology","tag-apple-intelligence-infrastructure-costs","tag-component-procurement-outlays","tag-gb","tag-iphone-18-pro-lifecycle-pricing","tag-mobile-services-subscription-loops","tag-premium-smartphone-gross-margins","tag-technology","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/626762","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=626762"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/626762\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/576154"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=626762"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=626762"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=626762"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}