Apple is under pressure to deliver a hit iPhone
Why it matters: The iPhone is critical to Apple's business, but also crucial for component makers and wireless carriers.
Driving the news: Apple previewed iOS 26, the software that will power the next iPhone at its June developer conference.
The signature features will be mostly cosmetic and unlikely to drive most consumers to upgrade.
Meanwhile, the Apple Intelligence features it did introduce were modest and the Siri overhaul promised last year has been delayed.
Several analysts this year have cut their iPhone sales forecasts, citing the delay.
The big picture: Apple also faces a variety of headwinds including growing economic uncertainty, the potential of higher tariffs and the industrywide trend of people holding on to their phones longer.
Between the lines: A new thinner iPhone Air could arrive this year, a move that might convince those on the fence about upgrading.
Apple is also expected to make the usual improvements to the entire line, including faster chips and improved cameras on the front and rear.
Yes, but: Even good hardware won't solve Apple's AI issues. In a column published Sunday, Bloomberg's Mark Gurman suggests Apple will have to move beyond its "comfort zone" of small acquisitions to meaningfully improve its position.
Apple has reportedly considered a range of acquisitions to boost its efforts, including Perplexity. It also held informal talks with Thinking Machines Lab, the startup run by former OpenAI executive Mira Murati, Bloomberg reported.
What they're saying: Creative Strategies analyst Carolina Milanesi said hardware improvements are always key to driving upgrades and that probably would have been true even if Apple had made more meaningful improvements to Apple Intelligence.
"For Apple, hardware always matters," Milanesi told Axios. "Getting people to upgrade remains critical for them, both for Apple Intelligence adoption and also for services adoption."
What we're watching: The rectangular iPhone we know and love might not be the go-to form factor of the future.
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