Some of those features won’t be available until next year, but Apple’s push to add artificial intelligence to the iPhone is still likely to lead to a sales boom, optimistic analysts say. While in the past iPhone hardware upgrades were the big draw, now the lure is how Apple’s hardware, such as custom chips, will serve up advanced AI.
“Whether or not Apple Intelligence is supported from day one, the new iPhones are future-ready,” said Paolo Pescatore, analyst and founder of PP Insights. Pescatore, like Ives, believes this is the start of an iPhone supercycle. “Apple’s power in silicon, hardware and services will come together to bring Apple Intelligence to life.”
Pescatore adds that Siri has been in need of a much-needed overhaul, and he believes iPhone customers would now like to give Siri another chance.
Apple did not immediately respond to inquiries about the company’s potential for iPhone sales growth.
Super unknown
Other analysts don’t buy the supercycle hype. Anand Joshi, an engineer by trade and former CTO who is now an analyst for TechInsights, says the technical limitations of older iPhone models are likely to drive upgrades. But he believes there is only a “50-50 chance of a supercycle”.
“The biggest driver will be artificial intelligence, but I’m still skeptical about the user experience,” says Joshi.
Likewise, Counterpoint Research senior analyst Varun Mishra says this is the start of a “step cycle” in iPhone revenue — a series of incremental increases — rather than a supercycle. This is partly due to the fact that the release of Apple’s AI features will be delayed by several months.
“Most of the use cases offered through Apple Intelligence are generally ‘nice’ and not so compelling that a large number of users will upgrade their devices sooner than expected,” says Mishra. “We also don’t see any pent-up demand, like the demand in previous supercycles, for genAI features among consumers.”
There’s also the question of whether these new AI-powered iPhones will boost sales in China, one of Apple’s most important markets for both iPhone sales and production.
Last fall, The Wall Street Journal reported that Chinese officials ordered workers at government agencies to stop using their iPhones and other foreign electronics for work, which does not affect most of the Chinese population but could have a long-term “chilling effect ” for the Apple brand in China. As Apple has rolled out more AI features that rely on both on-device processing and data sent and received from the cloud, questions have arisen about how exactly the company’s Private Compute Cloud will work in China. Apple has yet to share details on how this will work.
Earlier today, during the iPhone launch event, Apple said it plans to expand its AI features to other languages, including Chinese, starting next year.
TechInsights’ Joshi says he doesn’t believe the Chinese government’s iPhone crackdown has much of an impact at this point. “China will continue to buy iPhones,” he says.
Ives believes that the key to Apple’s success in this market will be unusual for a company that prides itself on its complete technology and tight control of the experience it provides: “Getting a Chinese partner will be key for Apple to enable AI in China,” he says.
