Some of these features won’t be available until next year, but Apple’s push to add artificial intelligence to the iPhone is likely to cause a boom in sales, say optimistic analysts. Whereas in past years the iPhone’s hardware upgrade was the big draw, now the attraction is how Apple’s hardware, like its custom chips, can be serviced by advanced AI.
“Regardless of whether Apple Intelligence is supported from day one, the new iPhones are future-proof,” said Paolo Pescatore, analyst and founder of PP Insights. Pescatore, like Ives, believes this is the start of an iPhone supercycle. “Apple’s expertise in silicon, hardware and services will come together to bring Apple Intelligence to life.”
Pescatore added that Siri needs a much-needed overhaul, and he believes iPhone customers may now be ready to give Siri another chance.
Apple did not immediately respond to questions about the company’s potential for iPhone sales growth.
Super Unknown
Other analysts aren’t buying the supercycle hype. Anand Joshi, an engineer by trade and former tech executive who is now an analyst for TechInsights, said the technical limitations of older iPhone models are likely to prompt upgrades. But he believes there is only a “50-50 chance of a supercycle.”
“The biggest driver will be AI, but I’m still skeptical about the user experience,” Joshi said.
Similarly, Counterpoint Research senior analyst Varun Mishra said this is the start of a revenue “step-cycle” for the iPhone—a series of incremental boosts—rather than a supercycle. This is partly due to the fact that the release of Apple’s AI features will be staggered over several months.
“Most of the use cases offered through Apple Intelligence are basically ‘nice to haves’ and not so compelling that a large section of users will upgrade their devices sooner than expected,” said Mishra. “We also don’t see any demand, like the demand in previous supercycles, for genAI features among consumers.”
There is also the question of whether these new AI-powered iPhones will boost sales in China, one of Apple’s most important markets both in terms of sales and production of iPhones.
Last fall, The Wall Street Journal reported that Chinese officials ordered workers in government agencies to stop using their iPhones and other foreign-made electronics for work, which did not affect the majority of the Chinese population but could have a long-term “chilling effect.” on the Apple brand in China. As Apple rolls out more AI features, which rely on both on-device processing and data sent and received from cloud, there are questions about how exactly the company’s Private Compute Cloud will work in China.Apple has yet to share details on how it 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.
Joshi, from TechInsights, said he doesn’t believe the Chinese government’s crackdown on iPhones will have much of an impact at this point. “China will continue to buy the iPhone,” he said.
Ives thinks the key to Apple’s success in that market will be unusual for a company that prides itself on its full-stack technology and tightly controls the experience it provides: “Getting a Chinese partner will be key for Apple to enable AI in China,” he said.
