Some of these features won’t be available until next year, but optimistic analysts say Apple’s push to bring artificial intelligence to the iPhone is likely to continue to drive a sales boom. Whereas in previous years iPhone hardware upgrades were the big draw, now the appeal is how Apple’s hardware, such as its custom chips, will be at the service of advanced AI.
“Regardless of whether Apple Intelligence is supported on day one, the new iPhones are ready for the future,” said Paolo Pescatore, analyst and founder of PP Insights. Pescatore, like Ives, believes this is the beginning of an iPhone supercycle. “Apple’s prowess in silicon, hardware and services will converge to bring Apple Intelligence to life.”
Pescatore adds that Siri was in need of a much-needed overhaul and believes iPhone customers might now be willing to give it another chance.
Apple did not immediately respond to questions about the potential for iPhone sales growth.
Super unknown
Other analysts aren’t buying the supercycle hype. Anand Joshi, an engineer by training and former tech executive who is now an analyst at TechInsights, says the technical limitations of older iPhone models are likely spurring upgrades. But he believes there’s only a “50% chance of a supercycle happening.”
“The biggest driver will be AI, but I am still skeptical about the user experience,” says Joshi.
Similarly, Varun Mishra, a senior analyst at Counterpoint Research, says this is the start of a “staggered cycle” of iPhone revenue (a series of incremental increases) rather than a supercycle. This is partly due to the fact that the rollout of Apple’s AI features will be phased in over several months.
“Most of the use cases that Apple Intelligence offers are generally ‘nice to have’ and not so compelling that a large portion of users will upgrade their devices sooner than expected,” Mishra says. “We also don’t see any pent-up 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 crucial markets both in terms of iPhone sales and production.
Last fall, The Wall Street Journal reported that Chinese officials ordered government agency workers stop using their iPhones and other foreign-made electronics for work, which doesn’t affect the majority of the Chinese population but could have a long-term “chilling effect” on Apple’s brand in China. As Apple has rolled out more AI features, which rely on both on-device processing and data sent and received from the cloud, questions have arisen about How exactly will the company’s private computing cloud work in China?Apple has not yet shared details on how this will work.
Earlier today, during its 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 think the Chinese government’s crackdown on iPhones will have much impact at this point. “China will continue to buy the iPhone,” he says.
Ives believes the key to Apple’s success in that market will be something unusual for a company that prides itself on its end-to-end technology and tightly controlling the experience it delivers: “Getting a Chinese partner will be key to Apple enabling AI in China,” he says.
