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 fuel a sales boom, optimistic analysts say. While in the past the iPhone’s hardware upgrades were the big draw, the lure now is how Apple’s hardware, such as its custom chips, will be put to work in the service of 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 beginning of an iPhone supercycle. “Apple’s prowess across silicon, hardware and services will all come together to bring Apple Intelligence to life.”
Pescatore adds that Siri was in dire need of a major overhaul and he thinks iPhone customers may now want to give Siri another chance.
Apple did not immediately respond to questions about the company's potential to grow iPhone sales.
Super Unknown
Other analysts aren’t buying the supercycle hype. Anand Joshi, an engineer by trade and a former tech executive who is now an analyst at TechInsights, says the technical limitations of older iPhone models will likely lead to upgrades. But he believes there’s only a “50-50 chance of a supercycle.”
“The biggest driver will be AI, but I'm still skeptical about the user experience,” says Joshi.
Similarly, Varun Mishra, senior analyst at Counterpoint Research, says this is the beginning of a revenue “step cycle” for the iPhone, a series of incremental boosts, rather than a super cycle. This is partly because the release of Apple’s AI features is spread out over several months.
“Most of the use cases being served up through Apple Intelligence are generally ‘nice to have’ and not so compelling that a large portion of users will upgrade their devices sooner than expected,” Mishra said. “We also aren’t seeing pent-up demand, like we saw in previous super cycles, for genAI features among consumers.”
Then there’s the question of whether these new AI-powered iPhones will boost sales in China, which is one of Apple’s most important markets, both in terms of iPhone sales and production.
Last fall, The Wall Street Journal reported that Chinese officials had ordered employees at government agencies to stop using their iPhones and other foreign-made electronics for work, a move that won’t affect the majority of the Chinese population but could have a “chilling effect” on Apple’s brand in China in the long run. As Apple has rolled out more AI features that rely on both on-device processing and data sent and received through the cloud, questions have been raised about how exactly the company’s Private Compute Cloud will work in China. Apple has not yet shared details about how it will work.
Earlier today, during the iPhone launch event, Apple announced that it plans to expand its AI features to additional languages, including Chinese, starting next year.
Joshi, of TechInsights, says he doesn't believe the Chinese government's crackdown on iPhones is having much of an impact at this point. “China will continue to buy the iPhone,” he says.
Ives thinks the key to Apple's success in that market will be an unusual one for a company that prides itself on its full-stack technology and tightly controls the experience it delivers: “Finding a Chinese partner will be critical for Apple to enable AI in China,” he says.
