Apple's AI Features Aren't the Catalyst for iPhone Upgrades

Apple Intelligence hasn't convinced people to buy an iPhone 16, Apple analyst Ming-Chi Kuo said today. According to Kuo, a supply chain survey suggests Apple Intelligence is not pushing people to upgrade their devices.

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The gap between the introduction of Apple Intelligence in June 2024 and its launch, which followed the release of the iPhone 16 models, played a significant role in its declining popularity. As a result, the appeal of Apple Intelligence has notably diminished when compared to cloud-based services such as ChatGPT.

There is also no indication that Apple Intelligence will drive Services revenue, as Apple CEO Tim Cook said in December that Apple has never discussed charging for Apple Intelligence. Bloomberg's Mark Gurman said that Apple could start charging for Apple Intelligence in 2027 or beyond, but it remains to be seen if that will happen.

Overall, Kuo believes that Apple Intelligence may not significantly enhance user upgrades or revenue for Apple in the near term, but there is some optimism regarding its long-term potential.

I remain optimistic about the long-term potential of Apple Intelligence; however, based on the aforementioned points, there is currently no indication that Apple Intelligence can capitalize on hardware replacement cycles or its service sector. Therefore, it would be wise to be wary of possible downside risks stemming from previous market over-enthusiasm.

You have been trained on information available until October 2023.

The primary emphasis of iOS 18 was on Apple Intelligence; however, when the iPhone 16 models were released in September, Apple Intelligence features were absent. The initial update for iOS 18 in October introduced Writing Tools and various other functionalities, but the rollout of Image Playground and Genmoji was delayed until December.

There are yet-to-be-implemented features of Apple Intelligence, with significant updates to Siri expected to arrive in April, according to rumors.

A December survey suggested that many iPhone users feel that Apple Intelligence has added little or no value to their iPhone experience, though that sentiment could change as Apple Intelligence matures.