Why Apple’s AI delay has yet to hurt iPhone sales
The iPhone just posted the strongest quarter in its history.
“Unprecedented demand.” Tim Cook can savor this victory over Apple’s difficulties in generative artificial intelligenc. Between October and December, the iPhone posted the strongest quarter in its history. Sales of Apple’s flagship smartphone jumped 23%, reaching $85 billion. This growth — the fastest since 2021 — was driven in particular by a spectacular rebound in demand in China. It is also explained by a cyclical factor: the replacement of devices purchased during the pandemic.
Tim Cook’s triumphalism, however, deserves qualification. While iPhone performance reached a record in value, this was not the case in volume. According to estimates from research firm IDC, more units were sold in the final three months of 2020 and 2021. The gap reflects a sharp rise in the average selling price, which has crossed the $1,000 threshold as a result of the ultra-premium positioning of the lineup. In the United States, the Pro and Pro Max models, priced between $1,100 and $2,000, now account for more than half of all sales.
AI is not yet a selling point
Still, the figures published by Apple show that iPhone sales have not been affected by the repeated setbacks surrounding the new Siri. Unveiled with great fanfare in June 2024, this version was supposed to usher the long-standing voice assistant into the era of generative AI. It has yet to be released, as the company has not managed to develop its own models to power the advanced features it promised. Last month, Apple announced a partnership with Google to use its Gemini model. The new Siri is now expected in the spring.
While AI sits at the heart of the marketing pitch for some brands, particularly Samsung and Google, it is not yet a major selling argument. On their own, these new features, sometimes little more than gimmicks, are not enough to persuade the vast majority of consumers to buy a new smartphone, let alone to abandon Apple’s closed ecosystem. Especially since, pending deeper integration at the operating-system level, usage remains concentrated on a handful of applications available across all platforms.
A new design
In reality, the smartphone market continues to be driven by more down-to-earth factors. For the latest iPhones, interest is notably explained by a new design, after several generations of very similar models. This novelty triggered a “super-cycle” of upgrades, prompting more consumers to replace their devices. The effect was amplified by the fact that several hundred million people are still using smartphones released in 2020 or 2021, when the pandemic and the rise of 5G fueled a surge in sales.
This momentum could continue. But a threat is looming: the sharp increase in memory-chip prices, the result of exponential demand linked to AI. According to TechInsights, this surge could translate into an additional cost of $57 for the base version of upcoming iPhones — a bill that would climb even higher for premium models. Asked about a possible impact on retail prices, Tim Cook prefers not to “speculate.” The possibility cannot be ruled out, even if Apple could absorb part of the increase by trimming its margins.
A handicap in the post-smartphone era?
As it waits for truly compelling AI features to arrive, Apple is also betting on new form factors to boost sales. Its first attempt, however, has fallen flat: the ultra-thin models launched in the fall have yet to find their audience. This year, the new iPhone lineup is expected to include Apple’s first foldable smartphone, seven years after Samsung entered the segment. While sales volumes are likely to remain modest, these devices offer higher margins. And several observers believe the Cupertino-based group could succeed in jump-starting the market.
If they are not yet crippling, Apple’s delays in AI could eventually catch up with it. In the medium term, they risk weighing on iPhone sales if rivals manage to deliver a truly integrated experience at the operating-system level. Over the longer term, Apple could above all miss the post-smartphone era. The rise of AI is expected to give birth to new dominant platforms. In this coming revolution, mastery of both hardware and software will be decisive — just as it was for Apple in the age of smartphones.