Apple’s AI Move Won’t Spark iPhone Sales Explosion in 2024

TLDR: Apple’s generative AI push, expected at WWDC, won’t immediately spark iPhone sales. Hardware matters more initially, and AI software is still new. However, as older phones struggle with AI features, sales will eventually rise. The iPhone market should improve in 2024, with a slight increase in shipments. The real AI-driven sales boost will come later, as features improve and developers create AI-powered apps that strain older devices.

We’re close to Apple’s yearly conference, WWDC, starting June 10 at the company’s base in California. This time, Apple is likely to show its big move into generative AI with fresh abilities for the iPhone.

Exciting news for investors. But don’t think AI will cause a huge rise in iPhone sales this year. When it comes to phones, people care more about the bits inside than the software.

“I don’t think it’s going to be the main reason people buy an iPhone,” said Thomas Husson from Forrester. “It’s more likely going to add to the experience.”

But that doesn’t mean AI won’t help iPhone sales in the future. As phones get older and can’t run AI features, people will have to get new ones.

It’s the Hardware That Matters… at First

People usually buy new phones for the hardware, not software.

“The average person won’t care [about generative AI],” said Gene Munster from Deepwater Asset Management. “They want to know screen size first. Second is camera, third is battery.”

There’s another reason AI on the iPhone probably won’t make people line up at the Apple Store: The software is too new.

Many of the consumer AI products out there are still quite basic. Microsoft’s Copilot will soon give tips on fixing common PC problems, and Google’s Gemini for Workspace makes writing emails easier. But overall, there’s no must-have AI app.

Even Microsoft’s AI-focused Copilot+ PCs are more interesting for their new Qualcomm chips, which are supposed to match Apple’s M3 processors, than for the AI software they’re named after.

It’s unclear.

“If you go to the average person and say, ‘Hey, you can have AI in your iPhone,’ they’ll say, ‘Great. Now, what do I do with it?’ And that’s where we are right now,” said Ramon Llamas from IDC.

Apple is expected to introduce a smarter Siri that can control apps with your voice and write out recordings, new photo editing tools, and better notifications, all powered by AI.

Making Siri useful would be a big step, though it’ll be interesting to see how much people actually use it. When was the last time you asked Siri to do anything besides set a timer or check the weather?

Helpful features, but Google and Samsung already offer similar things in their phones, and they don’t seem to be driving sales. And Apple will likely offer its own versions too.

More importantly, we’ll have to wait and see how iPhone app makers end up using AI to improve their own apps. Think about it. You probably spend most of your time on your iPhone using apps like WhatsApp, TikTok, or Gmail. The same will be true with AI-powered apps, but it’ll take time for developers to get them going.

Sales Will Come

While AI might not cause a sales boom this year, it will get people to buy new iPhones in the future. That’s because AI features will need some of Apple’s latest chips, and users with older phones won’t be able to use those functions or they’ll run slowly. And nothing makes people want a new phone more than when apps are sluggish.

“It’ll take six months, a year, two, three years, for people to start to understand that the hardware they had before AI isn’t performing as well,” Munster said. “The battery won’t last, because it will be putting more weight on the CPU or the AI chip… things like that. I think this iPhone AI upgrade cycle, it’s like a two- or three-year cycle.”

That doesn’t mean Apple won’t see a small sales bump in September when it releases its next iPhone. The phone market, overall, is starting to pick up after a tough two years. According to IDC, global phone sales should improve by 4% year-over-year in 2024. Most of that will come from Android sales, though iPhone shipments should rise a bit, by 0.7%. Not a huge number, but an increase.

Time.

As for the big sales boost, that’s more likely to come later as Apple improves its AI features and developers make more AI-powered apps that strain older iPhones.

The sales explosion will just have to wait.