Apple's AI Journey: iPhone 16 Sales Underwhelming, True AI Experience Not Expected Until 2026

Apple's AI Journey: iPhone 16 Sales Underwhelming, True AI Experience Not Expected Until 2026Apple is gradually introducing its AI features, AppleIntelligence, with the first six expected to launch later this month and a new version of Siri anticipated sometime next year. However, while there is considerable anticipation for Apple's AI, analysts believe we may be overly optimistic about the iPhone's "true" AI performance, which may not materialize until 2026 or 2027

Apple's AI Journey: iPhone 16 Sales Underwhelming, True AI Experience Not Expected Until 2026

Apple is gradually introducing its AI features, AppleIntelligence, with the first six expected to launch later this month and a new version of Siri anticipated sometime next year. However, while there is considerable anticipation for Apple's AI, analysts believe we may be overly optimistic about the iPhone's "true" AI performance, which may not materialize until 2026 or 2027.

Rumors speculated that AppleIntelligence would drive iPhone 16 sales, as users, other than iPhone 15 Pro owners, would need to upgrade to access the new features. However, current sales are said to be on par with last year, suggesting people haven't yet prioritized AI as a key factor for purchasing a new phone.

JPMorgan analyst Edison Lee isn't surprised, claiming the expected 5%-10% iPhone sales growth is "unlikely to materialize." He believes that while Apple holds a crucial advantage over other smartphone brands in AI, it will take 2-3 years for the technology to significantly drive new iPhone demand.

Lee views Apple as the only integrated hardware and software manufacturer capable of delivering low-cost, personalized AI services leveraging its proprietary data, laying the foundation for AppleIntelligence's long-term success. However, smartphone hardware needs to be redesigned to achieve true AI, a feat that may not be achievable until 2026/27.

Despite this, Lee believes Apple holds a long-term advantage in technology and cost development, especially considering its partnership with chip manufacturer TSMC. He predicts iPhone sales growth next year, but attributes this primarily to the rumored thinner iPhone 17 Air, rather than AppleIntelligence.

Lee states, "We believe that smartphone technologies supporting AI capabilities may take 2-3 more years due to limitations in high-speed memory and advanced packaging technologies. But Apple's ultrathin model (17 Air) might attract more upgrade demand in 2025."

In conclusion, while Apple demonstrates an aggressive stance in AI, the genuine AI experience may be 2-3 years away on the iPhone. Apple will face competition from other brands' AI features and challenges in upgrading its own hardware over the next few years. Ultimately, it remains to be seen whether AppleIntelligence can lead the next wave of iPhone growth.