Apple Intelligence Fails to Boost iPhone Sales: A Detailed Analysis of Kuo's Report and Future Outlook

Apple Intelligence Fails to Boost iPhone Sales: A Detailed Analysis of Kuo's Report and Future OutlookTF International Securities analyst Ming-Chi Kuo recently released a report indicating that Apple Intelligence has had a limited impact on boosting iPhone sales. The report, based on a comparative analysis of the US and Japanese markets, incorporates Apple's financial reports and Kuo's own industry surveys to delve into the trends of iPhone sales and revenue, and the actual impact of Apple Intelligence

Apple Intelligence Fails to Boost iPhone Sales: A Detailed Analysis of Kuo's Report and Future Outlook

TF International Securities analyst Ming-Chi Kuo recently released a report indicating that Apple Intelligence has had a limited impact on boosting iPhone sales. The report, based on a comparative analysis of the US and Japanese markets, incorporates Apple's financial reports and Kuo's own industry surveys to delve into the trends of iPhone sales and revenue, and the actual impact of Apple Intelligence. This article will detail Kuo's analysis and offer a perspective on the future market performance of the iPhone.

US Market: Limited Impact of Apple Intelligence, Slight Sales Decline

The report highlights the US as the most representative market currently offering Apple Intelligence. Using the US as a benchmark and comparing it to Japan, which doesn't offer the service, provides a clearer picture of Apple Intelligence's actual impact on iPhone sales. For simplification, the report makes several assumptions: similar product mix proportions across regions, negligible impact of exchange rates and price differences, and the US accounting for approximately 75% of total sales/shipments in the Americas. While not entirely precise, these assumptions suffice for assessing overall trends.

Based on Apple's January 30th financial report and the assumptions above, the report reveals key data: the US market accounted for 31.8% of global iPhone shipments in Q4 2024, compared to 31.7% in Q4 2023. This implies a slight year-over-year decline in iPhone shipments in the US market during Q4 2024, despite the presence of Apple Intelligence.

Conversely, the Japanese market, lacking Apple Intelligence, saw high single-digit year-over-year growth in iPhone shipments in Q4 2024, reaching 7.2% of global shipments compared to 6.5% in Q4 2023. This contrasting data strongly suggests that Apple Intelligence's contribution to iPhone sales is limited, if not negligible.

Kuo's industry survey data further supports this conclusion. The survey indicates that global iPhone 16 shipments in Q4 2024 were approximately 66 million units, compared to approximately 68 million units for the iPhone 15 in Q4 2023. This represents a roughly 5.8% year-over-year decline in global iPhone shipments during Q4 2024.

Combining this data, it can be inferred that even if US iPhone shipments experienced year-over-year growth in Q4 2024, the growth would have been minimal. This aligns with some third-party survey results indicating low consumer interest in Apple Intelligence.

High-Price Strategy: Trading Volume for Price, Temporarily Staving Off Revenue Decline

Despite the decline in iPhone shipments, Apple's iPhone revenue in Q4 2024 only decreased by 0.8%. This is attributed to Apple's "trading volume for price" strategy, offsetting the shipment decline by increasing the average selling price (ASP).

Specifically, the iPhone Pro series' shipment share significantly increased from 54% in Q4 2023 to 61% in Q4 2024. As Pro models generally command higher prices, and consumers of Pro models are more likely to opt for larger storage capacities, the Pro series significantly contributes to the ASP.

The success of this strategy hinges on Apple's strong brand power, a feat not easily replicated. However, this reliance on higher prices to maintain revenue is not a sustainable long-term solution; the Pro model share cannot increase indefinitely.

Future Outlook: Revenue Decline Risks and Mitigation Strategies

Kuo's report points to the decline in iPhone revenue in Apple's Q1 2025 financial report as a warning sign. Without adjustments to product and sales strategies, the report projects a potential mid-single-digit year-over-year decline in iPhone revenue by 2026.

Apple currently faces the challenge of stimulating iPhone sales growth while maintaining high profit margins. Relying solely on price increases will inevitably lead to market share erosion. Therefore, Apple needs to carefully consider its product and market strategies, exploring new growth areas such as improving Apple Intelligence or introducing more attractive products to address future market competition.

In summary, Kuo's report provides an in-depth analysis of the actual impact of Apple Intelligence on iPhone sales and the challenges facing Apple. The report concludes that Apple Intelligence failed to effectively boost iPhone sales, and Apple's reliance on a high-price strategy to maintain revenue is risky. Apple needs to implement proactive and effective measures to avoid a continued decline in iPhone revenue. This report offers valuable insights for Apple, the mobile phone industry as a whole, and investors alike.