Apple Intelligence will drive iPhone 16 sales but isn't a major factor yet
by William Gallagher · AppleInsiderInvestment bank JP Morgan analysts say that Apple Intelligence is not yet drawing iPhone users to upgrade, and demand for iPhone 16 Pro models is weaker than it was with the iPhone 15 Pro range.
In April 2024, JP Morgan dropped its Apple stock price to $210 because it believed that Apple Intelligence would drive iPhone 17 sales rather than iPhone 16 ones. Then in May 2024 it raised the stock price to $245 specifically on the strength of Apple's announcement of Apple Intelligence.
Now having conducted a user survey and monitored sales of the iPhone 16 range, the company is taking up a position in the middle. JP Morgan now believes that Apple Intelligence will drive up sales of the iPhone 16 range — but not yet.
In pair of notes to investors seen by AppleInsider, JP Morgan says there is "more muted momentum" in early orders for the iPhone 16 Pro models. But this is "likely due to the unavailability of AI capabilities," which users want to see before they buy.
At present, JP Morgan found that Apple Intelligence wasn't even in the top five reasons people are upgrading. It comes in sixth, but ahead of it are factors such as 5G connectivity and overall speed of the phone.
There is also the issue that Apple Intelligence will initially only be available in US English. The analysts predict that consumer appetite for the Apple Intelligence models will grow as more countries are supported.
This is based both on the rationale that a wider audience reach will help, but also on the analysts' findings about demand. The company's survey showed that where 63% of people surveyed in 2023 intended to buy a new iPhone 15, now 68% expect to buy from the iPhone 16 range.
The survey showed that in particular, demand from consumers in the US and China is higher. There is also a higher appetite for Android users to switch to iPhone, with 2023 seeing 50% wanting to move, and in 2024 it's 61%.
Those switchers from Android reportedly prefer the higher-end models. That's the opposite of the current trend in regular iPhone users.
Overall, JP Morgan now predicts Apple will sell 76 million iPhones in Q4, 2024. It will reach 148 million over the next four quarters.
The investment bank's analysts also describe the response to the Apple Watch Series 10 as "muted," but then says that its survey shows much greater interest than for the Apple Watch Series 9. In 2023, a survey said 38% of consumers looking for a smart watch were intending to buy an Apple Watch, and now it's 54%.
As a consequence of the current sales and its prediction of how Apple Intelligence will grow, JP Morgan is maintaining its Apple stock price of $265.
5 Comments
iOS_Guy80 884 comments · 5 Years
About 1 day ago
JP Morgan is all over their board with their price predictions glad I don’t use there information to make financial investment decisions.
DAalseth 2968 comments · 6 Years
About 1 day ago
I wonder though. Outside of us in the tech world AI is just a buzzword. I don’t see many non tech folks chomping at the bit to get their hands on the tech. A lot of people may start using it over time, but I wonder if it will really drive sales as much as some think it might.
kkqd1337 451 comments · 12 Years
About 23 hours ago
WIll it?
I really wouldn't expect your average Joe to know the difference between Siri and Siri AI. And for good reason. It's basically the same thing!
Edit: Unless of course you love AI emoji's!? (i mean wtf is that all about?). But if you do, your probably too young to afford an iPhone.
mpantone 2151 comments · 18 Years
About 20 hours ago
DAalseth said:
I wonder though. Outside of us in the tech world AI is just a buzzword. I don’t see many non tech folks chomping at the bit to get their hands on the tech. A lot of people may start using it over time, but I wonder if it will really drive sales as much as some think it might.
Consumer adoption of new technologies is never instantaneous. It will take time.
One thing that is clear: smartphones are the drivers of consumer technology innovation because smartphones are the primary computing modality for consumers in 2024. It will not be about how AI can help what you do on your Windows PC or Mac. It will be about what it does on your smartphone.
We have seen skepticism before and repeatedly. Remember when Apple Pay was introduced? A lot of people went off the deep end saying it was insecure, scary, whatever despite the fact that the Japanese started using their mobile phones as transit passes in 2005. That's right, two years before Apple even launched the iPhone. Today NFC contactless payment is widespread (more in Asia and Europe than in the USA) and no one really thinks anything of it. Most credit and debit cards now have an NFC chip too.
Same with Face ID. Again, a lot of bizarre reactions at launch but now biometric identification doesn't turn anyone's head. Airlines and border control agencies use it.
I expect pretty much the same for AI/ML. Some people will be rightfully cautious of early implementations of consumer usage cases. But at some point, there will be something that sticks.
Remember that students have been using AI to do their homework, write papers, etc. for a couple of years now. In five years, it will be "AI? What about it? I use it every day" just like people use biometric identification and NFC contactless payment today without giving them a second thought.
I think Apple has a good chance at making AI/ML mainstream for Joe Consumer. They have similar success stories with hardware, whether it be MP3 music players, tablets, wireless earbuds, or smart watches. All of these were marginal products at the beginning and Apple has always been criticized for not being the cheapest solution. Remember Slashdot's CmdrTaco's reaction of the iPod when it launched in 2001: "No wireless. Less space than a Nomad. Lame."
One thing that Apple has to its advantage is their heavy emphasis on consumer privacy. This has worked to their advantage in gaining consumer trust whether it be financial transactions (NFC contactless payment), health data (Apple Watch functions), biometric identification (Touch ID and Face ID data stored on device in the Secure Enclave). While they put ads in their storefronts (Music, App, etc.) they don't shove ads down people's throats elsewhere unlike some other platform providers (*cough* Windows *cough*).
It's hard to say what smartphone usage cases will make Joe Consumer view AI as a helpful and desirable tool but there will be more than one, that's for sure.
My guess is that photography has a good chance at being one of those game changers. Something like "remove telephone poles and other people from this photo", "fix sleepy eyes on photo subjects", "add tiara to girlfriend", "make me look 15 pounds lighter" or "remove sunburn". Or maybe all of them at the same time...
;)
dewme 5676 comments · 10 Years
About 17 hours ago
DAalseth said:
I wonder though. Outside of us in the tech world AI is just a buzzword. I don’t see many non tech folks chomping at the bit to get their hands on the tech. A lot of people may start using it over time, but I wonder if it will really drive sales as much as some think it might.
Most buyers don't buy technology directly for technology's sake. They buy the features, applications, and services the technology enables. I personally feel like Apple was already on the right track with AI, ML, predictive analytics, etc., when their primary focus was on the features, applications, and services their underlying "AI" technology was allowing them to bring to the market and put in customer's hands.
Unfortunately the investment mavens, buzzword babies, tech pundits, and tech media started weaving tales of unparalleled technical innovation soon to arrive just in time to save us all from whatever was impeding us. Things like writing legible business documents with only a 4th grade education, writing guaranteed-to-get-hired resumes while having no marketable skills, generating flying hairy rhinoceros in a tutu with steel eagle beak images to share with the world, and tools to summarize TLDR emails into a shorter form that we'll still ignore in our 6-digit unread email pile, etc. The saviour for our stupidity that would fill all those empty holes in our own intelligence, while covertly plotting to kill us at some point. The dawn of a new technical world order was coming, ... and its name was "AI." Behold, the "AI" is coming soon.
Apple had to jump on the bandwagon to avoid becoming totally irrelevant in the eyes of the "true believers" who were already sold on AI. But in typical Apple fashion, Apple wasn't about to jump in with a me-too version of AI. In fact, Apple wasn't doing AI at all, they were doing Apple Intelligence. That totally fits Apple. Apple rarely jumps into markets or product categories they do not own. The Mac was never simply Apple's take on a PC, it was a "Mac" and Apple owned the entire Mac market. Same with OS X, macOS, iOS, iPod, iPhone, iPad, HomePod, Vision Pro, Apple TV, and now Apple Intelligence.
Even when Apple's creation kind of looks like other products in nearby markets, like the HomePod and AirPods, Apple always finds a way to own a market in which they are the only supplier. HomePod isn't just another Bluetooth speaker. It looks like one, but it doesn't even do Bluetooth. The HomePod does everything Apple needs it to do in order to mesh into other Apple-owned product categories. This is why I have no delusions about Apple jumping back into home networking like they did with the AirPort product line. If Apple does anything again along those lines, it will be an Apple creation that sits happily in its own product category, one that is owned exclusively by Apple. Same with HomeKit devices. If Apple can't own a market or a product category, they will create one and leave the me-too products for all the others to fight it out amongst themselves.
That said, I am very enthusiastic about the possibilities that Apple Intelligence will eventually deliver. They will come without a doubt. They'll slither out of Apple's R&D labs and factories with total focus on the products, features, capabilities, and lifestyle altering changes they actually deliver to customers. That's what will sell, not the technology. I just hope Apple can reach escape velocity from the AI buzzosphere soon and keep everyone focused on what Apple's products actually deliver.
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