AI Fails To Spark Upgrade Supercycle For Apple

Wall Street analysts touted that the release of AI-powered Apple iPhones this fall would ignite a massive upgrade supercycle into year-end. However, new research shows those analysts were entirely wrong, as Apple missed out on the 2024 global smartphone rebound. 

Bloomberg cites a new report from market tracker IDC showing that global 2024 handset shipments are forecasted to increase by 6.2% or an estimated 1.24 billion units. 

A closer look at IDC’s data reveals that Apple’s shipments are only expected to grow by a mere .4% this year. This underscores the growing challenge Apple faces as Android-based competitors continue to chip away at its market share in top markets, particularly in China and emerging markets.

“While GenAI continues to be a hot topic and top priority for many vendors, it is yet to impact demand significantly and drive early upgrades,” said Nabila Popal, research director at IDC.

Popal continued, “More investments are needed to increase consumer awareness and introduce a ‘must have’ feature that will rush consumers to the store and create that super cycle which everyone is waiting for.”

In late August, recall Wedbush analyst Dan Ives hyped up his clients by publishing a note that specified the AI-enabled iPhone 16s would spark the biggest upgrade super cycle in history: “AI is on the doorstep … Our recent Asia checks are giving us more confidence that this upgrade cycle will unleash a long-awaited renaissance of growth for Cupertino over the next year.”

IDC’s new report comes as no surprise to readers. We have detailed, through fall, that AI-enabled iPhones would be a dud… 

• No AI-Fueled Upgrade Supercycle? Apple iPhone 16 Discounts Offered At Major Chinese Online Retailers

• Apple Slips On Pre-Order Analysis Showing Weak iPhone 16 Pro Demand

• Apple’s iPhone 16 Sales Falling Short Of Expectations; DigiTimes Says

• Barclays Analysts Find “Weak” iPhone 16 Demand After Supply Chain Check

• Foxconn Sales Growth Slows Amid Underwhelming AI-Enabled iPhone Upgrade Supercycle

• AI-Fueled iPhone Sales Drop During World’s Biggest Shopping Holiday In China

Meanwhile, Apple’s competition …

Sanctions: the new Huawei Mate 70 phone no longer relies on Google’s Android OS and has zero US hardware. It also has features which Apple likely won’t be able to steal for at least another 3 yearshttps://t.co/3i3NAEYI93

— zerohedge (@zerohedge) November 27, 2024

Goldman analysts still have a “Buy” on Apple with a 12-month $286 price target. Moar buybacks.

Shares are up 22% on the year – trading at a record high. 

Android rivals outperform Apple because their handsets are offered at a much lower, affordable price point: around $300, versus Apple’s $1,000.

The takeaway: AI failed to spark the upgrade supercycle in the handset market. Separately, the AI computer upgrade cycle was also a dud. Oops.