iPhone sales will build over years as Apple Intelligence vaporware condenses

Apple Intelligence — the personal intelligence system for iPhone, iPad, and Mac — combines the power of generative models with personal context to deliver intelligence that’s useful and relevant to the user.

Vaporware refers to products or services that are announced, but are significantly delayed as they are built and/or coded. While Apple Intelligence features have been announced at WWDC, with features like summarizing messages and generating images showcased in developer previews, it will take many months or years (into and past Apple’s expected iPhone 17 release in September 2025) for all of its features to be delivered to the general public.

Apple Intelligence fits the classic definition of “vaporware.” it has a long way to go to match its marketing hype

Because Apple Intelligence is a slow burn, analysts expect that iPhone sales will build over years as Apple Intelligence features and services come into existence and are released.

Dan Gallagher for The Wall Street Journal:
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[T]here are high hopes the new phones can spark some new action—especially since they will be the first to incorporate Apple’s new artificial-intelligence technology. Apple’s stock price has surged around 25% over the past six months, well outperforming its megacap tech peers in that time. The stock closed Wednesday about 6% below its record high from July but still fetches nearly 31 times forward earnings—18% above its five-year average and a 48% premium to the S&P 500’s multiple, according to FactSet data.

That sets up some risk, especially since Apple’s shares often slip on the days its new iPhones are announced. This time, there is also the big unknown about whether on-device AI can actually help Apple sell more iPhones. Strong iPhone sales cycles in the past have typically coincided with hardware or design changes, such as bigger screens and 5G capabilities. And Apple’s new AI developments won’t be a big surprise either. The company already used its Worldwide Developer Conference in June to show off its Apple Intelligence offering…

Complicating the picture is that Apple Intelligence isn’t expected to launch until October, so the software won’t be included with the new phones likely going on sale later this month. And not all AI capabilities will be available initially; the integration of ChatGPT with Apple’s Siri digital assistant isn’t expected until late this year.

That has Wall Street expecting a more bifurcated sales cycle; analysts expect iPhone unit sales to rise 4.5% in Apple’s 2025 fiscal year, which will be anchored by the new phones introduced next week, with a 5.4% gain projected in the following year, according to consensus estimates from Visible Alpha. “We believe that an ‘OK’ iPhone 16 (mid to high single digit revenue growth) and a stronger iPhone17 is increasingly embedded in expectations,” wrote Toni Sacconaghi of Bernstein in a report Tuesday.

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MacDailyNews Take: With some 300 million iPhones worldwide being four years old or older, due to three consecutive years of weak unit sales growth, Apple has time on its side as these pent-up upgrades don’t really rely on AI existing just yet – people just want/need a new iPhone, with new batteries, larger displays (Apple is expected to increase the display size of the iPhone 16 Pro from 6.1 inches to 6.3 inches and iPhone 16 Pro Max from 6.7 inches to 6.9-inches), better cameras, faster chips, etc.

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