Apple Intelligence Drives iPhone 16 Sales, Highlighting AI's Growing Importance in Smartphone Market

New iPhone buyers actually do care about Apple Intelligence - 9to5Mac

Apple positioned the iPhone 16 as the first model "built from the ground up for Apple Intelligence." But until the company shared iPhone sales numbers, we didn't know whether customers would care or not. Now, the answer seems clear. Last week, Apple reported its biggest quarter in the company's history: $124.3 billion in revenue. Digging into the details revealed strong sales for Apple's trio of flagship products: iPhone, iPad, and Mac. iPad and Mac performed especially well, which may or may not have been due to an AI impact. iPhone saw a very minor decline from the year before -- but performed very well regardless. Perhaps even more important, he mentioned that the iPhone 16 is selling better in countries where AI is available than ones where it's not. Currently Apple Intelligence is unavailable in the EU and China. That Apple's AI narrative is working -- at least so far. Whether you think Apple Intelligence offers compelling functionality yet or not, customers are putting up money to buy the new AI-centric iPhone 16 at higher rates than we've seen with past iPhones. And the current struggles in areas where AI isn't available are short-term hiccups that reflect significant opportunity ahead for Apple. So overall it's good news for Apple Intelligence, good news for iPhone sales, and now the biggest question is: will iPhone 16 users care about AI once they actually have it? How will the all-important 'customer satisfaction' numbers turn out? In other words, can Apple deliver a great AI product? We should find out soon with iOS 18.4's upgrades, but iOS 19's unveiling in June will prove especially telling too. What do you make of Apple's recent iPhone sales report? Let us know in the comments.

Apple says the iPhone 16 is selling well and Apple Intelligence is a big reason why

Once you try AI tools, Cook says 'you can't imagine not using them anymore' Given the push to launch and expand Apple Intelligence last year, you'd be right to conclude that's Apple thinks its suite of artificial intelligence-powered tools will play a major role in the company's growth. And we got a glimpse of just how major that is, particularly for Apple's iPhone business when the company announced its fiscal first quarter earnings yesterday (January 30). While Apple reported all-time record sales of $124.3 billion for the three months ended December 29, iPhone revenue growth was essentially flat for the holiday quarter. The iPhone business accounted for $69.1 billion of Apple's sales for the quarter, down slightly from the $69.7 billion the company tallied during the same period a year ago. Normally, that should set off alarm bells, as the December quarter not only covers the holiday shopping season, but it's also the first full quarter of sales after Apple's traditional fall iPhone launch. A drop in revenue would, on the surface at least, suggest a not-so-great start for the iPhone 16. However, Apple insists that's not the case. In remarks to analysts after the earnings call, CEO Tim Cook brought up two things about iPhone sales that weren't immediately visible in Apple's balance sheet. For starters, Cook says, the iPhone 16 is actually selling better than the iPhone 15 did over the comparable launch date-through-the-end-of-the-calendar-year period. For another thing, Apple Intelligence appears to be convincing people to get new iPhones. "Markets where we had rolled out Apple Intelligence during the [quarter] performed better on a year-over-year basis than markets where we had not," Cook told analysts. "It's a positive indicator that we were pleased with." That might explain a lot about Apple's iPhone numbers. Apple Intelligence launched in October, but only in U.S. English. That meant people in other parts of the world who wanted to use the new features had to change the region setting on their iPhone. By December, Apple introduced localized English versions of Apple Intelligence in the U.K., Australia, Canada, New Zealand and South Africa, so Apple Intelligence was only fully available in those countries for a few weeks during the quarter. Apple Intelligence will be expanding to more areas soon enough. In April, Apple plans to add more languages to Apple Intelligence -- specifically French, German, Italian, Japanese, Korean, Portuguese, Spanish and Vietnamese. Localized English versions are also coming to India and Singapore at that time, along with a Chinese English version. Apple Intelligence's impact on iPhone 16 sales is certainly a surprise, at least to me. Right after iOS 18.1's release, I put together an assessment of Apple Intelligence, finding some features that I liked, others that I had little use for and mostly things that seemed like works in progress. There was promise to what Apple had come out with, I concluded, but nothing you'd go out of your way to upgrade for. Based on Apple's data, it seems my analysis was slightly off. "Apple Intelligence opens up an exciting new frontier and is already elevating experiences across iPhone, iPad, and Mac," Cook said. Asked by analysts which features people are using the most, Cook specifically cited Writing Tools, Image Playground, Genmoji, Visual Intelligence and the Clean Up tool for editing photos. "I know from my own personal experience using the features, you can't imagine not using them anymore," Cook added. "I know I get hundreds of emails a day and the summarization function is so important. So I think it's a combination of that and of course in April we roll out a whole series of new languages that we had mentioned and so the base grows further." It's not just about adding support for additional languages, though. Apple Intelligence's growth hinges upon Apple releasing more devices that can support those features. Right now, the AI tools are limited to the new iPhone lineup, as well as the iPhone 15 Pro and iPhone 15 Pro Max, which feature an AI-compatible A17 Pro chipset. Apple never comments on unannounced products during its earnings briefings, and the company stuck to that script in this quarter's call with analysts. But certainly more Apple Intelligence-ready devices are in the works -- and we could be seeing one sooner rather than later. It's widely expected that Apple will release a new version of its midrange iPhone SE phone sometime during the spring. And if Apple sticks to its normal pattern of SE releases, the new phone will feature the same silicon Apple introduced the previous fall. That would mean an A18 system-on-chip, which would allow the iPhone SE 4 to run the same Apple Intelligence features currently available to iPhone 16 models. If so -- and if the new SE keeps its price under $500 -- that could expand Apple Intelligence to a wider audience. And that's before the likely fall launch of the iPhone 17 lineup brings more Apple Intelligence-ready devices to the market. Indeed, Apple Intelligence will be crucial to any success Apple enjoys this year, according to a research note from Francisco Jeronimo, a vice president for data and analytics at IDC EMEA. "Apple Intelligence already played a significant role in this quarter's results and is expected to remain a key driver moving forward," Jeronimo wrote. "Expanding its availability to Europe (and reaching an agreement with the EU) and to additional Asian markets and languages should be Apple's primary focus in the year ahead."

Apple Intelligence is making iPhones smarter & driving sales

Apple's latest iPhones are flying off the shelves in some markets, and not in others. Apple CEO Tim Cook says this all comes down to where Apple Intelligence is available, and where it isn't. In a recent chat with CNBC ahead of the company's earnings call, Apple CEO Tim Cook explained that regions where the company has rolled out its AI platform, Apple Intelligence, saw stronger iPhone 16 sales compared to areas that didn't have it. Tim Cook's remarks suggest that Apple Intelligence might have been a key factor in boosting iPhone 16 sales in markets where it's available. However, China has not yet seen the rollout of Apple Intelligence. "During the December quarter, we saw that in markets where we had rolled out Apple Intelligence, the year-over-year performance in the iPhone 16 family was stronger than those markets where we had not rolled out Apple Intelligence," Cook said. Despite the absence, China remains central to Apple's growth plans, and its success there is often driven by hardware advancements and strong brand loyalty. Apple's approach to AI is famously understated compared to rivals like Google, but it's clearly making a difference. Apple Intelligence is working behind the scenes to improve the iPhone experience -- think smarter Siri interactions, better photo editing suggestions, or even personalized app recommendations. This restrained approach fits Apple's style. Unlike some of its competitors that loudly market AI features, Apple tends to embed them into its ecosystem quietly, letting the technology work for itself. Based on Cook's comments, this strategy is resonating with customers and giving the iPhone 16 lineup an edge in competitive markets. The timing is no coincidence. AI is dominating the tech industry, and companies are rushing to integrate it into everything. Google's Pixel phones have made a name for themselves with AI-powered features like real-time translation and ridiculously good camera software. Apple, meanwhile, has been more careful, rolling out features that integrate deeply with its devices. For the iPhone 16, Apple Intelligence enhances the experience in ways that may not be immediately obvious but still make an impact. The phone's new hardware -- like better cameras and longer battery life -- gets a boost from these AI-powered features. Apple's strategy of selectively launching Apple Intelligence in certain markets feels like a trial run. The company often takes this kind of gradual approach, whether it's rolling out new technologies or expanding product features. Ultimately, Apple's take on AI feels true to its brand: practical, polished, and focused on the user. As AI continues to shape the tech world, Apple's ability to seamlessly integrate it into its ecosystem could set it apart in a big way.

iPhone 16 sees stronger sales than iPhone 15 -- thanks to Apple Intelligence? - 9to5Mac

Not every iPhone launch outperforms launch sales of the prior model. That's the a problem for the iPhone 16 family, however. Apple CEO Tim Cook tells Susan Li that the latest phones are selling in higher volumes than the iPhone 15 family during the same time last year. Perhaps surprisingly to some is the reason: Apple Intelligence. That's based on Cook saying that "of course those countries that we have launched Apple Intelligence had stronger year over year performance than the countries where we did not." That's a nice way to say that the iPhone 16 launch did not impress in China where Apple Intelligence is not yet offered. Is the early suite of Apple Intelligence features actually converting into more iPhone 16 sales? Remember that the iPhone 16 lineup originally launched with zero Apple Intelligence features. You wouldn't know that based on the aggressive marketing saying that "Apple Intelligence is here." Once Apple did release the first set of Apple Intelligence features -- focused on improving writing and a new Siri design -- it still lacked many of the advertised features like Genmoji, image creation, and ChatGPT integration. More recently, Apple has offered most of what Apple Intelligence in year one consists of, but there are still major Siri features promised for iOS 18 that Apple Intelligence doesn't include yet. Meanwhile, Cook says that Apple Intelligence will reach more countries in April. That's when we expect iOS 18.4 to be ready. That release should include the new Siri features that let the virtual assistant use content in context from your iPhone to complete requests. Separately, Cook somewhat addressed DeepSeek, the Chinese AI firm that has rocked companies like NVIDIA and OpenAI. I think it's great... that efficiency is a great thing, and innovation that drives efficiency is a great thing. We've always had this hybrid model on investment, as you know, in the data center space, where we have our own data centers, and then we also use third parties. And so I think we're going to continue on that strategy. Hopefully Cook expands on those thoughts on the call with analysts next.

Countries That Support Apple Intelligence Witnessed Higher iPhone 16 Sales, According To CEO Tim Cook, Likely Explaining Why Revenue From China Dropped This Quarter

Tim Cook sounded thoroughly pleased during Apple's Q1 2025 earnings call, mentioning that it was the company's best quarter, with a revenue of $124.3 billion, along with double-digit profits. However, this figure could have been much higher had there been a more ubiquitous rollout of Apple Intelligence, and as you can tell, several regions have yet to support the service. During a recent chat, the trillion-dollar giant's Chief Executive commented that countries that support the company's generative AI features witnessed higher iPhone 16 sales, emphasizing how branching out to other nations is imperative. Speaking with CNBC, AppleInsider reports on Tim Cook's remarks that Apple Intelligence might have been a primary booster of iPhone 16 sales, but given that the firm's slew of generative AI features are not available in all countries, particularly China, it might be a strong reason why the iPhone division brought in $69.1 billion in Q1 2025. While this revenue still accounts for more than half of Apple's $124.3 billion earnings, it is slightly lower than the $69.7 billion recorded during Q1 2024. Bear in mind that Apple Intelligence has yet to launch in China, with the company still scrambling to team up with either Tencent or ByteDance to bring the service locally. In total, revenue in the country was $18.513 billion, down from $20.8 billion in Q1 2024, and given that it is the largest smartphone market by volume, it holds immense significance for Apple. It is also possible that when Apple Intelligence does become available worldwide, customers will opt to pick up the higher storage variants, as these features now require you to have 7GB of unallocated space. These requirements have increased because Apple prefers to run its AI models locally to maintain user privacy, but this change might have a positive impact on the technology giant's revenue. Customers who wish to run Apple Intelligence might be compelled to spend a little extra money to obtain devices with 256GB of storage, increasing the average selling price of compatible products and contributing immensely to the overall revenue. Since the rollout has been slow, we will not see the complete picture until a few months from now. If you truly believe that Apple Intelligence will result in higher iPhone 16 sales, let us know in the comments.

Apple Says It's Seeing More iPhone Upgrades Than Ever With Apple Intelligence Rollout

That milestone comes as the iPhone 16 lineup, which rolled out in September, is outpacing the performance of the iPhone 15 in the months following its launch in September 2023, Cook said. Customers are upgrading in part to get access to Apple Intelligence, the company's suite of artificial intelligence tools available on iPhone 15 and iPhone 16 models, Cook said, adding that iPhone 16 sales were stronger in markets where Apple Intelligence is available compared to markets where it hasn't been rolled out. That could indicate an opportunity for revenue growth in markets like China, where Apple Intelligence remains unavailable due to regulatory hurdles. Apple's first-quarter revenue fell 11% year-over-year in the region, as Chinese smartphone makers like Vivo and Huawei gained market share. Overall, Apple's iPhone sales fell just under 1% year-over-year to $69.14 billion. In April, Apple Intelligence will be made available in additional languages, including French, German, Italian, Portuguese, Spanish, Japanese, Korean, simplified Chinese, and localized English in Singapore and India, the company said. Apple expects to unveil new AI features in the future too, including an "even more capable Siri," Cook said. Cook said he expects Apple Intelligence to "go mainstream" as the company's base of iPhone 15 and iPhone 16 users grows. "I know from my own personal experience, once you start using the features you can't imagine not using them anymore," he said.