Apple's AI Ambitions Face Setback: Analyst Predicts 'Underwhelming' Apple Intelligence to Impact iPhone Sales

Kuo: Apple Knows Apple Intelligence is 'Underwhelming' and Won't Drive iPhone Upgrades

As early as last July, Kuo said expectations that Apple Intelligence could drive iPhone upgrades were likely "too optimistic," and in January, he was even more explicit and said that the appeal of Apple Intelligence had "significantly declined" because of the delay between when Apple showed off Apple Intelligence features in June and when they launched starting in October. Kuo is maintaining his cautious view in light of Apple's Siri debacle, which has seen the company delay heavily advertised Apple Intelligence Siri features that it initially said would come in iOS 18. According to Kuo, Apple is already aware of Apple Intelligence's "underwhelming performance," and has provided suppliers with conservative iPhone shipment forecasts as a result. Lately, the market consensus has shifted to a more cautious stance on iPhone shipments and Apple Intelligence (Siri), which supports my earlier predictions. Moreover, it's clear that when Apple shared conservative shipment forecasts with its key suppliers early this year, they had already factored in Apple Intelligence's underwhelming performance. The negative public sentiment that Apple is facing due to the Apple Intelligence Siri delay could further impact sales of the iPhone 16 and iPhone 17 models in the coming months. Apple last week said that Siri personal context and App Intents are being pushed back until the "coming year," and it doesn't seem like the company expected such a critical reaction from the tech community and its customers. Longtime Apple reporter John Gruber, for example, recently published an in-depth report calling out Apple's Siri shortcomings, and his commentary has resonated with many who have the same feelings about Apple's longtime struggle with Siri improvements. Many others have also spoken up on the very public demonstrations of Apple Intelligence Siri features that Apple provided over the course of the last year and the subsequent delay that has shaken public confidence in the company's ability to deliver AI features that can compete with OpenAI, Google, Anthropic, and others.

The 'underwhelming performance' of Apple Intelligence will impact iPhone sales, analyst claims

The delays Apple Intelligence has faced might impact iPhone sales negatively. Analyst Ming-Chi Kuo called the performance of Apple Intelligence "underwhelming," adding that it won't entice people to replace their older iPhones. In a social media post on Thursday, Kuo reiterated his previous claims that Apple Intelligence would "contribute less than expected to shipment volumes." In October 2024, the analyst said more or less the same thing -- that Apple's AI features would not facilitate a short-term boost in iPhone sales. According to Kuo, the market has recently adopted a more cautious view of Apple Intelligence, presumably because of the debacle Apple faced with its planned Siri upgrades. We can already see signs of this, as Morgan Stanley decreased their expectations for Apple's stock prices, citing concerns regarding the current status of Siri and its postponed Apple Intelligence overhaul. The iPhone maker was forced to delay some of Siri's heavily promoted Apple Intelligence features, such as the virtual assistant's personal context functionality and in-app actions. Kuo claims that Apple "had already factored in" the "underwhelming performance" of Apple Intelligence when the company shared conservative iPhone sales forecasts with suppliers in early 2025. Apple was presumably aware of the negative impact its Siri delay would have on sales figures. While Apple Intelligence itself was originally announced in June of 2024, at WWDC, the company's generative AI features only made a partial debut with the release of iOS 18.1 in October 2024. Apple ran multiple advertisements depicting a new and improved, contextually aware Siri, but these features still have yet to reach end users, undoubtedly causing frustration and negative sentiment. In January 2025, Apple CEO Tim Cook chimed in on the matter. He said that the iPhone 16 had performed better in regions and markets where Apple Intelligence was available, indicating that the company's generative AI features were a significant factor for users looking to upgrade. This was before Siri's personal context features and App Intents features were postponed, however, making it unlikely that Apple Intelligence will influence iPhone sales in a similarly positive manner going forward. Siri's personal context capabilities are set to arrive "in the coming year," meaning that they might only become available with iOS 19. Apple is said to be working on a massive user interface redesign as part of iOS 19, possibly in an attempt to drive attention away from the slow rollout of Apple Intelligence features. Similarly, a significant design overhaul is planned for the iPhone 17 range, which is set to feature an entirely new "iPhone 17 Air" model with an ultra-thin chassis. Ultimately, any poor performance and negative public perception of Apple Intelligence if it materializes in the larger market will likely have a more significant impact on the existing iPhone 16 range, as Apple appears to be working on additional selling points for the iPhone 17. The company might opt to relegate artificial intelligence to the backdrop, putting the spotlight on major design changes and new camera-related features.