In the ever-evolving world of smartphones, Apple has long been the gold standard, with its iPhone reigning as a cultural and technological icon. However, recent trends suggest that the shine might be wearing off. Fewer people are upgrading their iPhones, sales are steadily declining, and Apple’s much-hyped foray into artificial intelligence (AI) has failed to ignite the excitement—or the sales—the company anticipated. Despite aggressive advertising, Apple Intelligence has largely been a bust, leaving the tech giant at a crossroads as it grapples with shifting consumer behavior and a saturated market.
The Upgrade Cycle Slows Down
For years, Apple thrived on a predictable rhythm: every fall, a new iPhone would launch, and millions of loyal customers would rush to upgrade. That cycle, however, is slowing. Data from industry analysts like Counterpoint Research shows a clear trend—consumers are holding onto their iPhones longer. In the United States, for instance, the iPhone 16 series saw a 1% year-over-year decline in sales through the first four weeks of availability in 2024, with wireless carriers reporting persistently low upgrade rates. Globally, iPhone unit shipments as a share of smartphone shipments dropped to 15.8% in Q2 2024, down from 16% the previous year.
Why the hesitation? For many, the incremental improvements in newer models—better cameras, slightly faster processors, or refined designs—aren’t compelling enough to justify the cost. The iPhone 14, 15, and now 16 have been criticized for lacking groundbreaking innovation, with online memes poking fun at how each new release feels like a rehash of the last. As one analyst from Counterpoint noted, “Buyers have not seen reasons to change their behavior of holding on to their existing smartphones for longer periods of time—yet.” With modern iPhones built to last and software updates extending the life of older devices, the urgency to upgrade has faded.
Declining Sales: A Global Challenge
The slowdown in upgrades has translated into a tangible hit to Apple’s bottom line. In the final quarter of 2024, global iPhone sales dropped by approximately 5%, according to Counterpoint Research, with a full-year decline of 2% even as the broader smartphone market grew by 4%. This marks a stark contrast to Apple’s historical dominance, where it once commanded a 20% global market share. In 2024, that share slipped to 18%, with competitors like Samsung also losing ground to fast-rising Chinese brands such as Xiaomi and Vivo.
Nowhere is this decline more pronounced than in China, Apple’s largest market outside the U.S. and Europe. Sales in Greater China fell 11% year-over-year in the fiscal first quarter ending December 28, 2024, reaching $18.51 billion—well below analyst expectations of $21.33 billion. Local rivals like Huawei, which saw its high-end phone market share in China soar from 11% in 2022 to 24% in Q3 2023, are eating into Apple’s territory with feature-rich, competitively priced devices. Counterpoint reported a staggering 30% drop in iPhone sales in China during the first week of 2024, underscoring the intensifying competition and waning demand.
Even in the U.S., where Apple holds a commanding 53% market share, the iPhone 16’s lukewarm reception suggests trouble. While overall company revenue grew 4% to $124.3 billion in the holiday quarter, iPhone sales specifically dipped 0.8% to $69.14 billion—missing Wall Street’s $71 billion target. This reliance on other product lines, like Macs and services, to prop up revenue highlights a growing vulnerability in Apple’s flagship product.
Apple Intelligence: A Hyped Bust
Enter Apple Intelligence, the company’s big bet to reverse these trends. Unveiled with fanfare at the 2024 Worldwide Developers Conference and rolled out in stages starting in October, Apple positioned its AI suite—featuring email rewriting, image generation, and an enhanced Siri—as the must-have reason to upgrade to an iPhone 15 Pro or 16. The marketing blitz was relentless, touting these features as revolutionary. Yet, the reality has been far less impressive.
For one, the rollout was staggered and limited. At the iPhone 16’s September 2024 launch, Apple Intelligence wasn’t fully available, disappointing early adopters. In China, regulatory hurdles have delayed its debut entirely, leaving Apple without a key selling point in a critical market. Even where it’s accessible, consumer response has been tepid. Analysts like Craig Moffett of MoffettNathanson, who downgraded Apple stock to “sell” in January 2025, pointed to “growing evidence that consumers are unmoved by AI functionality.” Far from sparking a “golden upgrade cycle” as predicted by Wedbush’s Dan Ives, Apple Intelligence has failed to move the needle.
The features themselves have drawn mixed reviews. While some, like privacy-focused AI processing, align with Apple’s brand, others—like the delayed “more capable Siri”—have underwhelmed. A misstep with a news-summarizing AI tool, pulled in December 2024 after generating inaccurate headlines, further dented confidence. As Jane Hepburne Scott of Aegon Asset Management put it, “AI is the new technology innovation, [and] the fact that Apple’s handsets are lagging behind on capabilities is a key reason why their competitive positioning has weakened.”
Advertising Overpromise, Underwhelming Reality
Apple’s aggressive promotion of Apple Intelligence stands in stark contrast to its lackluster impact. The company leaned heavily on AI as a differentiator, hoping to counter rivals like Samsung, whose Galaxy S24 boasted AI features out of the gate. Yet, the disconnect between the hype and the delivery has left consumers skeptical. Posts on X echo this sentiment, with one user noting, “Apple’s AI rollout might matter to a small fraction of customers. For everyone else, we just need our iPhones to work—with or without AI.” Another quipped that the “slow-and-steady upgrade cycle, not the sexy new features,” drives sales—a damning assessment of Apple’s strategy.
This advertising push hasn’t been cheap, either. While Samsung has historically outspent Apple on phone ads in the U.S., Apple ramped up its budget to spotlight AI, only to see diminishing returns. The lack of “compelling use cases” for AI, as an anonymous agency exec told Ad Age, has made it tough to convert marketing into sales, especially when hardware innovation has plateaued.
What’s Next for Apple?
Apple finds itself in a tricky spot. The iPhone, still accounting for nearly half its revenue, is no longer the unstoppable growth engine it once was. Market saturation in developed regions, fierce competition in emerging markets, and a consumer base content with older models pose ongoing challenges. The company’s pivot to services—like Apple Music and the App Store, which hit a record $26.3 billion in the holiday quarter—offers some relief, but it’s not enough to offset the iPhone’s struggles entirely.
Looking ahead, Apple is banking on a 2025 refresh, including a new low-end SE model and a thinner iPhone, to reignite interest. Partnerships with AI firms like OpenAI or Google could bolster Apple Intelligence, especially in China. Yet, the broader question looms: can Apple reclaim its mantle as an innovator, or is it destined to become, as one X user put it, “a utility”? For now, the numbers tell a clear story—fewer upgrades, declining sales, and an AI bust that’s failed to deliver on its promise. The tech giant’s next move will be critical.
