• iPhone 16 launch is critical against the backdrop of lengthening iPhone holding periods and launch of Apple Intelligence.
• In the current state, most of the use cases offered through Apple Intelligence are not so compelling as to get a large section of users to upgrade their devices earlier than expected.
• The launch of Apple Intelligence in terms of both features and regions is also expected to be staggered hence its full impact is likely to be seen over time
• Hence, Apple Intelligence will drive an iPhone revenue step cycle rather than a single super cycle.

iPhone 16 is coming at a very important time for Apple especially when Apple showcased its foray into GenAI, creating a positive initial excitement. The launch is also critical against the backdrop of lengthening iPhone holding periods. Historically there have been 2 key super cycles for Apple – first one in 2016 with the iPhone 6 and the second one in 2021 with the iPhone12/13. While these super-cycles happened during different years, one common underlying factor was the “pent-up” demand – one fulfilled by a larger-display iPhone and the other by a clever portfolio strategy further catalyzed by post-pandemic pent-up demand. Coming to Apple Intelligence, In the current state, most of the use cases offered through Apple Intelligence, or even by other OEMs, are generally “nice to have” and not so compelling as to get a large section of users to upgrade their devices earlier than expected. We also do not see any “pent-up” demand (like in the previous super-cycles) for GenAI features among consumers, at least in the near term. The launch of Apple Intelligence in terms of both features and regions is also expected to be staggered, hence its full impact is likely to be seen over time, rather than in a single push. These factors will result in a revenue step cycle for Apple rather than a single super-cycle. Source: Counterpoint Research However, this step cycle will also help in driving a super-cycle in services revenue by creating a flywheel effect for the entire Apple business. We expect Apple’s services revenue to cross the $100-billion mark to account for one-fourth of its revenue by 2025. For our complete research note please login to our Research Portal if you are not a client, reach out to us at [email protected]