In the fiercely competitive landscape of the technology sector, Apple's iPhone series has consistently captured market attentionThis interest extends beyond simple sales figures, as the performance of the iPhone is intricately linked to Apple's market standing and the broader trajectory of the smartphone industryRecently, Ming-Chi Kuo, renowned for his acute insights into Apple’s business strategies, has provided an in-depth analysis of iPhone sales, sparking considerable discussion and debate in the industry.

Kuo highlighted a crucial aspect of Apple’s sales strategy: while the revenue generated by the iPhone has managed to mitigate the downturn in unit shipments due to an ongoing enhancement of the product mix, he cautioned that the effectiveness of this strategy may very well be on borrowed timeHe argued that the share of Pro models in the iPhone lineup cannot continue to increase indefinitelyThis statement has sent ripples throughout the industry, challenging the norms that have dictated Apple’s trajectory thus far.

To deepen our understanding of Kuo’s assertions, it is insightful to examine the role of Apple Intelligence on iPhone sales

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Notably, the United States represents one of the most characteristic markets for Apple Intelligence, whereas Japan has not yet adopted this service, providing an intriguing contrast for our analysisWe can make several assumptions for our studyFor instance, if the product mix in various regions remains consistent, disregarding currency fluctuations and price discrepancies, the ratio of revenue to unit shipments should theoretically mirror one anotherFurthermore, let’s assume that the U.S. constitutes approximately 75% of sales or shipments across the Americas.

Employing data released in Apple’s earnings report from January 30, we glean some significant insightsAccording to the report, the proportion of total iPhone shipments attributed to the U.S. market is projected to be 31.8% for Q4 2024, showing a minimal change from 31.7% for Q4 2023. Meanwhile, Japan's representation in the global iPhone shipments for the same quarters is 7.2% and 6.5%, respectively, hinting at a nascent growth trajectory.

When considering the latest industry surveys, it emerges that global shipments of the iPhone 16 series in Q4 2024 are projected at around 66 million units, compared to approximately 68 million units for the iPhone 15 series in Q4 2023, marking a decline in overall shipmentsThis data starkly illustrates a slight year-on-year decrease in Q4 shipments for the new iPhone models in the U.S. marketIntriguingly, Japan, despite lacking Apple Intelligence, recorded a modest single-digit year-on-year growth in Q4 2024 shipmentsThis juxtaposition compels a reevaluation of the tangible influence of Apple Intelligence on iPhone salesAlthough our estimates are not flawless and are predicated on theoretical assumptions, they point toward a plausible conclusion: even if the U.S. market were to witness a year-on-year increase in iPhone shipments for Q4 2024, that increment would likely be marginal

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Correspondingly, third-party investigations corroborate a lack of enthusiasm among Apple Intelligence users, aligning with our conclusions and indicating limited significant influence on iPhone sales.

Next, we turn our focus to the relationship between iPhone revenue and its shipment volumeIndustry research indicates that the total iPhone shipments saw a decline of approximately 5.8% in Q4 2024, reflecting a notable downward trendThe surprising element here is that the iPhone's revenue only fell by a marginal 0.8% during the same quarterThis stark contrast can primarily be attributed to a further optimization of the shipping makeup of the iPhone lineSpecifically, the proportion of the Pro series models shot up from 54% in Q4 2023 to an impressive 61% in Q4 2024. This significant escalation highlights the Pro series' heightened appeal within the marketFurthermore, consumers purchasing Pro models frequently opt for higher storage variants, leading to a substantial boost in average selling priceEssentially, it can be argued that Apple has effectively leveraged a favorable product mix to counterbalance shipment declines by enhancing their average selling price, stabilizing revenue to a certain degreeIt’s important to note, however, that this approach may not be feasible for all companies as it necessitates a strong brand reputation to support such a strategyApple benefits enormously from its global brand recognition and customer loyalty, allowing it to implement this approach successfully over a period of time.

However, Kuo has pointedly remarked that the Pro model ratio cannot continue its ascent indefinitelyIn the Q1 FY 2025 earnings report, a notable drop in iPhone revenue began to emerge, serving as a stark warning sign

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