Apple’s iPhone shipments just dropped 10%, but it’s got its eye on a different prize

Apple Wwdc22 Tim Cook Apple Park Hero
(Image credit: Apple)

Despite smartphone shipments growing 7.8% overall, Apple has seen an almost 10% drop in its iPhone shipments in Quarter 1 of 2024, causing many to wonder if this marks the start of a decline in Apple’s fortunes — especially since Apple’s attempts at building its electric vehicle have faltered and its AR ambitions have got off to a bit of a rocky start

Many of us are left wondering where Apple’s future lies and what its next ‘big thing’ is going to look like. But I'm confident Apple has a plan, and it’s in the fields of AI, all-new devices, and robotics where its future lies.

Big trouble in Little China

Over the 2020 lockdown period, iPhone shipments hit an all-time high as people retreated to brands they felt secure with. But post-lockdown, Apple has struggled to maintain its strong performance with a drop of 9.6% in shipments in the first quarter of 2024 compared to a year ago, seeing rival Samsung regain the top spot in the smartphone market. It’s mainly China that is responsible for the softening of the iPhone demand due to a resurgence of brands like Huawei and Xiaomi, and a Beijing ban on foreign devices in the workplace hitting hard.

Even a little closer to home, Apple’s iPhone woes continue with the newly opened DOJ lawsuit over Apple’s alleged monopoly of the smartphone industry. Apple has hit back at the lawsuit as “misguided”, but while the wheels of the justice system may move slowly, it has real power, and it could move to take away some of Apple’s advantages by breaking down its closed approach to software and hardware integration.

Project Titanic

Apple Car concept

Apple Car Concept (Image credit: Vanarama) (Image credit: Vanarama)

Project Titan, Apple’s ill-conceived name for its electric car project, ended up going down just like its namesake, the Titanic, with over 700 Apple staff laid off, and others relocated to other teams. While Apple hasn’t released a public statement about why it has shelved its foray into electric vehicles, it is believed that the slower-than-expected growth of the EV market (decelerated growth rate to 11% this year) combined with tougher-than-expected technical challenges for producing a true self-driving car (Apple had reportedly reduced the self-driving technology down from Level 4 to Level 2+ technology, requiring more human-driver control) combined to seal its fate.

While Apple is certainly not short of R&D dollars, canning a 10-year project like that cannot have been an easy decision, and it's left an armored vehicle-sized hole in the company’s plan for the future. Without a car, what is next for Apple?

Veering from AR to AI

Apple Vision Pro demo at Apple Store

Deep in the Apple-verse.  (Image credit: Future)

We had great hopes for Vision Pro being the way forward for Apple, but while the technological advancements of spatial computing cannot be denied, many have been left non-plussed by the futuristic headset. While it no doubt appeals to the geekier amongst us, it’s hard to imagine how wearing a headset for hours at a time lends itself to being a mass-market product, and there’s also the high price tag to consider. When it comes to smartphones people are happy to pay a premium for the security and safety that Apple provides, but smartphones are key to every aspect of our lives these days. It’s hard to see people justifying the expense for a headset that doesn’t rank as essential.

So, with AR floundering and electric vehicles off the table, many are left wondering if 2024 is going to be a turning point for Apple. If iPhone continues to underperform, what fills the gap? In the words of Paul Atreides from Dune 2 - “Our enemies are all around us, and in so many futures they prevail. But I do see a way, there is a narrow way through”, and that way is artificial intelligence. 

The battle for the soul of AI

According to Bloomberg, many of the engineers who were working on Apple’s Project Titan have now been transferred to working on artificial intelligence. So far, Apple AI hasn't produced much to talk about. In a sense, it is starting from a much worse position than Google or Facebook because, ironically, its chief selling point of offering more security and privacy than its rivals means it doesn’t have the vast swathes of user data available to train its AI on that its competitors do. However, we don’t know where this latest AI bubble is going to land yet. When the iPhone was invented nobody would have predicted the flood of app-based companies that it helped create. Nobody could have imagined an Uber, for example. And it’s the same with AI. We can’t quite predict exactly where this will take us yet.

All we can do right now is imagine: we can imagine AirPods that can talk back to you and have conversations with you. We can imagine HomePods that combine with robotics to give us that futuristic home robot we’ve always dreamed of. We can imagine a future where Apple’s AI is inside your next car, helping you plan your journey.

The future for Apple

Humane AI Pin's new AI Pin is an alternative to a smartphone. (Image credit: Humane) (Image credit: Humane)

It could be another device entirely that kickstarts the AI revolution. Take's new AI Pin as an example. The startup (run by ex-Apple employees) has generated a lot of interest in its device that attaches to your clothing and reduces the need for a smartphone. The $700 device is controlled by your voice. It lacks a screen, but it can use a laser to display images directly onto your hand. Early reviews have been less than glowing, but there's a consensus at least that AI-driven hardware will need to take some similarly-innovative form if it's to be truly engaging.

Apple is steaming ahead with AI in its new M4 Macs for later in the year that have already been leaked. The M4 chip will have AI capabilities that don’t require cloud computing. iOS 18 is already said to contain major AI upgrades that work entirely on the device. Whatever the future holds for Apple, AI could be the glue that sticks together so many of its silicon dreams. And a powerful AI heart beating away in an iPhone 16 or iPhone 16 Pro Max? It's hard to imagine that not selling like hotcakes.

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Graham Barlow
Group Editor in Chief, Tech

Graham is the Editor in Chief for all of Future’s tech magazines, including Mac|Life, MaximumPC, MacFormat, PC Pro, Linux Format and Computeractive. Graham has over 25 years of experience writing about technology and has covered many of the big Apple launches first hand including the iPhone, iPad and Apple Music. He first became fascinated with computing during the home computer boom of the 1980s, during which he wrote a text adventure game that was released commercially while still at school. After graduating university with a degree in Computer Science, Graham started as a writer on Future’s PC magazines eventually becoming editor of MacFormat in 2004 then Editor in Chief across the whole of Future’s tech magazine portfolio in 2013.These days Graham enjoys writing about the latest Apple tech for as well as Future’s tech magazine brands.