In 2025, Apple’s iPhone has emerged as a pivotal force in the global smartphone industry, significantly contributing to market growth amid challenges faced by competitors, particularly in China. According to IDC’s August report, worldwide smartphone shipments are projected to increase by 1% compared to 2024, reaching 1.24 billion units. This modest growth surpasses earlier industry expectations, largely due to Apple’s performance.
Apple’s iPhone shipments are anticipated to rise by 3.9% over the previous year. Without this contribution, global smartphone shipments would likely remain stagnant or decline. The Chinese market, a significant player in the smartphone industry, is expected to experience a 1% decline in shipments. This downturn is attributed to the cessation of government subsidies and a sluggish recovery in consumer spending. Despite these challenges, Apple has managed to maintain steady demand through strategic initiatives such as trade-in offers and installment plans, which encourage customers to upgrade their devices.
Customer loyalty plays a crucial role in Apple’s success. A significant majority of iPhone users prefer to remain within the iOS ecosystem when replacing their devices. This loyalty has enabled Apple to expand its market share, even as Android manufacturers focus on increasing volume in highly competitive segments.
Regional Gains Matter
The U.S. market is projected to grow by 3.6% in 2025, while the Middle East and Africa are expected to see a 6.5% increase. These regional gains help offset the decline in China. For Apple, the U.S. market is particularly significant, as the company dominates the premium segment and collaborates closely with carriers on upgrade promotions. In contrast, other regions hold varying levels of importance.
Asia-Pacific, excluding China, is anticipated to post a modest 0.8% increase. This uneven landscape underscores the necessity for global brands to maintain flexibility. Apple’s extensive supply chain and broad marketing reach enable the company to target growth regions effectively.
Premium is the Priority
IDC forecasts a 5% rise in the industry’s average selling price in 2025, with overall market value increasing by 6%. Apple exemplifies a strategy focused on profitability without solely pursuing unit share. Instead of concentrating on low-cost devices, Apple emphasizes premium phones, making them more accessible through trade-ins and financing options. This approach is effective because the iPhone serves as the hub of Apple’s broader ecosystem. Services like Apple Music, iCloud, and Apple One enhance the value of remaining within the Apple family. Additionally, customers who own other Apple products, such as the Apple Watch or MacBook, are less likely to switch to competitors.
GenAI Pushes iPhone Forward
IDC projects that 370 million GenAI-capable smartphones will ship in 2025, accounting for nearly 30% of the global market. By 2029, this figure is expected to exceed 70%. Apple is poised to capitalize on this trend with new AI features anticipated in the iPhone 17. Unlike some Android manufacturers that promote AI capabilities prematurely, Apple typically waits until the technology is fully developed. If Apple executes this strategy effectively, its scale could accelerate the mainstream adoption of GenAI faster than any competitor. The iPhone has previously transformed niche features, like Face ID, into industry standards, and AI is set to follow a similar trajectory.
Risks in the Background
While the 25% tariffs announced in April are in effect, IDC’s forecast assumes that exemptions on smartphones beyond that 25% remain intact. Any changes in trade policy could rapidly alter the market landscape. Even Apple, with its substantial supply chain leverage, is not immune to such disruptions. Another significant challenge is consumer upgrade behavior. Customers are retaining their phones longer than before, sometimes for four years or more. Apple has mitigated this trend with its annual upgrade program and trade-in offers, but it cannot entirely reverse the pattern.
In summary, the iPhone continues to dominate the industry. While GenAI and foldable phones are noteworthy developments, the smartphone market in 2025 mirrors the past decade—Apple leads, and others follow.
