Apple is reportedly preparing to launch the iPhone 17 Air, a move that Omdia analysts say could represent a major strategic pivot for the company.
Historically, Apple’s mid-tier iPhone experiments — such as the mini and Plus — have underperformed, caught in a positioning gap between affordability and flagship appeal. The iPhone 17 Air aims to close that gap by making slimness a premium attribute, mirroring Apple’s successful MacBook Air vs. MacBook Pro playbook.
Why the iPhone 17 Air Matters
The new “Air” line could transform Apple’s smartphone portfolio in three key ways:
Strategic Testbed – Ultra-thin designs require advanced engineering and high-cost materials, making them harder for rivals to replicate. The Air could serve as a proving ground for future foldables and other ultra-premium innovations.
Premium Portfolio Support – Rather than serving as a budget option, the Air will complement the Pro line, reinforcing Apple’s luxury brand positioning.
Margin Optimization – Positioned between entry-level and flagship pricing, the Air could balance volume with profitability while reducing cannibalization of Pro sales.
Some key data points on Apple:
iPhone historical shipments and average selling price:
2020: 207.2 million units (+5%), US$788 (-3%)
2021: 230.1 million units (+11%), US$952 (+21%)
2022: 232.2 million units (+1%), US$932 (-2%)
2023: 229.1 million units (-1%), US$1,039 (+12%)
2024: 225.9 million units (-1%), US$1,068 (+3%)
2025 H1: 99.8 million units (+6%), US$1,054 (-1%)
Key Takeaways
The iPhone 17 Air signals a new chapter for Apple’s portfolio strategy, pivoting from size-based differentiation to design-led premium positioning.
Supply chain diversification, especially into India, is reducing Apple’s exposure to U.S.–China trade risks.
Apple’s AI adoption strategy is critical to sustaining competitiveness, especially in China and emerging markets.
Its IoT ecosystem, powered by AI, remains a cornerstone of brand loyalty and profitability.
The U.S.–China Trade War and Supply Chain Shift
Apple is facing escalating pressures from the U.S.–China trade war. Tariffs have already added an estimated US$900 million in costs, with that figure expected to exceed US$1 billion by Q3 2025. At the same time, a weaker U.S. dollar gives Apple room to raise U.S. launch prices while keeping overseas prices competitive.
The bigger story is supply chain realignment. According to Canalys (part of Omdia), nearly half of all iPhones sold in the U.S. in Q2 2025 were assembled in India. Shipments from India hit 11 million units, far surpassing China’s ~3 million. With Foxconn scaling rapidly and Tata expanding post-Wistron acquisition, India is now central to Apple’s supply chain resilience strategy.
Apple’s AI Challenge: Playing Catch-Up
While rivals like Samsung and Xiaomi push ahead with AI-powered smartphones, Apple has been cautious, emphasizing privacy and on-device processing. But adoption gaps are emerging:
By end of 2025, 25 percent of smartphones will be AI-capable, up from 9 percent in 2024.
AI app downloads have already surpassed 1 billion globally.
In China, Apple holds ~40 percent of the AI-capable smartphone market, but the absence of Apple Intelligence features has driven users to third-party apps like Doubao (101M downloads).
The iPhone 16e has seen success in Japan and Europe, but its lack of Apple Intelligence has slowed adoption in emerging markets—highlighting the need for faster software innovation to match hardware advances.
AI as the Backbone of Apple’s IoT Leadership
Beyond smartphones, Apple continues to leverage AI across its ecosystem to drive growth in wearables, AirPods, and services. At the upcoming “Awe Dropping” event, the company is expected to unveil:
A larger-screen Apple Watch with advanced health tracking.
Tighter AirPods integration for seamless experiences.
New Apple Intelligence features enabling personalization and ecosystem cohesion.
Canalys data shows Apple’s IoT leadership is built on high attach rates, driving recurring revenue and user stickiness. By embedding AI into its ecosystem, Apple strengthens its dominance in the AI-driven IoT landscape.
Baburajan Kizhakedath
