Apple’s iPhone 16 has hit the market with a less-than-stellar reception following a launch event many found underwhelming. The anticipated smartphone has struggled to attract buyers, with concerns centered around its delayed artificial intelligence (AI) features, which were expected to drive interest.
Industry insiders like Ming-Chi Kuo and Mark Gurman have weighed in on the sluggish sales. Despite high hopes for the new AI capabilities branded as Apple Intelligence, the feature’s delayed rollout has dampened enthusiasm for the iPhone 16.
One sign of the iPhone 16’s lackluster performance is the early availability for Apple employees to purchase the device. Normally, employees have to wait several weeks after a new iPhone’s release to buy it at a discount. However, Kuo noted that this time around, employees could buy the iPhone 16 right away, suggesting weaker demand than usual.
“This early access could indicate that the initial demand for the iPhone 16 is lower than expected,” Kuo remarked.
Sales Drop 13% from Last Year
Sales data confirms the slowdown. In the first weekend post-launch, Apple sold approximately 37 million iPhone 16 units—down nearly 13% from the previous year’s iPhone 15 sales. Kuo attributes this drop primarily to the delayed introduction of Apple Intelligence, a key selling point for the iPhone 16 Pro models.
“The staggered release of Apple Intelligence, which isn’t available at launch, is a significant reason for the lower demand for the iPhone 16 Pro series,” Kuo explained.
Mark Gurman, another prominent analyst, offered a more nuanced perspective. He confirmed that employees were able to purchase the iPhone 16 simultaneously with the general public, supporting Kuo’s view of lower demand. However, Gurman noted that the wait time for employees has not been as lengthy as in past years, suggesting a shift rather than a significant delay.
Other analysts also observed weaker demand. JPMorgan’s Samik Chatterjee reported “modestly softer” interest in the iPhone 16 Pro, while Bank of America’s Wamsi Mohan noted that shipping times for the Pro models are shorter compared to last year, especially in China.
Signs of Improvement in the U.S.
Despite the initial slowdown, there are some positive indicators. Jefferies’ report shows that demand for the iPhone 16 is gradually increasing in the U.S. Delivery times for the iPhone 16 Pro in major cities have extended to two to three weeks, suggesting a gradual uptick in interest, though still below last year’s figures.
Apple’s strategy hinges on new AI-driven features across its platforms, including enhancements to Safari, Notes, Calculator, and Siri. However, these features won’t be fully available until later this year, with initial updates expected in October.
Consumer Behavior and Upgrade Trends
Apple and analysts hoped that Apple Intelligence would trigger a significant upgrade cycle. However, studies reveal that only 18% of iPhone users upgrade their phones for new features alone. Most consumers prefer to upgrade when their devices are outdated, damaged, or lost.
The delay in AI features may be causing hesitation among potential buyers, with many waiting until these features are fully integrated before making a purchase.
Competitive Pressure in China
Apple faces tough competition in China, where local brands like Huawei are rapidly gaining market share. Kuo highlighted the “intense competition” from Chinese manufacturers as a major challenge for Apple in this crucial market.
To regain traction, Apple will need to leverage its AI innovations and address market concerns, especially in competitive regions like China.
