Apple iPhone 16 Pro sees slower-than-expected demand: analyst

Pre-orders for the latest iPhone models was below expectations because Apple (AAPL) pushing artificial intelligence has failed to drive early demand for its new line of smartphones.

In the first weekend since its debut, Apple sold about 37 million iPhone 16 smartphones — down nearly 13 percent from iPhone 15 sales in the first weekend a year ago, TF Securities analyst Ming-Chi said Kuo in one blog post Monday.

The weaker-than-expected sales were driven by lower-than-expected demand for the iPhone 16 Pro lineup, largely due to the staggered release of Apple’s new AI feature, Apple Intelligence, Kuo said.

“One of the key factors behind the lower-than-expected demand for the iPhone 16 Pro series is that the main selling point, Apple Intelligence, is not available at launch alongside the iPhone 16 launch,” Kuo said.

Apple shares were down nearly 3% on Monday morning.

The range of new AI features includes capabilities in Safari, Notes, Calculator and most notably Siri for iOS 18, iPadOS 18 and macOS Sequoia. But at its annual event last week, Apple confirmed that early Apple Intelligence tools, which are available on the iPhone 15 Pro and higher, will release as a software update in beta in October, with more features to be released in the coming months.

While analysts promoted growth opportunities and the potential for o “super cycle” upgrade, recent research shows that a the minority of consumers buy a new iPhone because of the new features. Most choose to upgrade their smartphones only after they become outdated or are stolen or damaged.

Kuo added that “intense competition in the Chinese market continues to affect iPhone demand.” Domestic delivery dates appear to be shorter in other regions, potentially due to higher supply compared to lower demand for smartphones, according to BofA Securities (ferry) research note.

Delivery time is about 10 days for the iPhone 16 Pro and two to three weeks for the iPhone 16 Pro Max, which is about a week shorter than in other regions, BofA said.

from Apple iPhone sales in China down 19% to start the year — the country’s worst performance since the start of the COVID-19 pandemic in 2020. Its share of China’s smartphone market also fell year-on-year in the first quarter of 2024 to 15 .7%, from 19.7%. The company has cut prices on some iPhone models in the Chinese market as competition grows with Huawei and other domestic smartphone makers.

But Kuo said Apple still has opportunities to improve sales with the launch of Apple Intelligence and “peak season promotions,” including the holiday season in the US and Europe and (the year-end holiday season in America and Europe and Double 11 in China, the country’s biggest shopping festival similar to Black Friday.

“These factors will be key points to watch for changes in iPhone demand,” Kuo said.