Apple Inc. (AAPL) is grappling with muted initial demand for its newly launched iPhone 16 series, a trend that has surprised analysts and sent the company's stock price sliding. Early reports indicate that the latest iteration of the iPhone, despite being equipped with advanced AI capabilities, has not generated the same level of excitement as its predecessor, the iPhone 15. This development comes at a crucial time for Apple, which relies heavily on its flagship product for a significant portion of its revenue.
The iPhone 16, which was unveiled last week and is slated for general release later this week, is priced between $799 for the base model and $1,199 for the high-end iPhone 16 Pro Max. While Apple has positioned this series as a significant upgrade, particularly with the promise of Apple Intelligence features, these AI capabilities are set to be rolled out in phases over the coming months. This delay, coupled with rising competition in key markets like China and a growing sense of consumer fatigue, appears to have dampened early sales.
Investment banks and industry analysts have noted that the pre-order activity for the iPhone 16 is not matching the levels seen during last year's iPhone 15 launch. Citigroup analysts observed that delivery times for pre-orders are notably shorter, suggesting that demand has not tested supply limits as it did previously. "Compared to the first day of iPhone 15 pre-orders, delivery times for the iPhone 16 are, on average, a week shorter," Citi analysts wrote. This trend is particularly evident with the Pro Max models, which have traditionally been the most popular in Apple's lineup.
Taiwan-based analyst Ming-Chi Kuo, known for his accurate Apple predictions, reported that Apple sold approximately 37 million units of the iPhone 16 during its opening weekend. This figure represents a 12.7% decline from the initial sales of the iPhone 15 series. Kuo highlighted that while the standard iPhone 16 and iPhone 16 Plus models have seen a modest increase in pre-orders compared to their predecessors, the higher-end Pro models are underperforming.
One of the key factors contributing to the lukewarm reception of the iPhone 16 is the absence of its much-touted Apple Intelligence features at launch. These AI-driven capabilities, which are central to Apple's pitch for the iPhone 16, are not expected to be available until October, with some features being delayed even further. This has left early adopters with little incentive to upgrade immediately, especially when compared to the fully-featured iPhone 15 Pro models.
Additionally, the iPhone 16 faces stiff competition from Chinese smartphone manufacturers, who have been aggressively expanding their market share. Kuo noted that this competition, particularly in China, has been a significant factor in the lower-than-expected pre-order numbers for the iPhone 16 series. The Chinese market is crucial for Apple, and any slip in performance there could have a substantial impact on the company's overall sales.
Another reason for the decline in demand for the iPhone 16 Pro models could be the narrowing gap between the standard and Pro versions. This year, the standard iPhone 16 and iPhone 16 Plus have adopted several features that were previously exclusive to the Pro models, such as the new Camera Control button and the Action button. Moreover, these models are equipped with the new A18 chipset, rather than inheriting last year's A17 Pro from the iPhone 15 Pro line. These enhancements make the standard models more attractive to consumers, potentially reducing the perceived need to opt for the more expensive Pro versions.
Despite these challenges, there is still optimism that demand for the iPhone 16 series will pick up later in the year. Kuo suggests that as Apple rolls out its delayed AI features and as the year-end holiday season approaches, the iPhone 16 could see a resurgence in sales. However, the current figures have already sparked concerns about Apple's ability to maintain its dominance in the increasingly competitive smartphone market.
The market has reacted swiftly to the news of sluggish demand. Apple's shares fell by 2.6% in premarket trading on Monday, reflecting investor anxiety over the potential impact of these developments on the company's financial performance. If the current trend continues, it could extend Apple's stock decline over the past month, which has already seen a 3.6% drop.
