iPhone 16 Sales Stumble: Is Apple Intelligence Enough?

Apple had high hopes for the iPhone 16, hoping it would be a game-changer in the global smartphone market after a few years of sluggish flagship sales. However, initial sales figures have been underwhelming, raising questions about the phone's appeal.

What's Holding Back the iPhone 16?

One of the key features touted by Apple was Apple Intelligence, a generative AI promising to make the phone even smarter. But this feature wasn't available at launch, with Apple only releasing a beta version in October alongside iOS 18.1. The delayed rollout could be contributing to the lackluster sales, as consumers might be hesitant to buy a phone with a core feature unavailable.

Further evidence of the underwhelming sales comes from pre-order figures. Apple analyst Ming-Chi Kuo reported that iPhone 16 pre-orders in the first weekend reached only 37 million units, a decline of over 12% compared to the iPhone 15 last year. This drop was particularly noticeable in the Pro and Pro Max variants.

While other analysts like Dan Ives from Wedbush predicted higher pre-order sales of around 40 million units, even their estimates pointed to a decline compared to previous years. Angelo Zino of CFRA Research also noted a decrease in pre-order sales compared to the previous year.

Standard iPhone 16 Models Steal the Show

Analysts believe consumers are more interested in the standard iPhone 16 and iPhone 16 Plus compared to the Pro variants. This is concerning for Apple as the standard models received comparable upgrades to the Pro models, leaving some analysts wondering if the standard models might be too good.

“Given this is largely a software upgrade cycle, I'm concerned that more consumers are choosing the lower-priced iPhone 16 over the more expensive models,” said Angelo Zino. “The standard models received significant upgrades in terms of camera and internal processor.”

Zino also pointed out that the AI feature, while promising, might not be compelling enough to drive upgrades. “You'll have to wait for word of mouth to filter through the consumer base over the next few quarters before consumers will see the value in this new technology,” he said.

Consumer response during pre-orders suggests that the promise of integrated AI features alone isn't enough to sway consumers from their iPhone habits. Moreover, Apple didn't make significant improvements to the iPhone's camera physically or adjust the screen size. Software updates, which are already met with skepticism by many consumers, might be even harder to sell.

For most consumers, particularly those who aren't die-hard Apple fans, analysts suggest that the AI feature isn't compelling enough to justify an upgrade.

Future Outlook

Despite the underwhelming initial sales, most analysts remain optimistic that the iPhone 16 will become the smartphone market leader in the coming months, especially heading into the crucial last three months of the year. The overall performance will largely depend on consumer response to Apple Intelligence and the phone's overall user experience.

Apple will release detailed iPhone 16 sales figures in their earnings report next month. This data will only cover seven days of initial sales and ten days of regular sales, providing a limited snapshot of overall performance.