Apple shares experienced a 3.3% decline in Monday afternoon trading following reports that demand for the new iPhone 16 is lower than expected. According to TF Securities analyst Ming-Chi Kuo, sales of the iPhone 16 are down 12% year over year compared to the first-weekend sales of the iPhone 15 last year.
Kuo highlighted that the key factor contributing to the lower demand is the absence of Apple Intelligence at the launch of the iPhone 16 series, as well as intense competition in the Chinese market impacting sales. Last Monday, Apple introduced new versions of the iPhone, AirPods, and Apple Watch at an event in Cupertino, California. Pre-orders for the new iPhones started on Friday, with an official launch date of September 20. However, Apple Intelligence features for the iPhone 16 will only be available in a beta version next month.
Analysts from Barclays, JPMorgan, and Bank of America pointed out that shipping times suggest reduced demand for the iPhone 16 Pro models compared to last year. The Barclays analysts mentioned a decrease in pro model units on a year-over-year basis, while base and plus model sales grew. They also highlighted that the delay of Apple Intelligence in the Chinese language until 2025 may impact early enthusiasm for the iPhone 16 in that market.
JPMorgan analysts noted that demand for the base models of the iPhone 16 is consistent with the iPhone 15 series during the pre-order week, whereas demand for the Pro models is softer. BofA analysts observed that shipping times for the iPhone 16 Pro models are slightly extended compared to last year, with various factors such as supply, inventory, and pricing potentially impacting the situation.
In response to the lower demand, Apple reduced prices in Australia and India for the iPhone 16 models, with the Pro and Pro Max versions starting at $999 and $1,199, respectively. The Pro models were praised for having the thinnest borders on any Apple product and enhanced display quality. Additionally, Apple claimed that the iPhone 16 Pro Max boasts the best battery life ever, although specific details were not provided during the launch event.
The potential implications of the lower-than-expected demand for the iPhone 16 may lead Apple to make strategic adjustments to enhance sales in key markets. It remains to be seen how the company will address the challenges and stimulate consumer interest in its latest offerings.
