The iPhone 16’s Sluggish Start: What Does It Mean for Apple?
Apple’s highly anticipated iPhone 16 launch isn’t delivering the sales numbers the tech giant had hoped for. Despite new artificial intelligence (AI) features and considerable marketing efforts, pre-sale figures reveal a less enthusiastic response from consumers. With declining sales and a greater demand for the lower-end models, Apple may face challenges as it pushes the iPhone 16 forward in an increasingly competitive market.
iPhone 16 Pre-Sale Estimates Fall Short
According to early estimates, Apple sold an estimated 37 million iPhone 16 units during its first weekend of pre-sales. This figure, shared by Apple analyst Ming-Chi Kuo of TF International Securities, marks a decline of more than 12% compared to the iPhone 15 pre-sales during the same period. The disappointing numbers reflect a particular drop in demand for the higher-priced iPhone 16 Pro models.
Wedbush analyst Dan Ives pegged pre-sale numbers slightly higher at 40 million units, yet the overall trend points to a year-over-year decline. Technology analyst Angelo Zino from CFRA Research echoed this, stating that the data from the first weekend of pre-orders shows a notable drop compared to the iPhone 15.
The reduced demand for the iPhone 16 Pro and Pro Max models is significant, as these premium devices typically generate higher profit margins for Apple. During the first weekend of pre-sales, Apple sold approximately 9.8 million iPhone 16 Pro units and 17.1 million iPhone 16 Pro Max units, a drop of 27% and 16% year-over-year, respectively. By contrast, sales of the standard iPhone 16 and iPhone 16 Plus saw a slight increase compared to the iPhone 15.
Consumers Leaning Toward Lower-Priced Models
Analysts suggest that Apple’s problem may lie in how the upgrades are distributed across the iPhone 16 lineup. The standard iPhone 16 and iPhone 16 Plus received significant improvements, such as better cameras and faster processors, making them comparable to the Pro models in several key areas. As a result, consumers appear to be opting for the more affordable versions of the iPhone 16, which could impact Apple’s overall revenue.
Zino notes that this shift in consumer behavior could hurt Apple’s bottom line. “Given that this is largely a software upgrade cycle, my concern is that there were a greater mix of sales in the lower-priced iPhone 16 than the higher-priced devices,” Zino said. The improved features in the base models are making it harder for Apple to push customers toward the more expensive Pro versions, where the company typically sees higher profit margins.
Shorter Delivery Lead Times Raise Questions
One of the metrics analysts often use to gauge demand is delivery lead times—the gap between when a customer orders a phone and when it’s delivered. Shorter lead times generally indicate weaker demand, as fewer orders mean quicker fulfillment. For the iPhone 16 Pro, lead times during the first weekend of pre-sales were between one and two weeks, compared to the three-to-four-week wait for the iPhone 15 last year. This suggests that demand for the Pro models isn’t as high as Apple had hoped.
However, there could be another explanation for the shorter wait times. Lex Chiew, an analyst at Canalys, pointed out that Apple may have simply improved its supply chain efficiency, allowing the company to produce and ship more phones faster. CFRA’s Zino also mentioned that Apple likely boosted its inventory before the iPhone 16 launch to ensure it could meet demand quickly, especially given the pressure to drive a significant upgrade cycle.
AI Features Failing to Spark Interest—So Far
Apple had hoped that the iPhone 16’s new AI capabilities, branded as “Apple Intelligence,” would set the device apart from previous models and reignite consumer interest. However, the AI features haven’t fully rolled out yet. These capabilities are set to debut in beta with the release of iOS 18.1, which is still a few weeks away. Analysts believe that until consumers experience these AI functions firsthand, it may be difficult to convince them that the iPhone 16 is worth the upgrade.
Angelo Zino suggests that Apple’s AI promise may take time to gain traction among consumers. “You need to wait for word of mouth to trickle through the consumer base over the next couple of quarters,” Zino said. Apple’s AI features are highly anticipated, but without a tangible demonstration of their value, many consumers may be reluctant to invest in a new device based solely on future software upgrades.
Challenges in the Chinese Market
Apple is also facing increasing competition in China, one of its largest markets. Domestic smartphone manufacturers like Xiaomi, Oppo, and Huawei have made significant gains in the Chinese market by offering feature-rich phones at lower prices than Apple’s iPhones. This competition has affected Apple’s sales in the region, and the iPhone 16’s early struggles could be partly attributed to this external pressure.
Ming-Chi Kuo noted that Apple’s position in China has weakened over the past few years, and the iPhone 16 launch hasn’t yet reversed that trend. Chinese consumers have more choices than ever, and many local brands now offer devices that rival Apple’s in terms of performance, while often being more affordable.
Looking Ahead: A Potential for Recovery
Despite the iPhone 16’s slow start, analysts remain cautiously optimistic about its long-term performance. T-Mobile CEO Mike Sievert told CNBC that his company sold more iPhone 16 units during the first week of pre-sales than it did with the iPhone 15 last year, suggesting that there may still be room for improvement as more consumers consider upgrading.
Additionally, analysts expect the iPhone 16 to perform better as the holiday season approaches. Historically, Apple’s sales tend to surge during the final quarter of the year, driven by holiday shopping and promotional events. Dan Ives of Wedbush believes that the iPhone 16 could still have a “monster holiday quarter,” which would help Apple meet its overall sales targets.
Apple won’t release official iPhone 16 sales figures until its next earnings report, but the data will only cover the first seven days of pre-sales and 10 days of regular sales. Most analysts agree that while the iPhone 16 has had a slower-than-expected launch, it’s too early to declare it a failure.
Conclusion: Early Days for iPhone 16
The iPhone 16’s initial sales figures may not be as high as Apple had hoped, but the situation is still evolving. With new AI features rolling out soon and the holiday season on the horizon, Apple has plenty of opportunities to turn things around. However, the company will need to address concerns about its product lineup, pricing strategy, and competition in key markets like China to regain its momentum.
For now, Apple will have to rely on the strength of its loyal customer base and the appeal of its upcoming AI features to drive further sales in the coming months.
