Apple Intelligence Isn’t Driving iPhone 16 Sales the Way Apple Hoped

[Shirogane]

 

 

 

 

The baseline iPhone 16 is already the most capable Apple non-Pro smartphone ever. It has all the same extra buttons, like Camera Control and the Action Button, that the iPhone 16 Pro has. It can capture spatial pictures and video, and eventually, it’s getting all the newfangled Apple Intelligence features. Despite that, a noted supply chain analyst is reporting the company is cutting iPhone production just two months after launch as people aren’t really too keen on the promise of an AI-ified iPhone.

Market analyst Ming-Chi Kuo from KGI Securities wrote on his Medium blog Wednesday that Apple cut orders for about 10 million baseline iPhones for the tail end of this year and into 2025. Previously, Kuo estimated shipments of around 84 million for the tail end of this year, but that’s now down to an estimated 80 million. Apple is also expected to make fewer iPhone 16s in the first two quarters of 2025.

That’s still a lot of iPhones, but when Apple has been dealing with declining iPhone sales for over a year, it’s not great news for the Cupertino tech giant. Kuo mentioned that the decline in production might not show on Apple’s Q4 financial statements due to the gap in production versus sales. Still, there may be a decline in shipments and phone revenue year over year once we get into 2025.

Apple isn’t expected to decrease the number of iPhone 16 Pro models, with their better displays and camera setups plus the more powerful A18 Pro processor. iPhone sales were also down going into early 2024, despite the promise that the iPhone 15 Pro would be the first phone to facilitate Apple Intelligence.

 

 

 

Kuo said he did not assume Apple’s AI features would increase iPhone sales. Apple released its new phone alongside iOS 18. However, users have to wait until Oct. 28 to get the first few AI features like Writing Tools outside of beta. They’ll have to wait longer for iOS 18.2 for any AI image generation. The fabled Siri overhaul, which will supposedly let the assistant access users’ data across their devices, won’t arrive until sometime next year, according to inside sources cited by Bloomberg’s Mark Gurman.

Even if Apple Intelligence has the chance to boost sales, the market analyst remains skeptical, writing, “Apple’s recent order cuts suggest this optimistic expectation may not materialize in the short term.” There’s a chance iPhone buyers are waiting until the iPhone 17 to upgrade. By then, we’ll have already seen the outcome of Apple Intelligence and know whether it’s worth using. That, or Apple fans aren’t seeing anything truly exciting or revolutionary about the last few yearly smartphone releases.

 

 

Apple has reportedly scaled back production of its other big bet, the $3,500 Vision Pro. According to anonymous sources on the production line cited by The Information, Apple capped production at between 500,000 and 600,000 headsets. That will apparently be enough to meet demand. The iPhone maker may start winding down Vision Pro production in November. This comes just a few days after a Wall Street Journal interview with CEO Tim Cook, who proclaimed how they plan to be “the best” in AI features across iPhone, iPad, and Mac. Cook also said he’d “always like to sell more of everything,” including the company’s first “spatial computer.” Still, he admitted, “At $3,500, it’s not a mass-market product.”

 

 

 

SOURCE

[Shirogane]

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