Analysts from LightShed and Bank of America expressed concerns about the lackluster demand for the iPhone 16 and the potential disappointment of Apple’s anticipated AI features, suggesting that current carrier subsidies are not driving significant upgrades. They highlighted the risk of competition from other companies developing innovative AI-enabled devices, which could challenge Apple’s market position and hinder the expected super cycle for the iPhone.
In a recent discussion, analysts from LightShed and Bank of America shared insights on the current state of iPhone demand and Apple’s AI offerings. Walter Piecyk from LightShed expressed concerns about the tepid demand for the iPhone 16, despite T-Mobile’s claims of better demand compared to last year. He noted that carriers are offering larger discounts to attract customers, which may help Apple in the short term but could ultimately harm their revenue from ancillary services, as price competition could lead to lower upselling opportunities.
Piecyk highlighted that consumers typically upgrade their phones due to broken devices or battery issues rather than software advancements. He pointed out that the current subsidies from carriers are similar to those from the previous year, indicating that there isn’t a significant push for upgrades driven by new software features. He also mentioned that the anticipated AI features, which were showcased at Apple’s WWDC, may not live up to the hype and could disappoint users when they are eventually released.
Laura Martin, another analyst, added that the upcoming holiday season could influence demand, but she observed that many users with iPhone models from the 13 series and newer are not feeling the urgency to upgrade. She noted that those with older models, like the iPhone 11 or 12, are more inclined to consider an upgrade due to the age of their devices. However, there seems to be a lack of awareness about Apple’s AI initiatives among the general public, which could hinder the excitement around the new iPhone models.
The conversation also touched on the potential competition from new AI-enabled devices being developed by other companies, including a collaboration between Johnny Ive and OpenAI’s Sam Altman. This development raises concerns for Apple, as it could disrupt their market position if competitors successfully deliver innovative AI features that resonate with consumers. The analysts emphasized that the evolving technology landscape could change how users interact with their devices, potentially impacting Apple’s dominance in the smartphone market.
Overall, the analysts conveyed a cautious outlook on Apple’s current product cycle, particularly regarding the iPhone 16 and its AI capabilities. They suggested that without a compelling “killer app” to drive upgrades, the anticipated super cycle for the iPhone may not materialize as expected. The discussion underscored the importance of innovation and consumer engagement in maintaining Apple’s competitive edge in an increasingly crowded market.