An attendee holds two iPhone 16s during an Apple event at the Steve Jobs Theater in Cupertino, California, United States on September 9, 2024.
Manuel Orpegoso | Reuters
Apple Shares fell 3.6% in morning trading on Monday after reports that demand for the new iPhone 16 was lower than expected — and a 12% year-over-year drop from first-week sales of the iPhone 15 last year, TF Securities analyst Ming-Chi Guo wrote in a note.
“The key factor is lower-than-expected demand for the iPhone 16 Pro series,” Guo wrote after compiling data from Apple’s websites on pre-order sales, average delivery times and pre-order shipments for each iPhone 16 model.
One of the “key factors” for low demand is that “with the launch of the iPhone 16, Apple’s intelligence has not been available as a key selling point. In addition, fierce competition in the Chinese market continues to affect iPhone demand.”
Last Monday, Apple unveiled new versions of the iPhone, AirPods and Apple Watch at an event at its headquarters in Cupertino, California. Pre-orders for the new iPhones began on Friday, September 20, but the first Apple Intelligence features for the iPhone 16 won’t be released in a beta version until next month.
Analysts at Barclays, JP Morgan and Bank of America wrote in investor notes that shipping times could translate to lighter demand for the new iPhone Pro models compared to last year.
“Based on our conversations with distributors and analysis of pre-order statistics on major Chinese e-commerce sites, with a less biased sampling mix, total pre-order units decreased Y/Y in the first two days,” wrote Barclays analysts. On a note. “We heard that Pro model units were down double digits on a Y/Y basis, while the base and Plus models grew Y/Y.”
The release of Apple Insights in Chinese “is not until CY2025, which could dampen early enthusiasm for IP16. Weak macro and competition continue to weigh on iPhone sales in China,” the Barclays analysts added. They also wrote that Apple will have to rely on significant discounts to help China sales for the iPhone 15.
When tracking key markets’ delivery lead times as a demand indicator, JP Morgan analysts note that “initial lead times indicate demand for iPhone 16 base models in week 1 (ie pre-order week) of the iPhone 15 series,” while initial demand indicators for Pro models Starts moderately soft compared to the iPhone 15 series.”
After tracking iPhone ship dates on Apple’s own website and various carrier websites, BofA analysts wrote that “ship times for iPhone 16 Pro and Pro Max models have extended, but slightly less (on average) than last year.” -Order cycle.”
“While the extension of ship dates may reflect iPhone demand, other factors such as distribution, inventory, allocation and pricing may affect ship dates,” they added. Analysts also wrote that Apple has cut iPhone 16 prices in Australia and India.
The iPhone 16 Pro and iPhone 16 Pro Max are Apple’s premium phones with nicer screens and cameras than the regular models, starting at $999 and $1,199, respectively.
The Pro models “have the thinnest bezels of any Apple product,” Apple said at its event last week, calling them “our best iPhone displays yet.” Titanium weighs about half the weight of stainless steel and is “more scratch resistant than other forms of titanium that others have used.”
The company said during the event that the new iPhone 16 Pro Max “has the best iPhone battery life ever,” but did not provide further details.
— CNBC’s Michael Bloom contributed reporting.
