Apple’s iPhone 16 pre-sales are off to a slower-than-expected start, with estimates indicating lower demand compared to last year’s launch of the iPhone 15, especially for the higher-priced Pro and Pro Max models. Early figures from analysts, such as Ming-Chi Kuo and Wedbush’s Dan Ives, estimate 37 to 40 million units sold in the first weekend of pre-sales, down more than 12% year-over-year.

Shift in Consumer Preferences

Notably, demand for the iPhone 16 Pro and Pro Max devices is down by 27% and 16%, respectively. Instead, consumers appear to be favouring the lower-priced iPhone 16 and 16 Plus, whose sales were slightly up compared to their iPhone 15 counterparts. Analysts like CFRA’s Angelo Zino suggest that this shift is due to the significant upgrades made to the base models, which include better cameras and processors that reduce the incentive to opt for more expensive versions.

AI Features Delayed

A key factor contributing to the muted response is the delayed rollout of Apple’s AI features, branded as Apple Intelligence. These highly anticipated capabilities won’t be available until later in the year, after the iOS 18.1 update. Shorter delivery lead times for the iPhone 16 Pro compared to last year also reflect a lack of urgency from consumers to upgrade, possibly due to uncertainties around the true impact of these AI integrations.

Supply Chain Improvements

While some analysts view the shorter lead times as a negative sign of demand, Canalys Analyst Lex Chiew and others argue that this may actually point to improvements in Apple’s supply chain efficiency, allowing the company to meet demand more quickly. Additionally, T-Mobile CEO Mike Sievert noted that iPhone 16 sales through the carrier outpaced iPhone 15 sales during the first week, suggesting that early sales data may not tell the full story.

Outlook for the Holiday Quarter

Despite the slow start, analysts remain optimistic about the iPhone 16’s potential for a strong holiday quarter. As consumers become more familiar with the new AI features and seasonal shopping begins, the iPhone 16 could still deliver significant results. Wedbush’s Ives believes the iPhone 16’s “supercycle” will kick off in full force as the year progresses, with Apple’s earnings report next month providing the first official sales data.

For now, Apple’s hopes rest on word-of-mouth about its AI advancements and how well the iPhone 16 performs during the critical holiday season.