Apple’s iPhone 16 series has garnered significant attention, but recent reports reveal mixed signals regarding consumer demand. Insights from Piper Sandler’s fall 2024 survey and updates from TF International Securities analyst Ming-Chi Kuo shed light on the current market trends and expectations.
Piper Sandler’s latest survey indicates that Apple’s hold on the teenage market remains strong, though the demand for iPhone 16 shows a slight decline. The survey, conducted among over 13,500 U.S. teens across 47 states, found that 87% of respondents own an iPhone, with 88% expecting their next smartphone to be an iPhone. However, only 22% of the teens surveyed plan to upgrade to the iPhone 16 this fall or winter, a slight dip from last year’s 23% for the iPhone 15.
The iPhone 16 demand driven by AI features
One factor influencing the demand for the iPhone 16 is the anticipation of Apple’s new suite of artificial intelligence features, known as Apple Intelligence. The survey revealed that nearly 30% of teens are interested in upgrading to the iPhone 16 specifically because of these AI capabilities. This growing interest in AI suggests that Apple’s future innovations could play an important role in driving sales.
Analyst Ming-Chi Kuo provided further insights into the iPhone 16 demand, especially focusing on the sales of the iPhone 16 Pro models. Kuo reported that the demand for the iPhone 16 Pro has met Apple’s expectations, with assembly orders remaining consistent. This steady demand indicates that the iPhone 16 Pro could continue to perform well in the market.
While the iPhone 16 Pro models appear to be doing well, the story is different for the base models. Kuo highlighted that the demand for the standard iPhone 16 and iPhone 16 Plus has been lackluster. Apple has responded to this trend by reducing component orders for these models by 3-5% starting mid-November. This move suggests that Apple is adjusting its production strategy to align with the lower-than-expected interest in the non-Pro versions.
Production expectations remain steady
Despite the decline in base model demand, Kuo expects the iPhone 16 production to stay within the range of 88-89 million units in the fourth quarter of 2024. This figure is slightly below the iPhone 15 series production, which was about 90-91 million units. These numbers indicate that while the iPhone 16 series might not surpass its predecessor in total production, it still holds a significant presence in the market.
Apple’s focus in the coming months is likely to be on meeting US demand, especially with the rollout of Apple Intelligence expected later this year. The AI features, anticipated to arrive with the iOS 18.1 update, could boost iPhone 16 demand, especially among tech-savvy consumers interested in the latest innovations.
Beyond iPhones, Piper Sandler’s survey also highlighted the continued popularity of other Apple products. About 70% of teens reported owning AirPods, with 25% planning to purchase a new pair in the next six months. iPads and Apple Watches also showed strong ownership rates among teens, while Apple TV+ and Apple Music saw more modest engagement.
