iPhone 16 Sales Growth and Consumer Upgrade Trends

The iPhone 16's lackluster appeal signals a decline in upgrade rates as consumers hold onto their phones longer.

### iPhone 16 Sales Growth Slows Amidst Consumer Hesitation
* 📉 The iPhone 16 has not generated enough excitement among consumers to trigger a smartphone supercycle, with sales growth now expected to be **only 3% year over year**, down from a previously projected **5%**.
* 📅 Analysts from Morgan Stanley and UBS have reported that lead times for the iPhone 16 are **lower than those of previous years**, indicating **weaker demand**.
* 🤔 Bloomberg Intelligence senior analyst Anurag Rana expressed surprise at the decline in upgrade interest, noting that only **55% of consumers plan to upgrade their phones** in the next 12 months, down from **60% last year** and **64% the year before**.
* 📊 The survey conducted by Bloomberg Intelligence focused on U.S. consumers' preferences for phone upgrades, revealing that both Android and Apple users are **opting to keep their phones longer**.
* 🔍 Despite the advanced features of the iPhone 16, Apple’s ranking in consumers' reasons for upgrading has **dropped significantly**, with **storage, processing power, and camera capabilities** still being the primary motivators.
* 🆕 A lack of significant software upgrades has also contributed to this trend, as consumers are not seeing **new features that leverage the phones' capabilities**, although future updates may change this sentiment.
* 🔮 Looking ahead, analysts predict that the iPhone 17 will present a **more compelling upgrade opportunity**, as it is expected to feature **significant hardware improvements** and **new functionalities** that could **stimulate sales**.
* 📈 Overall, while the current model may not excite consumers, there is optimism that **upcoming releases will reinvigorate interest** in Apple's smartphone offerings.

The iPhone 16 did not excite consumers enough to warrant a smartphone supercycle, and sales growth will be just 3% year over year instead of previously projected 5%. Yesterday, analysts at Morgan Stanley and UBS both noted that iPhone 16 lead times are tracking lower than previous years. Discuss it all. Bloomberg Intelligence senior analyst Anurag Rana, did these numbers catch you by surprise? Yeah, I think the surprising factor was we thought it would at least match last year's refresh rate, but it declined slightly. So when you look at it and you ask people like, you know, how in the next 12 months how many people are going to upgrade their phones and that number is somewhere around 55%. Last year it was around 60. The year before, it was 64. So every year we are seeing a decline in that number, which means people are keeping their phone for a longer period of time.

Now, whether that's driven by cost or whether that's driven by the phone being much better than previous years. But, you know, one would have thought with air features, you could have seen a slight bump in that. An Iraq survey data has been a big focus for Apple investors recently. Could you kindly explain the methodology of the Bloomberg Intelligence survey for the iPhone 16 and also kind of the breadth and depth of the data that you obtained? Yeah. In this case, we go out and look at us consumers and see what kind of phone are they looking to buy, whether they are looking to buy the Promax phone or the pro phone. What are the reasons they want to upgrade? How many of them want to upgrade? How many of them want to switch over? And one thing was clear whether it was Android users or Apple users, both said that they're going to keep the phone for a longer period of time. Apple intelligence actually fell really

low in the ranking of the reasons they want to upgrade. The reason still remains the same that the last few years, whether it's storage, processing, power, or camera, which was in line with what we were expecting. Now, one reason for this could be that we haven't really seen the software upgrade in terms of any new features that consumers are using. These phones are capable of doing it, but we don't have those features and that will be launched over the next 12 months. So I think that sentiment could change as we see these features launch over the next year or so. And that is where the tension lies. Investors looking towards the longer-term adoption here, perhaps not this particular moment of frenzy outside the stores. I agree with you. And in fact, we think next year's model is going to be a bigger upgrade or reason for people to upgrade because it's going to look different. The hardware Mark Gurman has done a very good job of telling people that iPhone

17 is where you should see some improvement in that. And hopefully by that time, we will see all the features launch. So those two factors, I think, would be compelling enough for Apple iPhone sales to go up dramatically.

Apple's iPhone 16 Receives a Lackluster Reception

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Bloomberg Technology

The iPhone 16's sales growth is projected at just 3% year over year, lower than the previously estimated 5%.

Lead times for the iPhone 16 are tracking lower than previous years, indicating decreased consumer excitement.

The trend of customers keeping their phones for longer is increasing, with the percentage of people planning to upgrade declining each year.

Phone upgrades are currently low on consumers' priority list, despite the devices' capabilities.

The lack of new software features has contributed to this sentiment, but upcoming launches over the next 12 months may change it.

Next year's phone model is expected to offer a bigger upgrade and a different design, potentially driving more people to upgrade.

Expected Improvement in Apple iPhone Sales

Improvements in the iPhone are anticipated by 2017, coinciding with the launch of all new features.

These two factors are expected to significantly boost iPhone sales.

The combination of enhancements and feature launches is seen as compelling for driving sales growth.