Oh Dear – 15% Decline in iPhone 16 Demand, Notes Barclays

Not everyone is as excited about the iPhone 16 as previously thought – demand is down year-on-year, according to market analysts…

Apple has reportedly cut iPhone 16 production by three million units due to lower-than-expected demand, according to a recent investor note from Barclays analysts.

Based on supply chain checks, the report highlights a 15% year-over-year decline in demand for the iPhone 16, marking a potentially challenging sales period for Apple as it faces increased consumer hesitation.

iPhone 16 Demand Ain’t What It Should Be?

Barclays analysts suggest that the iPhone 16 launch may not be as strong as previous releases, with several contributing factors behind the shortfall.

Chief among them is the ongoing popularity of Apple’s previous models—the iPhone 14 and iPhone 15—which have maintained solid performance and satisfaction among users.

This could explain why many consumers are holding off on upgrading to the latest model.

I’ve been using the iPhone 13, and while it’s a bit rough around the edges in terms of battery life, it still performs well for most tasks. Like many others, I don’t feel an urgent need to upgrade, which might reflect a broader sentiment among Apple users.

The longer product lifecycle of recent iPhone models could be a factor in why the demand for the iPhone 16 isn’t quite living up to expectations.

Apple Cuts 3 Million CUTS With Key Component Supplier

Barclays’ report indicates that Apple’s production cutback affects one of its key semiconductor suppliers, hinting at broader implications for the company’s Q4 2024 performance.

While iPhone shipments are on track to hit 51 million units for the September quarter, concerns are rising over the December quarter as production cuts loom.

Analysts have pointed to other challenges for the iPhone 16 as well, including a “staggered rollout of Apple Intelligence” features, limited AI adoption outside the U.S., and minimal hardware upgrades that may have left potential buyers underwhelmed.

The iPhone 16’s slow start contrasts with previous launches, where supply chain delays often signaled strong demand. In fact, shorter wait times for the iPhone 16 compared to last year’s iPhone 15 have raised questions about the depth of consumer interest this time around.

9to5Mac reckons this is bunk, though:

’m hesitant to put much too much stock into this report from Barclays, primarily because of the emphasis on lead times. Much of the Barclays analysis is based on the fact that “wait times across major geos we tracked were much shorter” for the iPhone 16 compared to the iPhone 15 last year.

I’m of the opinion that order times don’t do a great job of representing iPhone demand. There are so many factors that contribute to these numbers that I don’t think you can use them as a primary reason for iPhone demand being strong or weak in a particular year.

Lead times, typically used as an indicator of demand, are reportedly much shorter for the iPhone 16, a factor that has sparked skepticism among analysts.

Other industry voices echo Barclays’ concerns.

Gene Munster, a seasoned Apple analyst at Deepwater Asset Management, recently commented, “The incremental hardware changes, combined with robust performance from older models, may have put a ceiling on early iPhone 16 adoption.”

Similarly, industry consultant Patrick Moorhead highlighted that the prolonged product life of recent iPhones means “consumers just aren’t in as much of a rush to upgrade.”

Despite these challenges, Apple remains a force in the global smartphone market, and its full-year performance will come into clearer focus when it reports fiscal Q4 2024 earnings in November.

Meanwhile, Barclays has flagged the upcoming December quarter as one to watch closely, with the possibility that further production adjustments could follow depending on how holiday sales unfold.

The continued success of the iPhone 14 and iPhone 15, coupled with a market that might not feel compelled to upgrade to the iPhone 16 just yet, seems to be the prevailing narrative as Apple navigates the final months of 2024.

Whether or not Apple can reignite demand for its latest model remains to be seen, but for now, the signs suggest consumers are content with their current devices—myself included.