Some analysts expected the new iPhone, replete with Apple Intelligence, would drive a supercycle of iPhone sales. While we won’t hear from Apple until the end of the month about those initial sales, Verizon, which sells plenty of phones, reported today, and it didn’t look great for Apple.
So far, it seems Apple’s iPhone 16 hasn’t helped Verizon sell hardware. Wireless-equipment revenue declined 8% from a year earlier, offsetting gains Verizon made in services revenue and causing it to miss analyst estimates. Total upgrade volume (people trading in their old phone for a newer one) was down 10% year over year. Of course, that data is for all phone sales, not just iPhones.
It’s not clear how impressive Apple’s AI phone will be, since Apple Intelligence features won’t be available to the general public until next week. What we’ve seen so far in the beta version doesn’t inspire much confidence.
Either way, people don’t actually buy new iPhones for the new features but rather because their old phones no longer work that well or were lost or broken.
Verizon CEO Hans Vestberg said during Goldman Sachs’ tech conference last month that upgrade cycles have gotten “longer and longer,” from 12 months in the 1990s to 40 months now, as “people keep the phone because the quality is higher and it works really good.”
Bullish analysts are hoping the incorporation of AI will be such a fundamental improvement that people will have to upgrade.
Apple has actually seen record iPhone sales volume in Q3, according to data last week from Canalys, but much of that came from sales of older, less expensive models.
“The ongoing strong demand for the iPhone 15 series, along with Apple’s legacy models, played a crucial role in its Q3 performance,” Canalys analyst Runar Bjørhovde wrote. “Despite a modest initial reception, the iPhone 16 is expected to help Apple maintain a strong finish to 2024 and help momentum in H1 2025, particularly as Apple Intelligence expands into new markets and supports additional languages.”
In China, sales of the new model were up 20% in the first three weeks, compared to the first three weeks of sales for the previous model last year. Right after the iPhone 16 went on sale in the US last month, we saw that traffic to Apple’s website had declined from the past few years.
What happens with the iPhone is a big deal for Apple, since it accounts for about half its overall revenue. Right now those signals are decidedly mixed.
