Slow iPhone sales are weighing on AT&T, too

AT&T doesn’t seem to have seen a surge in iPhone sales for the latest model, either. The telecom reported that its mobile-equipment operating revenue was down nearly 6% in the third quarter compared to a year earlier. The quarter goes through the end of September and would include, but is not limited to, early iPhone sales, since those went on preorder midway through the month. Those declines offset higher services sales and contributed to a slight revenue miss.

That’s similar to Verizon, which reported yesterday that its mobile-equipment sales were down 8% in the third quarter. T-Mobile reports after the bell, so we’ll see if there’s a telecom trifecta.

The reports let some more air out of the idea that Apple’s iPhone 16 will drive a super-cycle of upgrades.

“You might even argue whether or not everything that Apple is offering right now on this device really requires a hardware change,” AT&T CEO John Stankey said during a Goldman Sachs technology conference last month. “It’s entirely possible other software and other apps show up on the device; it does many of the same things that they’re offering in Apple Intelligence that can be done somewhere else on the deck.”

As we’ve mentioned before, people don’t really buy new iPhones for new features. Instead they get one when their last phone breaks or is lost or is too old to hold a charge. At the same time, phones, especially iPhones, are lasting much longer than they used to. Meanwhile, hardware upgrades are more incremental, meaning there’s less difference in a phone’s capabilities from one year to the next. Therefore people are holding onto their phones longer.

Bullish analysts had hoped that Apple’s incorporation of AI in its latest iPhone would be such a sea change that consumers would need to upgrade. Seeing as Apple Intelligence capabilities are only coming out in underwhelming dribs and drabs, it’s not causing the masses to rush the Apple stores — or AT&T’s or Verizon’s — for a new iPhone just yet.