Apple made a number of changes to the iPhone 16, but analysts report that the new smartphone isn't dramatically different enough from its predecessors to drive up sales.
Between inflation and the high cost of smartphones, many consumers are content to keep their current smartphone. Nearly 300 million iPhones haven't been upgraded in over four years, reported CNN. The cards were already stacked against the arrival of Apple's new iPhone 16.
Apple made a number of changes to the iPhone 16 – new colors, a more durable glass ceramic front plate, vertically stacked cameras and the powerful A18 chip – but analysts report that the new smartphone isn't dramatically different enough from its predecessors to drive up sales.
"First, our view, which appears to be shared by commentators and the blogsphere generally, is that this is not a revolutionary device that is likely to drive a surge in upgrades," NewStreet Research analyst Jonathan Chaplin explained in an emailed research note.
NewStreet doesn't anticipate that the top three US carriers will provide promotions to drive demand since initial promotions mirror those for the iPhone 15. However, EchoStar's Boost, now an official Apple smartphone carrier, is providing a free year of service with the purchase of an iPhone.
Focus on AI
For now, Apple Intelligence will be a free software update, reported MoffettNathanson Research (analysis available via PDF). By comparison, the new Google Live conversational AI requires a Gemini Advanced subscription for $20 a month.
The choice to make Apple's AI service free makes sense because Apple Intelligence is still in the beta phase and Apple at its core is a hardware company, explained MoffettNathanson. In addition, Apple has yet to release its new iOS 18 update, which is scheduled for September 16, reported TechCrunch.
"We interpreted the specific call out of its gratis inclusion in iOS to be a signal that it might be a while before Apple Intelligence is a stand-alone revenue driver for Apple," the MoffettNathanson analysts explained.
A closer look at the iPhone 16 specs
One boon for the iPhone 16 is the price point. The iPhone 16 starts at $799, which was the same starting price for the iPhone 15, MoffettNathanson points out. It includes 8 gigabytes of RAM and is available for pre-order and in-stores on September 20.
The iPhone 16 also has a new camera control slider and customizable action button, and Apple Intelligence will provide users with the ability to search for photos by typing a description, said Marc Allera, CEO of BT's consumer business, on X. Users can also access "visual intelligence" by pointing the camera at a restaurant and the iPhone 16 will pull up a menu, for example, reported CNN.
The new action button acts as a shortcut feature, providing users with the ability to record a voice memo, identify a song or translate a phrase, for example, with a press of the button, said Kaiann Drance, VP of iPhone Product Marketing for Apple, in the launch video.
Sribalan Santhanam, VP of Silicon Engineering Group for Apple, said the new A18 chip, designed for the iPhone 16, is two generations ahead of the A16 Bionic chip for the iPhone 15. The A18 includes a 16-core neural engine "that is optimized for running large generative models. This neural engine is up to two times faster for machine learning," said Santhanam.
The A18 CPU is also 30% faster and uses 30% less power than its predecessor, making it more energy efficient.
However, Apple is also coming up against "compelling products in the market from Google, Samsung, and others," said the MoffettNathanson analysts. Google's Pixel 9 Pro has twice the RAM (16GB) of the iPhone 16 Pro, for example.
Google's Gemini AI model also poses steep competition to Apple's AI. Smartphone competition is fierce in China and it will be challenging for Apple to "best market a Western AI" in that market, explained MoffettNathanson.
For a longer-term recovery in the China smartphone market, Apple should focus on AI features that are of interest to the local market in China, analysts with Canalys recently told Light Reading.
When it comes to AI, Apple has some catching up to do.
"As titillating as some of Apple's new features might be, one is left with the nagging concern that Apple actually is meaningfully behind in its AI deployment," explained MoffettNathanson. "Perhaps the biggest takeaway is that yesterday confirmed that it will be another year before iPhone makes a more meaningful step forward."
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