In a surprising turn of events, Apple has reportedly decided to scale back production of its baseline iPhone 16 model, which was initially launched with much fanfare just two months ago. Market analyst Ming-Chi Kuo of KGI Securities revealed on his Medium blog that the tech giant has reduced orders for approximately 10 million units slated for the end of this year and into 2025. The revised estimate suggests that estimates for shipments will likely decrease from around 84 million to about 80 million units, with a continued decline into the first half of 2025.
The iPhone 16 is designed to be Apple’s most advanced non-Pro smartphone to date, boasting features like Camera Control and an Action Button, as well as the ability to capture spatial pictures and videos. However, despite these upgraded capabilities, including the promise of forthcoming AI features, enthusiasm among consumers appears to be waning. Sales of the iPhone 16 have not met expectations, prompting Apple to reconsider its production strategy.
Kuo noted that while the reduction in production volumes might not reflect immediately in Apple’s Q4 financials, there are concerns about a potential year-over-year decline in sales and revenue as we head into 2025. He emphasized that although the baseline iPhone model is facing challenges, Apple is expected to maintain its production levels for the iPhone 16 Pro models, which offer better displays and camera systems powered by the more advanced A18 Pro processor.
Interestingly, pre-launch hype surrounding Apple Intelligence, a suite of AI capabilities that the company touted as groundbreaking, has not translated into increased sales for the iPhone series. Kuo has expressed skepticism about the potential impact of Apple’s AI features on boosting iPhone sales, citing user reluctance to adopt new technology without demonstrable benefits.
Apple’s iOS 18, which accompanied the iPhone 16 launch, is set to introduce an array of AI functionalities. The initial rollout of features such as Writing Tools will be accessible to users starting October 28, but for more advanced capabilities like AI image generation, they will have to wait until the arrival of iOS 18.2. Furthermore, a comprehensive overhaul of Siri—an update that is anticipated to enhance the digital assistant’s capability to interact with users’ data on various devices—is expected sometime next year, leaving many wondering if the wait is justified.
Analysts speculate that consumer anticipation for the next iteration, the iPhone 17, might be influencing current purchasing decisions. If this trend continues, it could mean potential delays in upgrades as buyers hold out for what may be perceived as a more innovative leap in technology.
In addition to the iPhone, Apple is reportedly reducing production capacity for its ambitious Vision Pro headset, which is priced at $3,500 and has struggled to capture large-scale interest despite CEO Tim Cook’s claims of wanting to deliver excellence in AI across all Apple devices. Sources indicate that production for Vision Pro will be capped between 500,000 and 600,000 units, a strategic move that reflects both supply chain considerations and consumer demand. Looking ahead, as Apple gears up for the release of an array of new AI-capable devices—including MacBook Pros, Mac minis, and iMacs equipped with the forthcoming M4 chips—there remains unyielding anticipation about how these innovations will reshape the marketplace and the overall success of Apple’s AI initiative.
The tech giant’s pathway forward appears laden with both promise and uncertainty as it maneuvers through production cuts and fluctuating consumer demand, navigating a landscape where technological advancements like artificial intelligence could either uplift its sales or contribute to a perceived stagnation in value. As the tech scene evolves and competition grows fiercer, Apple’s strategic decisions will undoubtedly be critically observed by both analysts and consumers alike.