iPhone 16 Delay On New Features Might Harpen Early Sales And Sets Uncertainty On Future Annual Results For Apple

 

The recent launch of the iPhone 16 was marketed as “built from the ground up for Apple Intelligence". For this reason, expectations were quite positive to get a high amount of sales and upgrades from previous iPhone versions.

However, Apple’s iPhone 16 Pro is not meeting expectations. Early sales point to an estimated 37 million units in the first weekend of iPhone 16 pre-sales, which is an overall drop in iPhone orders of 12 percent compared to the same period last year. Notably, the iPhone 16 Pro and 16 Pro Max orders are falling, with sales of the cheaper consumer-focused iPhone 16 and iPhone 16 Plus keeping Cupertino’s numbers up. In other words, the iPhone 16 Pro and 16 Pro Max orders are falling while sales of the cheaper consumer-focused iPhone 16 and iPhone 16 Plus keeping Cupertino’s numbers up.

Apple hasn’t been entirely forthright about the phased rollout in its marketing. It heralded the iPhone 16 as the first device built from the ground up for Apple Intelligence and plastered the logo for the new AI features all over its website and retail stores. And yet, the iPhone 16 didn’t include Apple Intelligence when it launched last month. In previous years, Apple would have avoided discussing features that wouldn’t be ready for a while. It didn’t want to feed the narrative that the upgrades were delayed. The narrative of “delayed” has taken hold in the minds of consumers. Furthermore, many of these features were already announced at Apple’s developers conference in June, and the first set of features will be available in a free software update next month.

Yet Apple’s reliance on generative AI as the marquee iPhone feature is fraught with difficulty. The new iPhones do not yet support any of the promised features. The first wave should arrive later this month; support for some ChatGPT features will come in December, and the full suite will not ship until March. Carriers and retailers are being careful to include the delay to Apple Intelligence in all their advertising to ensure consumers are aware of this delay… a delay that does not occur in Android handsets, some of which have been sporting these features for over twelve months.

The relevance of the AI´s feature makes these consumer-focused iPhones closer to the Pro models than the last few years, and they offer far more value for money than the iPhone 15 or iPhone 14 models ever could. Long gone are the years when loyal Apple fans would line up to trade in their device on a near-annual basis, and the company hasn’t given consumers a big reason to upgrade since adding 5G connectivity with the iPhone 12. It’s been hoping that a suite of new software features that weave AI throughout would be a hit.

However, consumers are slowly warming to AI in their smartphones, with only twenty-five percent of Galaxy S24 owners saying AI was a key part of their purchasing decision in a Kantar report following the launch of Samsung’s handsets; a recent YouGov poll in the UK, reporting sixty percent consider it an important factor in their consideration, including 21 percent saying it is very important. Therefore, most customers probably don’t yet deeply understand why the AI features would be worth an upgrade.

Surprisingly, although now company sales numbers are not expected to rise a lot due to this delay, the company stock price has retained the higher levels achieved during the previous months as consequence of the positive expectations the recent release generated:

Apple won’t share any details on iPhone sales numbers until it reports earnings next 31th October, and even then, the data will only include seven days of presales and 10 days of regular sales. But most analysts still expect the iPhone 16 to prove a winner in the coming months despite a possible slow start, especially heading into the all-important final three months of the year.

Now I will share with you a summary of the new features and its comparison with the previous model so that you can make your own predictions on future company sales over the next quarters.

Compared to its predecessor, the new iPhone 16 has a larger battery, a new ultrawide camera, two new hardware buttons for shortcuts (the Action button and Camera Control button) and will have Apple Intelligence.

Regarding cameras, the iPhone 15 features a 48-megapixel wide and 12-megapixel ultrawide camera, while the iPhone 16 has a 48-megapixel wide camera and a new 12-megapixel ultrawide camera. Despite the similar megapixel count between the two phones, the ultrawide camera on the iPhone 16 can take in more light, has a wider aperture and features autofocus for macro shots -- great for those who let the camera "eat" first. The 5x telephoto camera offers more detail for zoom photos.

Both phones have a 12-megapixel front-facing camera and can shoot 4K video. The main difference is the iPhone 16 can shoot 1080p spatial video at 30 frames per second, (hence the vertical stacking of the cameras on this year's iPhone 16 and 16 Plus).

Referring the screen, Apple implemented more modest tweaks when it comes to displays. The iPhone 15 and 16 both have 6.1-inch OLED displays with a 60Hz refresh rate, though the iPhone 16 doubles the 15's peak brightness, reaching 2,000 nits. Both have a 460ppi pixel density. 

The iPhone 15 and 16 are the same size, with a height of 5.81 inches, width of 2.82 inches and a 0.31-inch thickness. They weigh just about the same: the iPhone 16 is 170g (6 ounces), while the iPhone 15 is 171g (6.02 ounces). 

The iPhone 16 comes in black, white, pink, teal and ultramarine. The iPhone 15 comes in black, green, yellow, pink and blue.

Both phones feature Dynamic Island, and use Face ID or a passcode to unlock (no fingerprint scanner).

In regard to battery, Apple doesn't disclose its battery capacity but says the iPhone 16 has up to 22 hours of video playback (18 hours streamed). The iPhone 15, meanwhile, has up to 20 hours of video playback (16 hours streamed). Both feature USB-C charging. 

The iPhone 16 supports MagSafe wireless charging up to 25 watts with a 30-watt adapter or higher, while the iPhone 15's MagSafe charging reaches 15 watts. They also each support Qi2 charging, up to 15 watts.

The iPhone 16 sports the new A18 chip, while the iPhone 15 has the A16 Bionic chip. The iPhone 16 has iOS 18 out of the box, and though the iPhone 15 features last year's iOS 17, it's eligible for the new operating system. The new iPhone Pro models include an A18 Pro chip with second-generation 3-nanometer transistors and a new 16-core neural engine that powers Apple Intelligence, designed specifically for generative artificial intelligence workloads, the company said, leading to a 17% increase in total system memory bandwidth. It is “even faster and more efficient than A18,” the company said.

Apple said a new update to Voice Memos, coming “later this year,” will allow people to layer other tracks atop previously recorded voice memos. For example, the feature could help musicians testing out song ideas layer a guitar track over a vocal track they have previously recorded.

Besides, users can now prompt Siri with text; ask questions with their voices, even if they stumble over their words; pull up specific details from text conversations; and more.

Another feature the company highlighted is the new generative emoji feature, which will allow users to create custom emojis by typing in a few words. Users can also type in words to pull up photos and videos they want to find.

Apple said the iPhone 16 started at $799, iPhone 16 Plus at $899, iPhone 16 Pro at $999, and Pro Max at $1,199.

Here you have a list of features to compare both models in a more detailed way:

I hope this post gives you a more reliable view on how future market price might change over the next year. Personally, I would hold my current position on Apple at the current 35x P/E ratio because it is an awesome company from a long-term perspective, and would wait for a potential disappointing year for the company (due to the delay on these features) to buy more stocks at a lower price multiple if future expectations worsen. I would follow this contrarian approach while being conscious of the actual company value in the long term. Remember it is better to buy a good company at a fair price than a fair company at a good price.