Apple's AI Ambitions Stall as iPhone 16 Faces Production Cuts and Tepid Sales
AInvestSaturday, Oct 5, 2024 5:00 am ET
1min read
AAPL --

Apple recently unveiled its latest iPhone 16 series, highlighting a significant development with the integration of its self-developed chip, which promises enhanced AI capabilities through "Apple Intelligence." Despite these releases being on the market for some time, the full launch of the AI functionality is still pending. Analysts foresee that once fully implemented, this feature could drive sales momentum for the new iPhones.

Historically, Apple integrates all features at launch, making the delay of "Apple Intelligence" quite unusual. While users on the iOS 18 beta have access to this function, the general public awaits a stable version. This delay is accompanied by a notable reduction in production, with Apple reportedly cutting the iPhone 16 series output by 3 million units.

This production cutback hints at less robust sales than anticipated. Some analysts suggest the initial sales momentum, particularly for the "Pro" models, has been subdued. They attribute this lukewarm reception partly to the absence of the AI functionality, which remains heavily promoted on Apple's website but currently only supports English, limiting its appeal in non-English-speaking markets.

Interestingly, analysts note that "Apple Intelligence" ranks only as the sixth reason consumers are inclined to upgrade, trailing behind features like overall device speed and 5G capabilities. Despite its major promotional push, it appears other technological advancements hold more sway in the upgrade decision.

In terms of market expectations, analysts project that Apple will ship 76 million iPhones in the fourth quarter of this year, with a total shipment goal of 148 million units over the next year. As Apple continues to emphasize its AI ambitions, industry observers remain keen to see how these developments will shape consumer engagement and market dynamics.

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