AI will not provoke a supercycle for the iPhone 16 after all
Analysts say the AI upgrades are "modest" so far
More battery life and a better camera are what will get people to upgrade - if they do!
The veil has been lifted and the analyst verdicts are in: Apple's new artificial intelligence (AI) enabled iPhone 16 isn't expected to spark the frothy sales supercycle expected by some Apple fan boys and girls after all. Instead, folks we spoke to are expecting more of a workaday spin cycle.
There was plenty of hype about a potential supercycle leading up to Apple's launch this week. But Fierce asked analysts for their views on the newest iPhone after the launch and whether they thought the new Apple smartphone would lead to a big buying spree among customers.
Avi Greengart lead analyst at Techsponential; Don Kellogg, president and analyst at Recon Analytics; and Leonard Lee, executive analyst at neXt Curve, all told Fierce that they didn’t expect a sales wave to result from the iPhone 16 launch.
What is a supercycle, anyway?
But wait a second, let’s first define what a supercycle actually is, shall we? Supercycles are commonly defined as lengthy periods of economic expansion, often accompanied by growing gross domestic product, strong demand for goods leading to higher prices and high levels of employment, according to CNBC.
A lengthy period of economic expansion? Seems a bit of a tall order for a lil ol’ smartphone, no? One would think that at best the iPhone 16 could be seen as some kind of leading indicator of a supercycle, not the event itself.
Well, people who talk up an Apple iPhone 16 super cycle had glommed onto the fact that this new model is the first that openly uses a great deal of AI. The AI super cycle idea seems to have been derived from an October 16, 2023 Goldman Sachs podcast that talked about how generative AI would transform every industry and job function and unlock an AI-driven M&A supercycle (though it wasn't specifically about a cell phone).
So, will we see a super cycle from the launch of the iPhone 16?
“I expect the iPhone 16 will be extremely successful but 'supercycle' is a term that’s more about Wall Street hype than long term value,” Avi Greengart told Fierce via email.
“I’m not sure what some of Wall Street means by supercycle,” added Leonard Lee, executive analyst at neXt Curve. “They usually don’t pan out, certainly not how they are portrayed by many analysts.”
“I don't think so,” Don Kellog said in reply to our question. “Phones today are great, and they last a long time. The median length of device ownership has been increasing for quite a while and consumers ready to upgrade have lots of good options.”
Indeed, Sowmyanarayan Sampath, EVP and CEO of Verizon’s Consumer Group, recently noted consumers are hanging on to their devices for well over three years at this point.
Meanwhile, WalletHub just released its 2024 iPhone survey (which included over 210 respondents online) that found 63% of Americans won’t buy a phone because of inflation and 9 in 10 Americans think the iPhone is overpriced. Still, 56% of Americans said they plan to purchase a new iPhone this year.
Standout features
So, that seems like a “no” on the supercycle, but let’s look at some features of the phone.
All the analysts agree that improved battery life, better processors and enhanced camera performance will actually be the factors that help consumers decide to buy the Apple 16, whether that be the base model or the $1,499 Pro with 1 terabyte of storage. (You running a datacenter there, bub?)
“Faster processors and better battery life are great for everyone, and this release improves performance on both fronts," Kellog said. "Photo and video enthusiasts will enjoy better computational processing for pictures and video, gamers will appreciate Apple's continued dominance in terms of graphics-heavy games. On balance, the new devices are incrementally better than last year, but not as revolutionary as earlier iPhone models that introduced things like Retina screens, LiDAR or Apple Silicon."
And analysts aren’t so happy clappy about Apple AI as some of the Apple bulls either.
“In the short term, I expect that image editing tools, email summaries and a more responsive Siri will be what consumers appreciate," Greengart noted. "Long term, if Siri can reach across apps and do things on your behalf will be transformative. However, third party developers will need to build support for that into their apps before that is fully realized."
That said, he added “Over time, I expect Apple AI features will change the way iPhone owners use their devices."
Lee was even more blunt in his assessment. “Apple Intelligence features are frankly modest to campy but should inspire some to upgrade." Interestingly, he added "the Camera Control button could have an outweighed influence on upgrade decisions."
Kellog also observed that "almost all of the AI features Apple announced are available elsewhere via third-party apps. That's not necessarily a dig on Apple in the sense that they have typically been a fast-follower. Under Tim Cook, Apple has tended to refine on good ideas and make them great."
"Apple's twist on AI is that much of the processing happens on-chip, which plays well with the privacy focused segments of the market, but the utility of the new iOS features are not radically unique within the context of what is currently available," he concluded.