The upcoming iPhone 16 has received a cautiously optimistic outlook from UBS analysts, despite mixed demand signals and a lack of enthusiasm for AI-related features, especially outside of China.
UBS conducted a comprehensive survey of over 7,500 smartphone users in key markets such as the U.S., U.K., China, Germany, and Japan, which revealed that global purchase intent for the iPhone has remained relatively stable year-over-year in these critical regions.
In the U.S., the intent to purchase an iPhone has remained at 24%, while in China, it has declined to 17%, a drop of 200 basis points compared to the previous year.
However, there have been positive trends in Europe, with the U.K. experiencing a 200 basis point increase in purchase intent to 19%, and Germany seeing a 300 basis point rise to 14%.
These figures suggest that while the iPhone 16 may not be generating overwhelming excitement, there are pockets of growth in certain markets.
The survey also revealed improvements in iPhone retention rates in China, rising to 74% from 68% last year.
However, this represents a decline of 300 basis points compared to the previous half-year, indicating increased competition from brands like Huawei.
Globally, the average age of an iPhone has slightly increased to 21.8 months, up from 21.3 months a year ago, indicating that consumers are holding onto their devices for longer periods.
Despite competition and fluctuating demand, UBS has raised its global smartphone sell-in estimates for 2024 and 2025 to 1.21 billion and 1.24 billion units, respectively, reflecting a modest growth outlook for the smartphone market.
The UBS survey also revealed lukewarm interest in AI-enabled features, with only 30% of respondents expressing interest in smartphones equipped with GenAI capabilities.
Cost concerns and privacy concerns were cited as significant barriers to purchase, with 51% of participants citing pricing as a hurdle and 37% expressing apprehension about privacy.
UBS has maintained a price target of $236 for Apple shares, indicating a belief in Apple's ability to navigate the challenges ahead and maintain its position in the smartphone market.