In a new note to investors, HSBC says that the slow rollout of the AI features Apple introduced at WWDC 2024 has so far “failed to trigger significant improvement in user experience,” and that unless Apple gets back on track, users could end up pushing off their next iPhone upgrade. Here are the details.
According to the note (via MacDailyNews), “the iPhone still represents about half of Apple’s sales,” but “initial hopes that AI would accelerate the renewal cycle have been short-lived,” as the company’s AI offerings have “so far failed to trigger significant improvement in user experience.”
Interestingly, the bank’s note contradicts a recent CIRP report, which claimed that “only 13% of US iPhone buyers reported upgrading specifically to take advantage of new features,” while “40% of buyers indicate they purchased their new iPhone because of a problem with their old one,” and “27% replaced a phone that was completely inoperable or was lost or stolen.”
Top comment by bcom77
I recently upgraded from an iPhone X to a base iPhone 16 (I was going to wait for the 17 but got a crazy good deal on the 16). I was expecting to see a significant difference in performance and battery life giving there's 8 years difference between the two and to be honest, apart from an hour or so of additional battery life, there is very little difference between the two in performance. I think this just highlights how well iOS is optimised for iPhone hardware. A phone that is almost a decade old can still run iOS smoothly and efficiently which negates the need to feel like you need to upgrade every few years. I honestly think that 5 years is the minimum time that an upgrade should be considered.
Still, as noted by Yahoo Finance, HSBC warned that “delays in launching the AI-powered Siri may lead many users to postpone handset upgrades.”
If not AI, what can Apple lean on to promote the iPhone 17?”
HSBC notes that Apple may have to turn its focus on more traditional hardware spec bumps as part of its iPhone 17 story, if it hopes to boost sales:
“Better specs with iPhone 17 in September should entertain the demand, in-line with what has been seen with the iPhone 16.”
And speaking of tariffs, the bank highlights rising tariff-related tensions as a key risk, noting that Apple “cannot re-localize production fast enough.” It also estimates a 20% tariff impact on Chinese imports.
In the report, HSBC maintained a Hold rating on Apple stock with a $220 price target. Shares are currently trading at $211.18, roughly the same range they’ve been in for the past three months.
Apple Watch deals on Amazon
- 40mm Apple Watch SE 2: $169 (was $249)
- 42mm Apple Watch Series 10: $299 (was $399)
- 46mm Apple Watch Series 10: $329 (was $429)
FTC: We use income earning auto affiliate links. More.
Comments