Apple's (AAPL, Financials) iPhone 16 sales have fallen short of expectations, with KeyBanc analysts reporting a 6% year-over-year decline in February, underperforming typical seasonal trends. The weaker demand prompted KeyBanc to lower its 2025 iPhone growth forecast to 1%, down from 7% two quarters ago.
Although KeyBanc's carrier survey produced conflicting findings, its own data revealed demand below projected level. Notwithstanding this, propelled by its camera improvements, the iPhone 16 Pro Max remains the most popular model; the Pro variation comes second.
On the other hand, demand for the iPhone 16e has been poor; experts refer to its higher price point as a turnoff. Launched on Feb. 28 at $599, the gadget has lower-end specs but costs 40% more than the SE3, which costs $429. Store comments point to the price approach's hindrance of sales. The iPhone 16 Plus is also the least popular model as consumers looking for bigger screens choose the Pro Max.
With indexed expenditure down 9% month-over-month, compared to the three-year average decrease of 3%, broader hardware purchasing patterns also slumped in February. Spending dropped 9% annually, a reverse from the 6% increase in January.
KeyBanc maintained its Underweight rating on Apple, noting a lack of a significant upgrading cycle and poor demand for iPhones 16. Concerns also included growing competition in China and Apple's value being unwarranted considering slower development prospects. Notes on negative drivers for future sales were delays in Apple Intelligence and Siri updates.
