AT&T and Verizon say iPhone supercycle didn't hit their Q3s

AT&T’s third quarter results call brought the spectre of an Apple iPhone 16 supercycle — that mythological massive sales boost for the device — down to earth.

It totally hasn’t happened yet - and if anything, numbers are down over last year, AT&T’s CEO noted in an answer to a question about iPhone 16 sales during the question and answer portion of the operator's Q3 earnings call.

“You’ve seen the numbers. They’re down slightly over last year’s levels on an introduction,” said Ma Bell’s big chief, John Stankey.

Analyst Walter Piecyk at LightShed Partners noted on X/Twitter that both the Verizon and AT&T device upgrade rate was down in Q3.

Some commentators have previously said that the supposed supercycle will be kickstarted by the Apple software update that has just been launched. The free iOS 18.1 update is available in beta for the latest iPhones, iPads and Macs. The developer beta for iOS 18.2 has also just been released.

Apple fanboys claim that the artificial intelligence (AI) software update will jump-start a sales boom. Operator execs and analysts are much more circumspect.

AT&T CEO Stankey said that the operator is still waiting for whether or not that software release will provoke a big upgrade cycle. “If you went back an thought about any software innovation that occurs on a handset over the past decade, you tend to see that they become material and meaningful over time, but oftentimes certain features didn’t exactly go to this massive ramp when they were first released.

Nonetheless, Stankey said that AT&T would be ready for a iOS-driven boom if it does happen in the fourth quarter. He said that the operator expects a device upgrade uptick anyway because it will be the holiday season. ”We’re in a position to address it no matter what happens,” he said.

There was still hope of a supercycle according to Mike Sievert, CEO of T-Mobile, who addressed the topic at the operator's recent Capital Markets Day in San Francisco. T-Mobile reported its earnings today. It's conference call is ongoing as of press time today.

"I think this one may unfold a little differently in terms of when the word-of-mouth value takes off, because the principal differentiating feature is coming in a later software release. That being said, sales are higher than last year, which is saying something, because sales last year were quite strong, and these are great share-taking moments for us," Sievert said, at the operator's Capital Markets Day.

"I get asked a lot, is this a super cycle? I don't know what that is," he said. "This probably isn't it, but it's vibrant, and it's higher than last year, and we suspect that it will be drawn out over time a little more, as people get the Apple intelligence features later start showing their friends and generate later excitement, as opposed to in prior years, it was a screen size, a camera, things like that that arrive on day one."

Indeed, smartphones are a "mature product category," Avi Greengart, analyst at Techsponential, told Fierce Network via email at the time. "To significantly increase sales would require a macroeconomic event, not text summaries and a more conversational Siri."

However, "As Apple builds out Apple Intelligence and consumers take notice, the iPhone 16 could see higher post-introduction sales than might otherwise have been expected," said Greengart, echoing Sievert's comments.

AI proof points

Several analysts had already told Fierce that they didn’t expect the AI capabilities of Apple Intelligence to provoke a major sales cycle for the new iPhone. Now, the Wall Street Journal reports that financial analysts have expressed concern about downbeat early sales of the new phone.

“It’s likely that Apple Intelligence, like its peers, will have to prove themselves as must haves before we see any substantial or even noticeable ‘supercycle.’ I don’t feel that that has happened,” said neXT Curve analyst Leonard Lee in an email to Fierce.

Downplaying the sales boom

Operators in the United States have already downplayed the prospect of a massive sales boom resulting from the iPhone 16. AT&T and Verizon executives have previously said that customers generally upgrade phones when dramatic hardware upgrades come about or the move to the next G.

Analyst Lee noted that it could be difficult to tell if Apple Intelligence ends up eventually being a driver of iPhone sales. “It could be the Camera Control button, which is featured on the iPhone 16 and 16 Pro models, that drives a ‘supercycle’, Lee suggested.

“My view is that Apple Intelligence transcends the iPhone. Unlike its competitors, Apple will be able to deliver its GenAI-augmented experiences and features across its portfolio of Apple Intelligence-supported devices such as iPads, Macs, and inevitably Apple Watch, Apple TV, etc. on a common platform and AI stack. The demand stimulus will likely be spread across Apple’s product lines,” the analyst concluded.

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