Apple’s glow is outshone by a star in the East

Apple’s product launches lack the pizzazz they once had. Before Monday night’s launch of the iPhone 16, new features had been widely trailed, including the focus on artificial intelligence, larger displays, better batteries and a new camera button.
In such a mature product, it is hard to make improvements that have the wow factor. Far from “it’s glow time!”, the event’s strapline, the reveal was quite underwhelming.
While a future powered by “Apple Intelligence” could move the dial in the user experience, it isn’t there yet. Literally. Customers will have to wait until later in 2024 for the software updates to bring the AI features to life, to search for photos, summarise texts or generate emails.
Meanwhile, the smartphone market remains tough. Although sales are coming back after a bleak few years, people are still not upgrading their handsets as frequently as they once did. Apple’s launch doesn’t seem poised to spark a stampede to the shops. The company’s share price barely budged.
Sales of iPhones fell in the Cupertino-based company’s latest earnings, down to $155 billion from $156.8 billion in 2023. They are important as they contribute a significant chunk of its business, about half of its $296 billion total revenue in the first nine months of the year.
This is a challenging time, with regulation and competition coming at it from both sides. This was hammered home on Tuesday when, from 7,000 miles across the Pacific Ocean in Shenzen, Huawei stuck two fingers up to its competitor. The Chinese company unveiled its new tri-fold smartphone, the latest in the Mate range.
The world’s first phone whose screen bends into three sections, it can be opened up fully for “cinema-level immersive viewing”, folded in half for reading articles and back into a phone-shaped third for phone calls. It is quite unlike anything else. There were four million pre-orders for the phone on Tuesday, despite a wallet-challenging $2,800 price tag.
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Huawei is stealing a march on Apple on its home turf, where the American company is no longer in the top five smartphone sellers. Apple’s total sales in Greater China fell to $52 billion in the first nine months of this year, from $57.5 billion in the same period the year before.
Huawei’s launch follows a trend in the handsets market, moving to such sophisticated foldables by the likes of Google and Samsung. A far cry from the clamshells of the past, these open out into smooth, tabletesque screens.
Research from Counterpoint released last week showed that foldables made up a mere 2 per cent of European sales at the end of 2023, but this proportion is growing. In the first half of this year, they were up by 52 per cent compared with the year before. Perhaps Apple will follow suit and make its next move into this new category. It has filed a patent, so it could be on the cards.
Aside from the competition, Apple also faces a threats from regulators. A dispute about new digital markets rules means that European iPhone 16 buyers will not see Apple Intelligence this year.
The company is also being sued by the US Department of Justice in a mammoth case over its tightly controlled ecosystem, which means, for example, that Apple watches can be paired only with Apple iPhones. If the department forces a change, what this means for future sales of Apple products will be closely watched.
Apple’s popularity comes from its world-class, beautifully designed and seamlessly integrated products. Will people stay loyal if they can get this experience elsewhere? Or will they use other companies’ products within the Apple walled garden? There’s little doubt Apple needs to reclaim its former “hold the phone” momentum.
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PS: Fancy handsets aside, the Huawei launch is significant in the technology cold war between America and China, which is striving for technological independence from the west in the face of trade sanctions. US policymakers will be anxious to get their hands on this latest Huawei model. Taking apart last year’s revealed a high-tech Chinese semiconductor. It suggested restrictions, aimed at cutting China off from advanced computer chips, were not working.
Katie Prescott is Technology Business Editor of The Times