Demand for Apple's (NASDAQ:AAPL) iPhone remains soft as interest in AI appears “muted,” analysts at UBS said in a note on Sunday.
Citing a recently conducted survey of over 7,500 smartphone users in the U.S., U.K., China, Germany, and Japan to assess smartphone demand, UBS said 12-month global iPhone purchase intent dropped by 3 points year-over-year in the U.S. to 18%, while in China, it increased slightly to 22% from 21% last year. In Europe, purchase intent decreased in the U.K. (down 4 points to 14%) and Germany (down 2 points to 10%).
The average age of iPhones in use rose to 21.0 months, up from 19.9 months last year, though it declined slightly from 21.3 months in the previous half-year.
The iPhone retention rate in China fell to 77%, down from 79% a year ago, as Huawei gained market share. Outside of China, interest in GenAI among respondents was tepid, with only 27% expressing interest in a GenAI-enabled smartphone, while 28% were not interested, and the remainder were indifferent, UBS noted.
“Somewhat not surprisingly in our view, “a high price” was cited by 47% of respondents as a key factor that would keep them from buying a GenAI-enabled smartphone,” analysts at UBS wrote.
“Behind price, “concerns around personal privacy” was cited by 39% respondents while the lack of “applications” was cited by 27% of respondents,” it added. “While “price” was the biggest concern in the US, UK, Germany, and Japan, the most cited concern in China (61%) was “privacy” followed by the lack of applications.”