Apple Fans Flock to Stores for iPhone Despite Delayed AI Rollout

(Bloomberg) — Apple Inc. fans lined up at stores around the world for the new iPhone 16, shrugging off the fact that the device’s signature feature — a new suite of AI tools — won’t arrive until later.

Most Read from Bloomberg

The company saw significant lines and waiting times at several major Apple retail stores globally, indicating a potentially strong start for the product. The company introduced the iPhone 16 lineup in almost 60 countries on Friday, including the US, China, India, Australia and South Korea.

Chief Executive Officer Tim Cook greeted crowds at the company’s location on Fifth Avenue in New York alongside Apple’s head of retail, Deirdre O’Brien. The store was outfitted with lights to mimic the new glowing interface of the Siri digital assistant. Other Apple outlets, including in Los Angeles, Australia and China, had notable lines of people picking up preordered phones or showing up without a reservation.

The device won’t come installed with Apple Intelligence — the much-anticipated AI software that the company has been touting since June. That means users will have to download the software features over time as they become available during the coming weeks and months.

That’s put Apple in a tricky spot. It’s already marketing the AI features heavily, but some consumers may be wary about buying the new phones if they can’t enjoy the benefits right away.

Given the strong initial buzz — even if it’s driven in part by Apple die-hards who line up every year — the marketing tactic may be working.

In terms of its look and feel, the new iPhone isn’t a major leap from prior models. A touch-sensitive Camera Control button, which makes it easier to take pictures and video, is the most notable change.

Even so, Wall Street remains bullish that Apple can accelerate growth during the all-important holiday season. Analysts estimate that revenue will increase 8% in the December quarter — the best showing for that period since the end of calendar 2021.

The new lineup includes two standard models — the 16 and 16 Plus — as well as the higher-end Pro and Pro Max. Preorders of the devices began last week, ahead of shipments to stores and customers getting underway Friday.

The initial units going on sale will run the iOS 18 operating system, but Apple Intelligence will require an over-the-air update to the iOS 18.1 software, which is launching in October. Apple has outfitted its retail stores with machines called “Presto” that will allow the company to load up Apple Intelligence and other iOS updates in the future. That will let Apple skip the usual scenario where iPhones are sold with outdated software.

Story continues

Apple Intelligence was announced in June at the company’s Worldwide Developers Conference and has been available in a limited beta test for developers over the past several weeks.

On Thursday, Apple released a public beta version of the software — one aimed at a wider audience — though most customers won’t access it until the suite of features is released in its final form next month. Additional capabilities won’t be ready until later, part of a staggered launch that will stretch into next year.

When the technology titan introduced the iPhone 16 line, it said that the devices were the first to be built “from the ground up” for Apple Intelligence. But some iPhones from last year — the 15 Pro and Pro Max — will be able to support the features as well.

The look of the new phones is little changed from the iPhone 12 design from 2020. But they feature noticeable battery-life improvements and camera advancements — beyond the new button. Prices start at $799 for the standard iPhone, ranging up to $1,199 for the Pro Max. Even with modest hardware updates, the new phones could attract owners of much older models or switchers from Android devices.

In past years, consumers ordering phones from Apple’s online store have seen major shipping delays — a sign that supply wasn’t meeting demand. That’s been less of an issue this year, either because orders are slower or Apple just has more phones on hand.

New orders of the regular iPhone 16 models will be delivered by early October, while the Pro versions will arrive around the middle of the month.

Apple also unveiled lower-end AirPods this month and updated watches. The new earbuds — dubbed AirPods 4 — are available in $129 and $179 versions, with the latter model including noise cancellation. That feature had previously been reserved for the upscale AirPods Pro, which cost $249.

Apple’s latest smartwatches, meanwhile, don’t offer a major reason to upgrade. The new Series 10 has a larger display and thinner design, but otherwise looks similar to the Series 9. The company’s only change to the higher-end Ultra model, meanwhile, is a black color option. Still, the products could attract customers who have older Apple Watches or are new to the category.

Read this next: Apple’s $3.4 Trillion Value Is Just One Way It Can Set the Rules

The iPhone, watches and AirPods won’t be the last new Apple products of 2024. The company also is planning a major Mac computer overhaul later this year.

Apple will bring its AI-focused M4 processor from the iPad to the MacBook Pro laptops and iMac desktop. It’s also preparing the most significant overhaul to the Mac mini in the product’s two-decade history, complete with a smaller design and new chips.

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.