Employees can already get the Apple iPhone 16 at a discount because demand for it is so low.

Despite optimistic expectations surrounding Apple’s (AAPL 0.00%) advancements in artificial intelligence, the Apple Intelligence initiative has not succeeded in persuading consumers to purchase the iPhone 16.

According to TF Securities analyst Ming-Chi Kuo, Apple employees are currently able to acquire the iPhone 16 using their employee discount. He noted in a post on X on Wednesday that typically, employees must wait several weeks following the launch of new iPhone models before they can make a purchase. This situation may indicate that initial demand for the iPhone 16 is falling short of projections.

In its first weekend following the launch, Apple sold approximately 37 million units of the iPhone 16, representing a decline of nearly 13% compared to the first-weekend sales of the iPhone 15 from the previous year, as reported by Kuo in a blog post on Monday.

Kuo has indicated that the slower sales during the first weekend can be attributed to a demand for the iPhone 16 Pro lineup that fell short of expectations, primarily due to the staggered release of Apple Intelligence.

Kuo stated, “A significant reason for the subdued demand for the iPhone 16 Pro series is the absence of the key feature, Apple Intelligence, at the time of the iPhone 16 launch.”

A recent analysis of pre-orders conducted by Jefferies (JEF-0.08%), published on Wednesday, suggests that demand for the new iPhone lineup is gradually improving in the United States. Delivery times for the iPhone 16 Pro have extended to two to three weeks in seven major cities examined by the investment bank; however, this remains below the levels observed last year.

The array of new artificial intelligence functionalities encompasses enhancements in Safari, Notes, Calculator, and, most significantly, Siri for iOS 18, iPadOS 18, and macOS Sequoia. During its annual event last week, Apple announced that the initial Apple Intelligence tools, which will be exclusive to iPhone 15 Pro models and above, are set to be released as a beta software update in October, with additional features expected to be introduced in the subsequent months.

Apple, along with industry analysts, anticipated that these highly anticipated features would catalyze an upgrade “super cycle” and usher in a new phase of growth for the technology company. However, recent studies examining the factors influencing upgrade decisions revealed that only 18% of consumers purchase a new iPhone due to new features. The majority tend to upgrade their devices only when their current smartphones become outdated, are lost, or sustain damage.

A significant portion of this deficit can be attributed to China, where Apple is encountering what Kuo described as “fierce competition,” especially from Huawei and other domestic smartphone manufacturers.

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