Verizon struggles because people are not buying new phones, but the iPhone 16 is coming to the rescue

If you haven’t upgraded your phone this year, you’re not alone. Millions of people haven’t done so. If you care about the well-being of corporations, you should be worried about this trend. Verizon, for example, fell short of quarterly revenue expectations

That’s the latest report from Reuters highlights that sluggish phone upgrades in the US are causing Verizon a 3.4% drop in its shares before the market opened on Monday.

Budget-conscious customers are holding onto their older phones for more years now – and why wouldn’t they, now that Google and Samsung over a whole seven year of software updates? – and this causes unexpected troubles for telcos.

Verizon reported second-quarter revenue of $32.8 billion, slightly below the analysts’ average forecast of $33.06 billion.

Analysts attribute Verizon‘s struggles to a historically low number of phone upgrades, though this trend may shift with the release of Apple’s new iPhone 16 line. This year’s phones from Apple are going to bring along the long-anticipated AI capabilities. Artificial intelligence features can be ignored by Apple no more; in fact, the Cupertino giant has some catching up to do in order not to fall behind Samsung and Google in the AI race.

Research firm IDC indicated that generative AI smartphones could drive the next wave of growth in the smartphone market during the second half of the year, following the impact of 5G and foldable phones.

Despite Verizon‘s missed quarterly revenue estimates, the telco added 148,000 net monthly bill-paying wireless subscribers from April to June, surpassing the analysts’ average estimate of 127,870 additions, as per Visible Alpha. This is a significant recovery from the previous quarter’s loss of 68,000 subscribers.

The company’s myPlan, introduced in May last year, allows customers to pay only for the services they need, helping Verizon better compete with AT&T and T-Mobile US in the competitive US telecom market.

Verizon has also partnered with streaming services to offer promotional bundles from platforms like Netflix, Warner Bros. Discovery’s Max, and Disney’s services. In March, Verizon raised the prices of some older plans to encourage customers to switch to new ones.

Despite these efforts, Verizon‘s consumer business reported a net loss of 8,000 wireless retail postpaid phone subscribers in the latest quarter, a significant improvement from the 136,000 losses a year earlier.