4 November 2018
I rarely discuss earnings, because it is boring and usually irrelevant, but this particular announcement came out of left field and is actually very significant. On the latest earnings call, Apple’s Luca Maestri announced that the company will no longer say how many iPhones, iPads, or Macs it sells, starting next quarter. They will report revenue for iPhone, iPad, Mac, Services and Other products (now renamed ‘Wearables, Home and Accessories’) but no longer will it tell you how many devices make up each category of sales.
The knee-jerk implication is that future iPhone sales are going to be disappointing, or flat. Of course, iPhone sales have been flat for a couple years now, so it’s not exactly a new phenomenon. As a counterfactual, Apple has never disclosed Watch sales but year-over-year growth of that product has been measured in double-digits percentages across its lifetime.
I do not interpret this sudden cloak of secrecy as an indicator that iPhone sales are falling off a cliff. It likely will go down for a while, until emerging markets like India come online. We’ll probably see a repeat of the last few years; hardware sales a little higher in some quarters, a little lower in others.
Perhaps Apple is planning some significant shakeups in its product line and they want to diffuse press attention. This past year, we have seen ASPs rise dramatically and now there is a rooted community consensus that Apple is ‘just’ making products more expensive. If sales had not been reported, it’s harder for people to attach to those storylines. You hear very little about Samsung or Google phone sales because those companies don’t report them. You have to rely on analysts and market analytics to come up with estimated figures. Apple is basically the only smartphone manufacturer who did report shipments. They aren’t doing anything radical really, they are merely joining the herd.
Moreover, I expect a lot of turbulence in the Mac and iPad businesses in the near future, as each of those products go through major transitions. It’s a lot easier to make those changes when there is less focus on financials.
It’s also important to note that disclosing less information does not always benefit Apple. When you create more uncertainty, there’s a greater potential for investors to be led astray. Quarters that are bad can be masked over, but quarters that are good can also fly under the radar.