Why Apple’s unit sales reporting doesn’t matter anymore

“Investors were disheartened by Apple Inc.’s announcement that it won’t provide unit sales numbers in earnings reports from this point on,” Jacob Sonenshine writes for TheStreet. “The stock fell more than 7% Friday afternoon, after Apple’s better-than-expected earnings report wasn’t enough to satisfy investors.”

“But it isn’t sales volumes that matter to Apple anymore,” Sonenshine writes. “Apple provides premium products, enabling it to lift prices, which lifts gross margins, and are justified by the services a user can enjoy on the device. And those services of course are likely to have significant upside, perpetuating the spin wheel.”

“Greg Portell, Lead Partner of Global Consumer Industries and Retail at A.t. Kearney Consulting is ‘”not really concerned about unit sales,’ he told TheStreet. The idea — especially in a slowing market for iPhones — is to ‘maximize profit from a slower growth base,’ Portell said,” Sonenshine writes. “Portell said the units numbers is simply not the important number to focus in on. ‘I don’t think it’s about confidence — it’s a misleading number in their mind,’ he said. The decision to stop reporting unit sales numbers focuses investor’s attention on services growth. ”

Read more in the full article here.

MacDailyNews Take: In effect, Apple is telling the analysts, “It’s the services, stupid.”

SEE ALSO:
The ‘smart money’ shrugs off Apple’s decision to no longer disclose unit sales – November 2, 2018
Apple rams their message home: Think ‘Apple as a Service’ – November 2, 2018
Investors bristle as Apple occludes iPhone unit sales data – November 2, 2018
Apple’s decision to stop reporting unit sales of iPhones, Macs, and iPads is a ‘defining moment’ – November 2, 2018
Apple to stop reporting iPhone, Mac, and iPad quarterly unit sales – November 1, 2018
Apple tumbles 7% after reporting record-breaking quarterly earnings – November 1, 2018
Apple beats Street with another record-breaking quarter – November 1, 2018

23 Comments

      1. I don’t appreciate the personal attack.

        You think profits will go up forever as over priced iPhones sales saturate and decline for several reasons, well, we shall see.

        Hiding the numbers speaks VOLUMES as cluless Cook hangs on..,

            1. I think the iPhone read his true intensions rather well, though why someone who thinks his ‘iPhone’ is clueless still uses one is something of a mystery and certainly not the sort of oracle one would put their faith in for premonitions.

              Yes we will see what happens, for this is precisely the sort of lazy assessment that has been heard time and again over the years and always proved wrong as the company has reached its present heady heights. As has been explained by various writers on the subject and in this article as long as the user base goes up or even stays healthy and service features grow and expand their capabilities, so will profits even if device sales stagnate so the wishful thinkers and their repetitive doom premonitions will have to wait a damn long time even by the worst case scenario to see even a whiff of the doom they crave, even with the mundane leadership of Cookie. So don’t hold your breath guys.

            2. “though why someone who thinks his ‘iPhone’ is clueless still uses one is something of a mystery and certainly not the sort of oracle one would put their faith in for premonitions.”

              Talk about extrapolation and conflation. Nowhere did I say the iPhone is overall “clueless.” I just wondered why it did not catch my ONE lazy mistake. Oh Richie, I know how to spell so you can rest easy tonight.

              Grow up boys…

    1. Unit sales were routinely touted by Apple for years at each and every Apple event, complete with smiles, clapping, and cheering – a wholly delightful experience. Not so much anymore. Apple must have wised up and realized that these data were not important any more.

  1. My entire early retirement has been made possible by buying AAPL at times like these. How is it that I know more than Wall Street and all its analysts? I have made a fortune by buying shares whenever I find myself shaking my head and saying, “This makes no sense.” I used to think these record quarters followed by a collapse in the shares was stock manipulation pure and simple. Drive that price down, load up and sell, then drive the price back down. Now I am not so sure of that conclusion. I think most of Wall Street is just STUPID.

    1. My retirement also has been made possible by Apple. People forget that a perceived slow down in sales is actually caused by Apple’s policies of increasing the long term usefulness of their products. The useful life of Apple’s phone has been prolonged by IOS upgrades, cheap battery replacement policy, smart battery cases, and efficient processors. Thanks to cheap battery replacement and a battery case, my wife’s iPhone 6 still has 2 day battery life. I don’t have to replace it yet, but when I do Apple knows it will be with another iPhone. I bought her a nice gold stainless Watch 4 because I know it will work with her current and next phone without problem. The unit numbers are not important! The installed base is the true measure of success. Long product life hurts short term numbers but guarantees long term success. Apple’s smarter and wealthier customer base live their lives that way and so does Apple.

      1. So true. The Android strategy of designing obsolescence into the product plan is effective short-term, but long-term it is counter-productive. It’s a great catalyst that entices switchers to dump Android and upgrade to their first iPhone. And generally people don’t go back once they’ve entered the Apple ecosystem.

    2. Why not both?

      Apple stock used to be manipulable but not so much any more. It would take a lot of capital to move the stock price.

      I think it’s possible that you were right before; that shady analysts were deliberately spreading FUD to move the stock up and down, while they traded options. I do know that you used to see a curious amount of surprising but incorrect reports just before options expiration.

      But now I think they’re just idiots.

    1. Short sellers made an absolute fortune today while investors dumped AAPL at cut rate prices.

      There was no rally at the end of the trading day today. Apple down 7% and no one walked the walk and bought at these very low prices.

      1. I think it will take time to recover as has so often happened in the past, even when circumstances were far less encouraging. But recovery will take place and precictably this fall will be conveniently forgetten and we just wait for the next irrational Wall Street response as if it’s uniquely significant again while the doom mongers escape their dark holes in middle earth and get off on the wistful excitement it grants them while they can. The more the world changes the more it stays the same for the analysts on planet Apple.

        1. The only “dark hole in middle earth” is where iPhone sales numbers have been banished forever. Hide the decline is obviously designed to shield Apple from criticism here on out. I would prefer to know the actual numbers good or bad and adults can handle either way. Cook is covering up and only a matter of time we get a new visionary CEO to replace a bean counter and someone who has no idea how to make money from flagship Macs…

  2. Apple’s plan is to make up for slowing sales by raising prices? Already a 1TB SSD in the new Mac mini costs $800! (Compared to $150 online.) How ridiculous can their prices go?

    Apple’s ease-of-use advantage is also gone. Style is a VERY fickle animal to build your base on. If Apple becomes “uncool” they could loose half their sales in a year. I’ve loved Apple for decades, but right now I am hoping for someone to come in and rescue me from them.

  3. I first began wondering Apple’s rather unusual hyping late last year when they were really self-praising the X. Until then, I have been automatically renewing my iPhone every time Apple came up with the new models.
    Lo and behold, the much touted “super-cycle” never materialized and after the year changed, it was the 8/+ that were the top sellers. By that time, I was worried about the one trick pony biz (overly dependent of phone sales) of Apple.
    I happened to have encountered a CNN article lately. When Tim Cook was asked about the justification of eliminating sales figures by device (as people smelled Apple must have something to hide), his answer was “”If you go to the market and you push your cart up to the cashier and she says, or he says, ‘How many units you have in there?’ It doesn’t matter a lot how many units there are in there in terms of the overall value of what’s in the cart.” quote/unquote. I am appalled by the CEO’s level of understanding of his own biz. I won’t go into other various details but even a grocery chains constantly analyzes product by product trend and constantly change the mix, dwciding where they must be going. Total sales consists of individual product sales. Grocery analogy was totally wrong in that retailers sell so many varieties of someone else’s products yet they have very sophisticated sales analysis programs. And it’s an extremely competitive biz. The CNN article concluded by saying “At some point Apple will need to figure out what will replace the iPhone, or its growth engine could stall out.”..
    So there….

  4. From the Wall Street Journal (Front Page)

    “Facing iPhone Troubles, Apple Tries to Change the Story
    The company plans to stop reporting unit sales as it pushes its services business.

    When Steve Jobs took a swipe at Amazon.com Inc.’s Kindle in 2009, he pointed to the online retailer’s decision not to report unit sales of its reading device as evidence it wasn’t selling many.

    Usually, if they sell a lot of something, you want to tell everybody, the Apple co-founder told the New York Times nine years ago.”

  5. “When Steve Jobs took a swipe at Amazon.com Inc.’s Kindle in 2009, he pointed to the online retailer’s decision not to report unit sales of its reading device as evidence it wasn’t selling many.
    Usually, if they sell a lot of something, you want to tell everybody, the Apple co-founder told the New York Times nine years ago.”

    Now Apple is doing the same…

  6. “Already a 1TB SSD in the new Mac mini costs $800! (Compared to $150 online.) How ridiculous can their prices go?

    And Apple being a major (monster) purchaser of various storage memories with a long term commitment, and memory chips being a typical commodity items, they are buying memories by weight, at a fraction of retail prices. Apple is in the memory reselling biz, an easiest and far more lucrative biz than selling their own products. Look at the memory price for iPhones. Greed prominently exhibits itself. But the greed has now been felt everywhere (not just my opinion) now, and I am afraid it will eventually hurt Apple’s past reputation that Jobs & Co. built. People are already getting repelled.

  7. The really sad part is that the innovation is just lacking at Apple. Jobs had a unique talent in that he could take an idea and browbeat others into making the vision occur. Where is the innovation coming from. Johnny Ives knows only how to make it shiny and thin. Where is the innovation? Where is the common sense? We get features rammed down our throat that many do not want. Case in point is the touch bar, and the huge oversized trackpad. The last decent keyboard we had on a macbook pro was in the 2015 models. What do we get in return? I have seen more cursor jumping and mysterious touch bar activation without even touching the touch bar.

    Move forward to the launch of the iPhone XR. It is really a nice little phone, but instead of giving everybody a screen with the same pixel density as an iPhone 8 plus, or even an iPhone 6 plus, they give you less pixel density. The perception is less, although it may help battery life. The other issue is whether it makes sense to dilute the entire line with multiple versions of phones being available? They still have the iPhone 7 on the website, in addition to the iPhone 8, and now the XR, XS, and XS Max. All we need now is the iPhone Performa, and iPhone LC. People forget how cluttered and underperforming the line up of Macs was in the early 1990s right before the company nearly went into oblivion. The first thing Jobs did when he came back was clean up the production lines. The leadership at Apple should really take a good look at how the last Apple depression occurred, and how to avoid it. Perhaps the leadership at Apple should focus on longtime Apple enthusiasts and find out why many are not amused by some of the directions Apple has taken with products. The MacPro line comes to mind. The last iteration was released five years ago.

    Apple could do much better, but they are going down a road where they could squander the loyalty and buying power of longtime customers.

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