Apple told investors not to worry about iPhone sales - but now it seems worried about them

Troy Wolverton

Nov 29, 2018, 22:10 IST

Apple told investors not to worry about iPhone sales - but now it seems worried about them

Tim Cook, CEO of Apple, which has sent mixed signals lately on how much investors should worry about how many devices it's selling.

Apple essentially told investors earlier this month that they shouldn't worry any longer about how many iPhones, iPads, or Macs it sells.
That worried investors a lot, and they sold off the company's stock over fears of declining iPhone sales.
Now Apple is saying investors shouldn't worry because sales of its most recent model are doing just fine.
You'd might be confused about whether unit sales are important or not; we sure are.

OK, Apple, I'm confused.

First you tell me that I shouldn't worry about how many iPhones you're selling. But now you're telling me that - just in case I was wondering, I guess - that your new iPhone XR is selling just fine. In fact, it's your best seller!

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So, should I be concerned about how many iPhones you're selling or no? It's all a bit befuddling.

When you announced earlier this month you wouldn't be disclosing unit sales of your devices any more, I wasn't happy. You've been telling us how many iPhones and other gadgets you've sold each quarter for as long as I can remember. The numbers help investors, analysts, and us reporters better understand how your business and the wider tech industry is evolving. With them, we can figure things out like market share, the average price people are paying for phones, and how the markets for tech products are changing.

I get why you're dropping reporting on unit sales

But, hey, I get your reasoning for dropping the disclosure. None of your rivals report their unit sales numbers, so continuing to do it arguably puts you at a competitive disadvantage. What's more, as your business has evolved, the number of iPhones you sell is no longer directly correlated with your revenue or profits.

Thanks to increasing prices, you can sell the same number of phones or even fewer of them and still make the same amount of revenue and potentially post higher profits. And with your services business becoming increasingly important, the amount of money you get from your customers is determined by much more than just each device you sell them.

So, I appreciate your reasoning. I mean, I wish you would replace the unit sales numbers with something that might give us similar - but more relevant - insights about the performance of your business. It would be great, say, if you would disclose something like an annual revenue per user number like other companies in subscription and services businesses. That would be helpful. But I understand - you want us to clear our minds of unit sales.

But, wait, why are you talking about unit sales again?

Or at least I thought I did until I saw a CNET article on Wednesday. In it, one of your top executives - Vice President of Product Marketing Greg Joswiak - came out and talked about unit sales. The new XR is Apple's best selling iPhone and has been since it launched last month, he said. It's outselling the company's two flagship phones, the XS and XS Max, he said. He also gave Reuters an "interview" to provide the same sound bite.

OK, sure, Joswiak didn't give any hard and fast numbers. So we don't know just how many XRs or XSs Apple's selling. But I thought we weren't supposed to be worrying about how many you're selling at all?

Are you saying I actually should? Or is this your way of acknowledging that many of us out here still do and this is your attempt to reassure us that everything's fine?

Maybe you're just nervous - just like your investors

You didn't respond to my inquiry about this, so I don't know for sure. But I could understand it if that's the case. I mean, I'd get nervous too if my stock had fallen so far so fast as yours has. Seeing hundreds of millions of dollars in market value evaporate in less than a month might have me rethinking my convictions too.

Clearly, despite your assurances that unit sales don't really matter all that much, investors are nervous about them. And can you blame them? According to the Wall Street Journal, you asked your manufacturers last month to cut the number of XRs they're making by a third before coming back to them this month and asking them to cut production again. Meanwhile, according to Bloomberg, Foxconn, your biggest manufacturing partner, is cutting costs and warning of a tough year ahead.

Even one of your most bullish backers on Wall Street is saying that sales of your new phones are "clear disappointment."

Read this: Investors focused on Apple's disappointing iPhone sales are missing the company's hidden goldmine

So, I get that you might feel a need to reassure investors that everything's really OK, that the XR is doing peachy. I just wish you could make up your mind and clear things up for the rest of us. Should we be worried about how many iPhones you're selling or should we not?

Because from the looks of things, you sure are.

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