Apple sold 212 million iPhones in 2016, 217 million iPhones in 2017, and 218 million iPhones in 2018. Next year, it’ll be anyone’s guess.
On an earnings call earlier this month, Apple announced that it would no longer disclose the number of iPhones, iPads, and Mac computers it sells each quarter. Given that iPhone sales make up nearly 60 percent of Apple’s revenue, that’s some significant information being kept from the market. Without sales volume data, for instance, Apple watchers will no longer be able to calculate the average sales price of iPhones, a crucial metric in assessing the consumer appetite for the product.
Conventional wisdom has a pretty compelling explanation for the company’s decision to shield its sales numbers going forward. iPhone sales have been on a slow decline since 2015, when Apple moved more than 230 million units. Meanwhile, Apple has continued to post rising revenue due to corresponding price increases. As Mashable put it, “why take the PR hit” on declining sales numbers each quarter, when you can keep them to yourselves and focus on the rosier revenue narrative? It’s a sensible question, backed further by Apple’s not unreasonable claim that momentum in “services” (App store downloads, iCloud, etc.) is now a better measure of the company’s health than iPhone sales numbers.
Regardless, Apple’s decision reduces transparency around one of the world’s most valuable companies. Few would say that decision portends good things, either for Apple or the larger business community. In fact, Apple’s decision spotlights three troublesome trends, two of which go well beyond the financial reporting of a single company.
Trend 1: Apple Cuts Production of New iPhones
When Apple announced its new policy, Nomura analyst Jeffrey Kvaal wrote that “[a]n abrupt loss of disclosure suggests weakness beyond one quarter.” Bolstering that thesis, the Wall Street Journal subsequently broke the news that Apple had cut production of three iPhone models (XS, XS Max, and XR) due in part to lower-than-expected demand. Reportedly, sales forecasts for the XR have been particularly bleak, with Apple reducing by up to a third its planned production of 70 million iPhone XRs before February.
Trend 2: Tech Companies Pull Important Information Behind the Curtain
Apple is not the only company in Silicon Valley that is pulling back some important data. As the New York Times noted, Twitter declines to provide its average number of daily users, a significant metric for a social networking site. Facebook does not provide a separate revenue number for Instagram. And as we know, Google refuses to provide revenue figures for YouTube.
Trend 3: Decline in FAANG Stocks
Setting aside the issue of causation, Apple’s reduction in transparency comes amidst a widespread decline in FAANG stocks (i.e. Facebook, Apple, Amazon, Netflix, Google). The day after the earnings call in which Apple announced that it would not report iPhone sales figures (and gave a sobering sales forecast), its stock dropped 7 percent. Each of the FAANG stocks entered bear market territory this month, having dropped at least 20 percent from their 52-week highs.
The biggest loser has been Facebook, which, as of the 19th was down more than 39 percent. Incidentally or not, Facebook is also the FAANG stock that has faced the most public scrutiny about its transparency.