My life as an Apple customer goes back about three decades, back to the yesteryear of the last century, back to before The Second Coming of Steve Jobs. In all that time one thing has remained a constant.
The negativity bias. It’s a thing. You read about it all over. Apple is doomed. Apple cannot innovate. This competitor or that competitor tops Apple again. Apple’s sales are in free fall. You get the idea, right? It’s a tragedy, I tell you. A tragedy. But only if you look at tragic numbers.
Numbers vs. Facts
Every business has a handful of financial metrics which are used– for good or bad– to determine a company’s current health and direction (from the past to the present to the future). Apple is no different and each quarter the company publishes– required by law– specific financial information that is used to determine the company’s fiscal health.
One number you won’t hear anymore is how many iPhones, iPads, and Macs were sold in a given quarter. Why not? First, the numbers have plateaued or fallen in recent years so they don’t make Apple look particularly healthy. Second, competitors don’t provide such numbers, either, so Apple went to a more level playing field.
What you will get are a few– only a few– of the metrics that really matter to shareholders, Apple watchers and critics, and customers who care.
Last quarter Apple reported revenue for the following:
- $31.05 billion iPhone
- $11.45 billion: Services
- $5.51 billion: Mac
- $5.13 billion: Wearables, Home and Accessories
- $4.87 billion: iPad
No surprise, right? iPhone leads the pack, followed by the up and coming category of Services (think Apple Pay, Apple Music, AppleCare, App sales and subscriptions, and anything else that is not hardware).
The Mac remains a healthy business, but of the five categories, and not far down the line of numbers, is iPad; still a vibrant $20-billion a year hardware business.
What is new among the numbers is Wearables, Home, and Accessories. Think Watch, AirPods, Beats headphones, HomePod, and anything else that is not an iPhone, Mac, or iPad.
Yet, what you read about in most online rags about Apple’s health is the marketshare metric. Let me tell you, marketshare is not a good metric to determine a company’s financial viability.
For example, among smartphone makers, Samsung and Huawei sell more phones than Apple. Yes, iPhone has dropped to third place and other Chinese makers are gaining fast as iPhone sales falter and fall.
Yet, among smartphone makers, Apple’s iPhone revenue tops all other smartphone competitors. Combined. Including Samsung and Huawei. Combined. If you’re the CEO, which number would you want for your company? The one with the most units sold? Or, the number with the most revenue?
It’s not just revenue, either, and it’s not just iPhone. Apple profits– per product category– are higher than any competitor; Mac vs. PCs, iPad vs. tablets, Apple Watch vs. other so-called wearables.
Here’s another good example where the facts do not match Apple’s so-called monetary problems. Microsoft’s Surface PC line is comprised mostly of touchscreen notebooks, but they are counted as PCs, not tablets. Guess what would happen if Apple were to combine Mac sales revenue and profits to iPad revenue and profits?
Apple would be the largest PC manufacturer. Those are the numbers that matter to Apple’s executives and they provide a more accurate picture of the company’s financial health.
Let’s compare those basics with Vinnie Fisher’s perspective:
5 Key Metrics You Should Be Tracking in Your Business
These metrics are interesting and can be considered important, but not nearly as important as the ones Apple publishes each quarter.
- Revenue to Expense Ratio
- Customer Retention
- Debt to Equity Ratio
- Inventory Turnover
- Current Ratio (assets minus liabilities)
All five are part of a handful of metrics that executives and investors may consider, but different from those Apple makes public because they are less valuable.
The tragedy of Apple’s money troubles is that there isn’t much tragedy at all.