On Apple's (AAPL +2.77%) most recent earnings call, several analysts tried to get Apple management to talk about the sales mix of iPhone 8, iPhone 8 Plus, and iPhone X that Apple expects to see in the coming quarters.
Analysts, of course, want as much information as possible to try to build accurate forecasts of Apple's iPhone revenue for the current fiscal year. Since iPhone revenue depends on both unit shipments as well as average selling prices, and since average selling prices depend on product mix, it's not hard to see why they were so interested in trying to get this information out of Apple's top brass.
Apple marketing chief Phil SchillerImage source: Apple.
Apple executives, of course, didn't provide this information, explicitly stating multiple times that the company doesn't provide historical product mix information or product mix projections, but that didn't stop analysts from trying to ask the same questions in slightly different ways to sneak answers out of the executives.
Why won't Apple talk about iPhone mix?
Competitive pressure
It's not in Apple's best interests to signal to its competitors what sort of product mix it's ultimately selling. To understand why, suppose that every quarter, Apple provided a detailed breakdown of its iPhone shipments by model and storage configuration.
Apple's competitors would immediately gain insight into what Apple's worst and best-selling products are, allowing them to adjust their product portfolios to more effectively compete with Apple. For example, if that data showed that Apple's best-selling iPhone was the iPhone 8 Plus with 256 GB of storage (I suspect that prior to the launch of the iPhone X, this was probably true), a competitor would know the following:
- Many Apple customers are willing to pay more for additional built-in storage.
- Apple customers value larger-screen iPhones more than they do smaller-screen iPhones.
In response to this information, an Apple competitor could shift its product development pipeline as well as its marketing strategy to more effectively go after Apple customers. Additionally, if Apple routinely provided this information, competitors could gain insights into the sales trends of different iPhones across a range of price points over time, allowing them to further adjust their product development and marketing strategies.
Of course, this isn't to say that Apple's competitors don't do their own market research, or that market trends that impact Apple's business don't apply to competitors' businesses. But the less informed Apple's competitors are of the specifics of Apple's business performance, the better it is for Apple.
Investor expectations
Another reason that Apple probably doesn't want to disclose its expected product mix is that this is something that's subject to change.
Let's say Apple provided a forecast of the mix of iPhones that it expected to sell in the current quarter. Analysts and investors would immediately take those mix projections and use them to build forecasts going out multiple quarters, if not multiple years.
That'd be fine -- unless Apple's mix projections turn out to be wrong. If Apple's product mix comes in less favorably than expected, then both analysts and investors might become unduly negative toward Apple and its prospects. It could also reduce investor confidence in Apple's trustworthiness, even if the projection that Apple gave was the best that it could come up with at the time with the information that it had.
On the flip side, if Apple reports a better-than-expected product mix, then analysts and investors might go a little bit nuts in revising their expectations upward, which increases the odds that Apple will miss those projections and ultimately lead to investor disappointment.
Sometimes it's just best for companies to keep the details of their expectations private.
