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Apple doesn’t want to talk about iPhone sales anymore

It’s using services like the App Store and Apple Music as a distraction for declining iPhone revenue.

Apple iPhone models over the years. Josh Edelson/AFP/Getty Images
Rani Molla is a senior correspondent at Vox and has been focusing her reporting on the future of work. She has covered business and technology for more than a decade — often in charts — including at Bloomberg and the Wall Street Journal.

Apple, which hit its lowered first-quarter revenue guidance in its earnings report today, no longer discloses how many iPhones it sells. That’s probably because the numbers aren’t so good.

IPhone revenue was down 15 percent in Q1 compared with a year earlier.

Apple’s iPhone unit sales were flat the last time it reported and had been sluggish for a while. For a while iPhone revenue had managed to increase despite stagnant unit sales, as Apple raised prices to eke out more revenue per phone.

Earlier this month, in a note to shareholders, Apple CEO Tim Cook blamed problems with the Chinese market — including slowing economic growth and trade tensions with the US — for its lackluster iPhone sales. At the time, Cook revised Apple’s revenue guidance down about 8 percent.

Apple’s year-over-year change in quarterly iPhone unit shipments and revenue

So instead of iPhones — Apple’s marquee device — the company has been trying to redirect attention toward its “services” segment.

Accordingly, Apple has begun breaking out its profit margins on services (App Store, licensing deals, Apple Care, Apple Music) to emphasize that its quick-growing service segment is also very profitable. Apple takes in about a third of every purchase on its App Store, which means tens of billions of dollars a year. Apple Music, which costs $10 per month, had about 27 million paying subscribers in June, up from 20 million at the beginning of 2018.

Apple’s margins on services were 63 percent compared with 34 percent for its products (phones, iPads, Macs) business.

But services only make up 13 percent of Apple’s revenue, while iPhones still account for 62 percent of Apple’s $84.3 billion in sales.

So even though Wall Street analysts might be heartened to hear about Apple’s services growth, iPhone sales are still the main event.

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