The only good thing about the Apple vs. DOJ case is the juicy discovery and all those spilled secrets
The Justice Department’s antitrust case against Apple isn’t strong, and I still don’t believe the iPhone business will rise to the level of a smartphone monopoly, but if Apple can’t get the case dismissed, there is a tempting possibility that Apple will. to reveal much that it likes to keep secret or hidden.
In a recent call in which Apple once again outlined all the ways the DoJ is failing to prove that Apple’s iPhone business is a monopoly, the company told us that the government’s argument is specious because, in the measure of Apple’s share in the “performance smartphone” (read: more expensive phones) they rely on sales figures instead of units sold.
It’s true, the DOJ’s complaint makes at least 27 references to “revenues” for the iPhone, Apple Watch and various other parts of Apple’s business and zero references to “units” or “units sold.”
“The iPhone, Apple’s signature product, is the primary driver of Apple’s growth and profitability, and routinely boasts profit margins of more than 30 percent on devices alone – significantly higher than those of smartphone competitors. iPhone sales have accounted for the majority of Apple’s annual revenue every year since 2012.”
A matter of selling
By all accounts this is accurate. Apple’s iPhone business is a cash cow. However, when Apple talked about how the DOJ got it wrong, it suggested that a better way to look at its business is to look at the number of iPhones it has sold, as that would provide a more accurate comparison of market share can deliver.
I told Apple that, as far as I remember, the company hasn’t reported any iPhone units sold in years. If the case goes forward, I assume Apple would have to explain this claim by providing a detailed breakdown of iPhone units sold.
Apple agreed and assumes that if it fails to dismiss the case, it will do just that.
However, this position is surprising. In 2018, when Apple announced that it would no longer report iPhone units sold during its quarterly earnings calls (or at any other time), Apple CFO Luca Maestri characterized the decision saying that “the number of units sold in a quarter is not representative of the underlying state of affairs.”
In other words, when Apple decided to stop telling us exactly how many iPhones, iPads, Apple Watches and Macs it sold per unit, it was because it felt the data didn’t paint the clearest picture of its business.
Granted, Apple has rarely broken down iPhone sales into actionable chunks, like how many iPhone 8 versus iPhone 8 Plus were sold. It never provided us with any details proving the iPhone 13 mini was a dud. At best, Apple CEO Tim Cook will drop a piece every now and then about how the iPhone 12 was once the most popular iPhone.
There’s a good chance Apple will be forced to share that level of detail and more as this case progresses. Not only will we get iPhone unit sales figures, but perhaps also how many iPhone 15 handsets have been sold versus the more expensive and powerful iPhone 15 Pro.
Get ready for revelations
According to Apple in 2024, this is the best way to assess Apple’s market dominance (or lack thereof). Of course, if you asked Apple the same question around 2018, you might get a different answer.
What these numbers should show, however, is how Apple can generate far more revenue than competitors while selling relatively fewer phones (and perhaps owning less market share than the DOJ thinks).
Apple’s products are generally more expensive and usually don’t get the huge discounts that competitors like Samsung offer. When Samsung released its pricey Samsung Galaxy Z Fold 5, I advised readers to shop around because there was little chance they would actually have to pay the full $1,799 price.
iPhone unit sales data will also likely show conclusively that Apple’s most expensive phone, the iPhone 15 Pro Max, is the most popular, accounting for the lion’s share of iPhone revenue.
In addition to iPhone, Apple Watch, Mac, and iPad sales data, I expect this discovery could reveal a lot about how Apple works and treats major partners. We’ll likely learn who pays to license key technologies and how much. We will find out which services have the most subscribers and make the most money.
Apple, a company that values its secrecy like few others, will reveal a lot, and I bet it will be happy to do so if it proves its point, even if that process contradicts what Apple has told us in the past told.