One of the all-time great Simpsons quotes involves Homer addressing unfavorable crime statistics: “People can come up with statistics to prove anything, Kent. 40% of all people know that.”
While good for a laugh, there’s a whole lot of truth to that sentiment. There’s even a famous book on that very topic, aptly titled How to Lie with Statistics.
Now what do Homer Simpson and a book written in 1954 have to do with anything tech related? Well, just last week I stumbled across two articles which relied upon statistical data to come up with bizarrely misleading headlines. And with Apple set to release its earnings results later today, it’s as good a time as any to remind folks to be a bit more discerning when presented with seemingly ominous statistical data.
Our first and worst offender comes in the form of a CNBC article covering Apple’s upcoming earnings announcement.
Here’s how the headline reads: “Traders see 10% chance of Apple earnings plunge.”
Run for the hills! The authors of the story slyly match up the words “earnings plunge” with Apple in an effort to frame Apple’s upcoming earnings announcement with more than a tinge of negativity.
Even the first sentence of the article spells doom and gloom for Apple: “With Apple set to report earnings next week, the options market appears to be bracing for a big potential move to the downside.”
A big potential move to the downside? All because 10% of traders say there’s a chance for an earnings plunge?
Of course, the very same article could just have easily been written as follows: “90% of traders see no chance of Apple earnings plunge.”
Same set of facts, but notice how quickly the thrust of the story changes when the headline is flipped.
Moving along, I noticed something similar in the wake of Tim Cook recently divulging subscriber metrics for Apple Music. Cook, if you recall, said that Apple Music currently has 6.5 million paying subscribers with an additional 8.5 million people still using Apple Music as part of the service’s three month trial service.
Now if you want to put a negative spin on things, one could simply highlight the fact that just 43% of Apple Music users are paying subscribers. Or you could go the route USA Today took when it went with a headline that read, “Apple lost millions of Music users when trial ended; 6.5M remain.”
Sounds like Apple Music may not be doing well, what with millions of users leaving the fold, right?
But upon closer inspection, 6.5 million paying subscribers for a service that didn’t even exist four months ago is no small thing. In the blink of an eye, Apple just added $650 million of revenue to its bottom line via a service that just got off the ground.
Apple Music’s chief competitor, Spotify, currently boasts 20 million paid subscribers. It stands to reason that by the time the current crop of 8.5 million users trying out Apple Music need to make a decision to renew, Apple’s subscriber base will grow to 10 million.
All that to say this: If pundits and analysts start painting gloom and doom scenarios for Apple this coming week, it’s probably wise to take a closer look at ominous sounding statistical data before nodding in agreement.