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Apple's China boom continues with 6x revenue growth to $3.8B

post #1 of 11
Thread Starter 
Apple revealed Tuesday that its Greater China regional revenue saw a six-fold increase year over year to $3.8 billion, even while company executives admitted that they are barely "scratching the surface" of the Chinese market.

Chief Operating Officer Tim Cook said during the company's quarterly earnings call that "China was very key to [Apple's] results." The region now contributes roughly 13.3 percent of Apple's total third-quarter revenue of $28.57 billion, compared to less than 4 percent in the year ago quarter and approximately 10 percent in the first half of fiscal 2011.

Greater China revenue for the first three quarters of fiscal 2011 stood at $8.8 billion, up from $3 billion for all of fiscal 2010. The region's breakout performance contributed to strong growth for the Asia/Pacific area, which saw sales nearly quadruple year over year.

"This has been a substantial opportunity for Apple, and I firmly believe we are just scratching the surface right now," Cook said. "I believe there is an incredible opportunity for Apple there."

The rapid acceleration of sales in China has surprised even some inside the company. "If any of us would have been told a year ago that we would have done $3.8 billion in Greater China in a quarter, there wouldn't have been very many of us who would have believed it, and probably none of you," Cook noted.

Emerging and developed markets continue to drive iPhone growth, with China playing a big part, while Brazil, Mexico and the Middle East also made significant contributions. "We are really beginning to see the fruits of our labor in these markets," Cook said.

Apple indicated last quarter that the bulk of its emerging market focus has been on China. The company plans to adopt its strategy for the country and apply it to other developing markets.

The iPhone maker has just four stores in mainland China, two in Beijing and two in Shanghai. As part of a dramatic retail expansion set to take place this quarter, the company plans to build its first retail store in Hong Kong.

Recent rumors have suggested that Apple has also negotiated leases on two possible retail locations in Chengdu, China. Executives for the company previously indicated plans to open 25 retail stores in China by the end of 2012.

During Tuesday's conference call, analysts probed whether Apple would multiply its successes by adding additional Chinese carriers and releasing a cheaper iPhone to target the country's mostly prepaid market. Cook dodged the question, while admitting that Apple has yet to "figure out precisely how to play perfectly in the environment." He added that the company has "more to do and more to learn," though he does "feel very very good about [Apple's] progress."

Brian White of Ticonderoga Securities believes the high-end mobile phone market in China could pose a $70 billion opportunity for Apple. According to him, a partnership with third-place wireless carrier China Telecom could bring Apple as much as $9 billion in near-term revenue. Currently, the iPhone is only officially available in mainland China on China Unicom.

Cook was reportedly spotted at the China Mobile headquarters in Beijing last month, fueling speculation that the companies are close to an agreement to sell the iPhone on the world's largest wireless network. Unverified photos showing a test iPhone on the carrier's TD-SCDMA network have strengthened the rumor.
post #2 of 11
Quote:
Originally Posted by AppleInsider View Post

Chief Operating Officer Tim Cook said during the company's quarterly earnings call that "China was very key to [Apple's] results." The region now contributes roughly 13.3 percent of Apple's total third-quarter revenue of $28.57 billion, compared to less than 4 percent in the year ago quarter and approximately 10 percent in the first half of fiscal 2011.

Remember this when the trolls come out saying that no one in China can afford Apple products.
post #3 of 11
Quote:
Originally Posted by OriginalMacRat View Post

Remember this when the trolls come out saying that no one in China can afford Apple products.

Exactly. Greater China is Apple's (and its shareholders') most significant growth opportunity in the next decade.

The good thing is, Apple knows it.
post #4 of 11
Interesting about China loving Apple products. Last Jan when I was looking for an iPhone 4 to buy, a Best Buy salesman tried to get me to buy and Android phone. He said he's from China and the iPhone isn't popular there.
Fortuntely I kew what he said was sales BS, as a friend from China had already told me the iPhone is hot in China among those who can afford it.
Of course it's only the initial downpayment which differs here, the usage cost which pays for most of the phone, is the same for all smart phones.
post #5 of 11
China, Brazil, Russia, India. All high potential growth areas for Apple.

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply

Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply
post #6 of 11
China has the third largest GDP in the world with over $10 Trillion. How people still think they can't afford Apple products is anyone's guess.

They are actually second, by country, with the US first, but Europe looks puny per country so they've combined them by the European Union.

https://www.cia.gov/library/publicat...=eas&rank=3#ch
post #7 of 11
How much money is invested in manufacturing in China by Apple though..How much investment has Apple made to begin seeing any revenue?....In effect, how much of their own money are they getting back?...A bit like welfare..And what about content providers?

Secondly, I work in Nantong, China as an English teacher...and I visibly see the prescence of the iphone daily..It is very popular...And it is easily available..China Unicom stores are everywheres...Curiously, there is also an authorized dealer store in Nantong that exclusivily sells Apple products...

In this same equation, I wonder how many iphones are bought at the retail price knowing Chinese business practices...I'm sure many fall off the truck, so to speak and make nice unexpected gifts for some.
post #8 of 11
Quote:
Originally Posted by mdriftmeyer View Post

China has the third largest GDP in the world with over $10 Trillion. How people still think they can't afford Apple products is anyone's guess.

That's at Purchasing Power Parity. When considering their ability to buy stuff like iPhones you have to consider their GDP at actual exchange rates - which is $6.5TN. Assuming that an iPhone costs $600 in China anyway.

http://en.wikipedia.org/wiki/List_of...2016_estimates
post #9 of 11
Quote:
Originally Posted by OriginalMacRat View Post

Remember this when the trolls come out saying that no one in China can afford Apple products.

I think the trolls have been stunned into silence this time. I've been making the rounds to my usual tech websites and forums and there's almost nothing from the haters. Even Cnet has been uncharacteristically quiet on the subject. I mean what kind of negative spin is possible in the face of such results? Even the analysts are using terms like "Wow!" , "Blowout", and "Stunning".
post #10 of 11
Quote:
Originally Posted by lkrupp View Post

I think the trolls have been stunned into silence this time. I've been making the rounds to my usual tech websites and forums and there's almost nothing from the haters. Even Cnet has been uncharacteristically quiet on the subject. I mean what kind of negative spin is possible in the face of such results? Even the analysts are using terms like "Wow!" , "Blowout", and "Stunning".

Oh that's easy, expect to see lots out of the following

'Apple should move manufacturing to the US'
'Apple is overpriced'
'Apple should pay better wages'
'Apple is only selling to sheeple'

etc. Remember, for mosr apple-haters the popularity is 'proof' that it's bad
post #11 of 11
A few key problems Apple has in China that it needs to address. A significant number of Mac users here, if not the majority, run windows XP exclusively on their Macs. Apple apparently hasn't done a very good job of extolling the superiority of OS X versus windoze so there is a lot of missionary work to be done here. And online banking and the huge online store TaoBao also don't work on Mac OS X / Safari so Apple should be working aggressively to get them into the Mac fold. Second, Apple has made it extraordinarily difficult to open an iTunes account. I tried to help my Chinese wife's uncle set up an account but it kept refusing to accept his Visa brand credit card. Turns out the visa card from his bank isn't accepted by apple. He would have to open a new bank account at another bank. So what did he do? He jailbroke his brand new iPad. Lastly, Apple's iphone sales would be signifcantly larger here if they had mobile number portability in China like in the US as China Mobile is the largest carrier by far and doesn't have the iPhone. Most consumers that can afford one won't switch carriers as they have to then get a new phone number which requires them to notify everyone - friends, family and business contacts.
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