Daisuke Wakabayashi reports: The biggest growth driver at Apple is not any single product. It’s China.
The numbers are shocking. Apple’s revenue in greater China – defined by the company as China plus Hong Kong and Taiwan – rose 112% in the fiscal third quarter ended June. This means that growth is accelerating in China after a 71% increase in the previous quarter, which was considered something of a seasonally-inflated surge because it encompassed the Chinese Lunar New Year, a peak shopping period in the country.
“The macro picture looks fantastic. Maybe there are minor thunderstorms now and then, but that kind of goes with the territory. We’re just getting started there.”
— Apple Chief Executive Tim Cook
Apple Chief Executive Tim Cook said he expects China to become the company’s biggest market at some point in the future. It appears that future is fast approaching. (Apple’s biggest market now is the Americas where revenue was $20.2 billion compared to $13.2 billion for Greater China, but revenue in the company’s home market grew a more pedestrian 15%.)
“China is a fantastic geography with an incredible unprecedented level of opportunity there. And we’re going to be there.”
— Cook, in a conference call with analysts
A growing reliance on the Chinese market does expose Apple to concerns about China’s economy, exacerbated by the recent pullback in the Shanghai stock market. On Wednesday, Cowen & Co. analyst Timothy Acuri downgraded Apple’s stock to a “market perform” in part because he said he saw lower-than-expected iPhone sales as a cause for concern due to mounting evidence of “a widespread demand reset from China.”
Cook said the company’s bullish view about China’s future remains unchanged. He said it is still planning to increase the number of Apple stores in China to 40 by mid-2016 from 22 currently. Read the rest of this entry »
Apple’s share of profits is remarkable given that it sells fewer than 20% of smartphones
“Roughly 1,000 companies make smartphones. Just one reaps nearly all the profits.”
Apple’s Spring Forward event was quite eventful (repetition intended). Apple TV got a big price drop and an even bigger exclusive partnership with HBO. The Apple Watch was priced for every single tier. And there’s that ultra-thin, minimal-ported MacBook.
Bloomberg claims to have some info on how Apple plans to spend some of the $10.5B it has set aside for capital expenditure over the next year, saying that the investments will span everything from lasers to robots.
Apple is spending more on the machines that do the behind-the-scenes work of mass producing iPhones, iPads and other gadgets. That includes equipment to polish the new iPhone 5c’s colorful plastic, laser and milling machines to carve the MacBook’s aluminum body, and testing gear for the iPhone and iPad camera lens …
A fair chunk of the cash – up from $7B last year – will of course be spent on initial work on the company’s spaceship campus, but Bloomberg’s sources say that Apple takes a very hands-on approach to its manufacturing process.