China Becomes 2nd Largest Apple Market

Apple Inc. (AAPL) said China has become its largest market after the U.S. as the iPhone, iPad and iMac computer maker opened an online store last year and six retail outlets in the past three years in the Asian nation.China accounted for 16 percent of fourth-quarter sales, or about $4.5 billion, Chief Executive Officer Tim Cook said on a conference call yesterday. Quarterly sales in China were up almost four times the year-ago level, he said.Demand in China was a bright spot in Apple earnings reported yesterday that missed analysts’ estimates for the first time in at least six years as iPhone sales lagged behind targets. The Cupertino, California-based company’s China sales rose to $13 billion in the year ended Sept. 24, from $3 billion in the previous 12 months, Cook said.“I’ve never seen a country with as many people rising into the middle class that aspire to buy products that Apple makes,” Cook said on the call. “So I think China, the sky’s the limit there.”Apple has a China network of more than 200 “Apple Premium Resellers” that are focused on the company’s products, Cook said. Combined with other types of resellers and partner China Unicom (Hong Kong) Ltd., the nation’s only carrier now offering the iPhone with a service contract, there are 7,000 points-of- sale for the iPhone in China, he said.“China should be Apple’s largest market, and I think they are actually underperforming here,” said Shaun Rein, managing director of China Market Research Group., a Shanghai-based company that advises retailers and other clients about operating businesses in China.China is the world’s largest mobile phone market, by subscribers, with 940 million users registered as of the end of August, according to the nation’s Ministry of Industry and Information Technology.The country probably overtook the U.S. as the largest personal-computer market in the second quarter, after three decades of American dominance in an industry pioneered by Apple and International Business Machines Corp., research firm IDC said in August.Personal-computer shipments in China rose 14 percent to 18.5 million units during the second quarter, the first time they surpassed the number in the U.S., where they fell 4.8 percent to 17.7 million, IDC said at the time.Apple sales in China, Hong Kong and Taiwan rose to 12 percent of the company’s total last fiscal year, compared with 2 percent in 2009, Cook said on the call.Revenue is growing “at a feverish pace,” in the region, making it the company’s fastest growing “by far,” he said.Apple last month opened its first store in Hong Kong, as well as its third store in Shanghai. The company also has two outlets in Beijing.“It’s an area of enormous opportunity,” Cook said. “It has quickly become number two on our list of top revenue countries very, very quickly. We’re obviously placing additional investment. We’re building more stores there, as well as doing quite a few other things.”Fourth-quarter profit was $6.62 billion, or $7.05 a share, compared with $4.31 billion, or $4.64 a share, a year earlier, Apple said yesterday in a statement. That missed analysts’ predicted profit of $7.31 a share, the first time Apple disappointed in at least 26 quarters.