Apple’s changing economy: as sales in America and Europe plateau, Asia saves the day

Apple’s changing economy: as sales in America and Europe plateau, Asia saves the day

In the last few years, Apple has grown its business tremendously, especially in terms of profits, as Cupertino is the company that rakes in the biggest profits of any tech company by a huge margin. However, times are a-changing for the California-based firm that used to make nearly all of its profits from sales in America and Europe.

In the last four years, the geography of Apple’s economy has become much more global. The company just announced its record-breaking (yet below expectations) quarter, and the results document two interesting facts. First, Apple’s business has actually started contracting in its core American market, and it’s gone nearly flat in Europe. Second, that disappointing performance was offset by huge growth in Asia.

In fact, Apple’s combined sales in Asia reached a record $17.4 billion, edging on its $20.1 billion revenues in Apple’s stronghold American market, and actually beating its $13.1 billion in revenues from Europe.

The biggest revelation comes when you look at the change in geography in Apple’s economy over the longer, 4-year term. In the period from Q1 2010 until Q1 2014, Europe’s share of Apple’s revenue has contracted a whopping 39%, while the American market has lost 22% of its share in Apple’s total revenue stream. The gains in China/Asia Pacific and Japan are - in stark contrast - tremendous. The share of revenue from China surged 62%, while the share of revenue from Japan grew 49%.

All in all, this is yet another indication that the smartphone market has reached a level of saturation in the American and European markets. Add to this the fact that iPhone sales in China are “lower than anybody expected” (a quote coming from Pacific Crest’s analyst Andy Hargreaves), and it’s no surprise that Apple gave a no-growth outlook for the next quarter.

Apple’s changing economy: as sales in America and Europe plateau, Asia saves the day

source: Fortune

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11 Comments

1. Duketytz

Posts: 534; Member since: Nov 28, 2013

Be gone Apple~

4. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

IDK about being gone, but Apple better do something about their sales flattening. Asia can't carry the entire company. They need to get the Americas & Europe sales going again. Resting on their laurels is the RIM/BB model. Otherwise, they will be gone.

7. networkdood

Posts: 6330; Member since: Mar 31, 2010

Well, this might explain their larger screened displays on their new Android...err, iphone models, coming out soon...

8. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

While the Android flagships get QHD displays.... The analogies with RIM keep increasing. Even Nokiasoft is rumored to be releasing support for QHD displays.

11. xfire99

Posts: 1205; Member since: Mar 14, 2012

If Apple be gone and we will have Intel vs AMD domination scenario. So its better Apple vs Samsung and consumers benefits.

2. superduper

Posts: 151; Member since: Oct 20, 2013

Two points: * The Asia market is huge. And there seems to be a lot of upward potential there too. Well done to Apple for cracking Asia and diversifying their markets. * The problem with Apple stuff is that it is too good. I know people still using ancient white plastic MacBooks and iPhone 3G/3GSs, when other companies' products would have broken down or been replaced by now. This is good and bad. Bad, because people can only buy so much Apple hardware, so sales will begin to plateau in established markets. Good, because people are happy to utilise their ithings for longer, which suggests happy customers and a revenue stream for Apple's burgeoning services division.

3. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

One thing that sustains the premium pricing that Apple demands for their toys is the high quality. If Apple starts selling crap at premium rices, their market share will tank. Better to keep the uality in line with their prices and sell on new feature. Only problem is that new features are not being released at the pace they were when Steve was around.

6. Finalflash

Posts: 4062; Member since: Jul 23, 2013

Yea no, that's some delusional stuff there. As the graph shows Apple hasn't cracked the Asian market, it seems to have been fairly stagnant in Japan since Q1 2010 and since Q2 2012 in China. Just that now they're losing market in their two biggest markets in US and Europe. Secondly, the people who use their stuff forever exist with every product not just Apple's amazing devices. I've been perfectly happy with my asus laptop for 5 years now doesn't mean Asus is stagnant. That is why they look for sales growth not volume only. You have to be able to move in new customers which seems to be a problem with Apple currently. Once every two years Apple cripples their older mobile hardware to move people up the line but a lot of people are realizing that (along with excellent choices like the 5c) and are usually jump ship when given a chance.

5. SonyPS4

Posts: 347; Member since: May 21, 2013

Nothing surprising. Asia now is the largest market for both smartphone and also apps revenue. China is largest market for smartphone, and Japan is the largest for apps revenue. S.Korea and india also one of fast growing market.

9. NokiaFTW

Posts: 2072; Member since: Oct 24, 2012

I guess Japan is probably the only market in Asia where iPhone has a substantial marketshare. In all other major markets, they don't have much presence.

10. NokiaFTW

Posts: 2072; Member since: Oct 24, 2012

I guess Japan is probably the only market in Asia where iPhone has a substantial marketshare. In all other major markets, they don't have much or rather any presence, especially in the Subcontinent.

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