Apple looks to Middle East and China to drive revenue growth

Despite missing its fourth-quarter estimates for the first time since 2008, Apple said it is looking to emerging economies in the Middle East and China with big expectations in the coming year. In a conference call, Apple chief executive officer Tim Cook said that Apple is eyeing the Middle East for increased revenues in a region where it just opened its new online Apple store. "The Middle East, we believe, has significant opportunities," Cook told reporters, noting, "We are planning additional focus on other areas that have shown great progress." The Far East, for example, has become a huge new market for Apple, Cook said, noting, "China's progress has been amazing. It represented 2 per cent of the fiscal year in 2009" but now is 12 per cent of all Apple sales. "It's our fastest-growing region by far," he said. Feverish pace "It is growing at a feverish pace. We now have six [retail stores] on mainland China." Cook said that by last count, Apple enjoys 7,000 points of sale in China for its iPhone and the widespread availability of the handheld device is being met with high demand from Chinese consumers with more disposable income. The company, he said, has never seen "middle classes aspiring to buy Apple products" as rapidly as the pace being set in China right now. Consumers are also ramping up in China to buy new iPad2 tablets. "I think the iPad will really be doing the same," Cook said. Sales of the iPad2 are being buoyed by the addition of 140,000 new apps that are native to the iPad2 as part of the total 500,000 apps available in the global iTunes store. Apple believes sales of the iPad2 and the iPhone 4S are only going to grow as points of sale continue to expand around the world into emerging economies. Cook said the company now has 120,000 points of sale globally for the iPhone, 40,000 for the iPad, and 50,000 PoS for the iPod. Tablets, meanwhile, are expected to outpace sales of the personal computer as customers move to more mobile devices to seek content online. It makes sense, he noted, that Apple would expect its own iPad2 success to eat away at sales of Mac computers. "I do believe we're seeing cannibalisation. Some people are electing to buy an iPad rather than a Mac," Cook said. Strongest Mac sales That said, Cook said the latest fourth quarter results were surprising because Apple enjoyed its strongest sales of Mac sales quarterly with a 26 per cent jump in Mac sales, resulting in 4.89 million units sold as of September 24. Sales of iPods, however, fell 27 per cent to 6.62 million shipped in the quarter. While Cook was happy with record sales of four million units of the new iPhone 4S in the first few days after the October 14 launch, analysts pummelled Apple for not meeting its quarterly revenue estimates that were pegged at $29.6 billion (Dh108.7 billion). Apple sold 17.07 million iPhones in the fourth quarter, far below the 20 million expected, resulting in a 39 per cent increase in revenues of $28.2 billion. Cook told reporters that fewer people bought iPhones in the back end of the fourth quarter in anticipation of the rollout of the newer iPhone. The demand for the new iPhone 4S reinvigorated sales, he said. "In our wildest dreams, we couldn't have gotten off to a better start as we did with the iPhone 4S," Cook said in the conference call from Apple headquarters in Cupertino, California. With Christmas approaching, Cook said he expects the rush for the new phone to continue. "I'm confident we will set an all-time record for iPhone 4s this quarter. We're thrilled to be shipping the new iPhone 4S." Apple surpassed $100 billion in revenues for the fiscal year. "We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion," Cook said.