Apple in Asia

Includes: AAPL, MSFT
by: No Guilt
As an Apple (NASDAQ:AAPL) long. I decided to go over the second quarter earnings report again. Apple was firing on all cylinders over many product categories, increasing revenue 49% to 13.5 billion, adding a cool couple billion to it’s 40 billion dollar war chest, selling 50% of their Macs in Apple Stores to first time Mac buyers, and just delivering what looks like another home run product in the ipad. This should not be new news.
One of the biggest reasons for growth was a more than doubling of iPhone sales. The iPhone grew 131% YOY and was over 3 times as strong the IDC’s published 41% estimate of growth for the smart phone market. That’s what you call a blow out folks.
So why did the iPhone beat estimates by more than 3 times? Let’s move on to the Q&A of the earnings call …(see complete transcript here):

Tim Cook, COO of Apple:

We had some staggering growth rates, as you mentioned. If you look at Asia-Pacific as an example, the iPhone units in Asia-Pacific grew 474% y-over-y. Japan grew 183. Europe grew 133. And so these are some fabulous numbers we’re seeing, just incredible demand for iPhone....

China has been interesting. If you look at greater China, which we define as mainland China, Hong Kong, and Taiwan, the iPhone units were up y-over-y over nine times, and we added another 800 points of distribution in China. The revenue also – we’ve never released this number before but I’ll do this in this particular case – is through H1 the FY that we just completed, so the six-month period, our revenue from greater China was almost 1.3B, and this is up over 200% y-over-y. And so we’re real pleased with how the company’s positioned to take advantage of the growth in greater China....

We’re very excited about China, not only for retail but for Apple. And Tim talked about successes that we’ve had in greater China to date with revenue being up about two times y-over-y. But as regards to retail stores, we will open two stores in Shanghai this summer, and we target having about 25 stores open in China by the end of calendar 2011....

Staggering growth rates indeed. It’s obvious that Apple has had some amazing growth numbers in Asia at a time when many Americans view Asia as a growth engine of the world. You want to talk about few hundred million person emerging middle class in China? How about having iPhone sales shoot up at a 900% YOY growth rate in greater China? Apple the company had an overall 200% growth rate in China but the iPhone 9 bagger was an amazing feat.
Apple is taking the internet mobile with products like the iPhone and the ipad. Microsoft (NASDAQ:MSFT) might have led the PC revolution, but Apple is leading the mobile computing revolution. Other have pointed out that phones have a 12-18 month life cycle where as people can hold onto a computer for 7 years. How do you like the idea of hundreds of millions of Asian customers replacing their iPhone every 12-18 months?
In America we are so used to debt, Asian electronics, and Importing, but Apple is the exact opposite. Apple has a strong cash balance sheet, Asian customers want to buy North American electronics, and Apple is exporting with over 50% of Revenues coming from abroad. People around the world like Apple's superior products. Apple is what China wants and what America needs.
Disclosure: Author long Apple