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China is Apple’s second most important market after U.S.

by Phil Hornshaw

Tuesday’s earnings call with Apple revealed some interesting information, like the fact that Apple sold 17.1 million iPhones in the last fiscal quarter of 2011, and took home $6.6 billion in profit.

It also laid bare the fact that Apple is making a whole lot of its money from customers in China. In fact, while the U.S. is still Apple’s largest market, China is its second-largest and accounted for 12 percent of its $28.7 billion in revenue in 2011.

GigaOM has the story, which details the earnings call in which Apple CEO Tim Cook called the company’s growth in China “amazing.” For contrast, consider that back in 2009, the China region (which includes Hong Kong and Taiwan) accounted for just 2 percent of Apple’s total revenue. That’s a pretty massive increase in business in just two years, and Cook said it’s Apple’s “fastest-growing region by far.”

Apple said it got 16 percent of its revenue for the fourth quarter of 2011, about $4.5 billion, from China and its surrounding regions, and as GigaOM reports, that’s more than half of the total revenue produced by Europe as a whole at $7.5 billion for the fourth quarter. Consider also that China has only six Apple retail stores, while Europe has 64. Cook said during the iPhone 4S address two weeks ago that when the company opened its Hong Kong Apple Store, the location received more customers on the first day than any other store.

But despite all that good news from China, the earnings call has resulted in some bad news for Apple, with its stock falling about 6.5 percent, according to GigaOM. The trouble: iPhone sales in the fourth quarter of fiscal 2011. Apple moved 17.1 million units in that quarter — which ended on Sept. 30 and didn’t include the massive launch of the iPhone 4S — but that was just shy of the 20.1 million iPhones sold during the same time last year.

Cook blamed iPhone rumors for the slightly lower sales in the fourth quarter. He said customers were holding out for the iPhone 4S. That was probably a very astute observation, considering that Apple’s new phone was purchased more than 4 million times by customers in its first weekend.

Still, as GigaOM points out, investors don’t like the look of those numbers, even though 17.1 million was higher than Apple’s projection for the quarter. It might have something to do with the fact that it’s believed Samsung was able to sell somewhere between 18 million and 21 million smartphones in Q4 2011. Samsung is Apple’s chief smartphone competitor.

But as the growth in China shows, Apple likely doesn’t have anything to worry about even though investors are balking a bit. With the iPhone 4S showing clear high demand for new iPhones, plus by Q4 2011, the iPhone 4 had been on the market for better than 14 months. Despite what Wall Street might be thinking, Apple is in pretty great shape right now, and will very likely continue to keep strong through 2012.