Apple in China Q1 2013: Revenue up 67% to $6.8 billion as iPhone sales double YoY

Apple began breaking out its Greater China operating segment with the release of its Q1 2013 financials on Wednesday, reporting $6.83 billion in revenue in the region, up 26% sequentially and 67% year-over-year.

The company recorded $54.5 billion in revenue the first fiscal quarter, with $13.1 billion in profit. It sold 47.8 million iPhones and 22.9 million iPads.

Its performance in Greater China, which includes Taiwan and Hong Kong, continues to gain strength, but it did see the region’s share of overall revenue decline sequentially. In Q4 2012, the region accounted for 15% of overall revenue, but it made up just 12.5% in Q1 2013. It is a significant improvement year-over-year, though, as Q1 2012 saw just 8.8% coming from Greater China.

Looking across all of Apple’s operating segments in Q1 2013, Greater China actually had the lowest sequential revenue growth (26%). Japan and the rest of Asia Pacific had the highest with 88% and 89% respectively, and the company’s overall revenue jumped up 52% quarter-over-quarter.

The most likely cause for the lower growth in Greater China is the fact that the mainland didn’t receive the iPhone 5 and the iPad 4 and iPad mini until late in the quarter. The new iPads arrived on December 7th and the iPhone 5 hit the market a week later.

While some naysayers have expressed concerns that Apple’s handset market share in China is under tight pressure from low-priced Android handsets, the iPhone does still appear to be doing well in China. CEO Tim Cook noted during Wednesday’s earnings conference call that iPhone sales grew by triple-digit percentage year-over-year.

“We experienced strong iPhone growth in each of our geographic segments most notably Greater China where iPhone sales more than doubled year-over-year,” he said, as transcribed by Seeking Alpha.

It’s worth noting, though, that the year-ago quarter didn’t have a new iPhone launch on the mainland, as the iPhone 4S didn’t arrive there until January 2012.

Apple reported record iPhone sales of 2 million units in mainland China during its first weekend of sales. The iPad mini also appears to be quite popular in China, as the company has had trouble keeping it in stock since it arrived last month.

Cook himself is optimistic about China, as he told Chinese reporters earlier this month that he expects the region to eventually become its largest market. His recent trip to China included visits with top-ranking government officials and executives at Chinese carriers.

In order to continue its impressive sales growth in China, Apple will eventually need to strike a deal with China Mobile, the country’s largest carrier by a large margin with over 700 million subscribers. Sales on China Unicom and China Telecom are going fine, but the country’s smaller carriers have a much lower ceiling.

China Mobile has said it expects to sell 120 million 3G devices this year, up from 60 million in 2012. By releasing an iPhone compatible with China Mobile’s TD-SCDMA 3G network, Apple could grab a portion of that pie. Though the company might be more inclined to wait for China Mobile’s 4G TD-LTE network to arrive, that’s still a year or two away.

Next quarter will be the quarter to watch for Apple in China, as it will contain the first full quarter of iPhone 5 and iPad mini sales there, as well as the Red Friday shopping event to take advantage of Chinese New Year spending.

China Unicom racks up 100,000 iPhone 5 preorders in first day

“The iPhone 5 is off to a strong start at its latest carrier,” Lance Whitney reports for CNET.

“After kicking off preorders for the new phone early yesterday, China Unicom took in more than 100,000 online reservations by 4 p.m. local time, Chinese news site Sina Tech said today,” Whitney reports. “China’s second largest carrier will officially launch the iPhone 5 on December 14.”

“China Unicom joins China Telecom as the second Chinese carrier to sell the iPhone 5,” Whitney reports. “Starting this month, the iPhone 5, iPad Mini, and fourth-generation iPad will be available in China through Apple’s online and physical stores and various Apple resellers. By the end of 2012, the new iPhone will be available in 100 different countries.”

Read more in the full article here.

U.S. House Intelligence Committee’s attack on China’s Huawei, ZTE could trigger major crisis

“A congressional report this week recommended in no uncertain terms that U.S. companies and government agencies avoid two of China’s biggest telecommunications companies. Buying equipment from them risks national security, the report said,” Verne Kopytoff opines for Fortune.. “The House Intelligence Committee’s withering attack on the two Chinese companies, Huawei Technologies and ZTE Corp., would seem like a big opportunity for U.S. firms to gain ground. The reality for U.S. businesses, however, could be the very opposite.”

“In response to the congressional assault, China may throw up roadblocks against the U.S. tech imports by raising tariffs or prohibiting certain kinds of equipment, according to trade policy experts,” Kopytoff opines. “Such a tactic would harm U.S. companies, which increasingly count on China for sales and growth. The stakes are huge. Last year, U.S. firms sold $20 billion in advanced technology to China, according to the Commerce Department.”

Kopytoff opines, “The bipartisan congressional report looked exclusively at Huawei and ZTE, two global businesses that sell gear for connecting phone calls and routing Internet traffic. Investigators said that China’s government could tamper with the technology to spy and to steal trade secrets. Both companies failed to provide details about their corporate control and government ties, they said. The presence of Communist Party offices in the companies’ headquarters also raised red flags.”

“Indeed, the situation is complicated by the interdependence of both nations. Cutting off trade is nearly impossible. China needs U.S. technology to keep its infrastructure and factories operating. Meanwhile, U.S. tech manufacturers depend on Chinese components. The lines are so blurry that a product’s origin is often a matter of semantics. Apple’s (AAPL) iPhones and iPads, for example, are largely assembled in China,” Kopytoff opines. “Similar cross-pollination is the norm for U.S. telecommunications equipment makers. Congressional investigators, however, did not look at any security risks created by such ties.”

Read more in the full article here.

Related article:
U.S. House Intelligence Committee: China's Huawei, ZTE should be ban in U.S. – October 8, 2012

Facebook, YouTube and Google dominate the mobile Web in Asia: Opera

Internet giants Facebook, YouTube and Google are dominating Asia’s mobile Internet market, according to browser maker Opera‘s most recent State of the Mobile report, which found that the services rank as the three most used by Opera Mobile users in more than half of the 25 Asian markets that the Norwegian firm tracks.

Facebook itself is the undisputed leader, as may well be expected. The Menlo Park-based social network is the top destination for Opera Mobile users in no fewer than 16 Asian countries. That’s further incentive for the company to up its game on mobile and better monetise the channel in Asia and other emerging regions.

Asia being Asia, and a hugely diverse continent at that, there are two stand-out examples to Opera’s trends: China and Japan. In the case of the former, this is hardly a surprise given that Facebook and YouTube are both blocked in the country, where newly merged Youku Tudou Inc is the largest video site (but not on Opera’s ranking list) and Google has had much publicised issues.

Furthermore, Opera’s statistics for China are diluted by the presence of a strong local competitor. Though Opera doesn’t break out raw user statistics, its Chinese presence is likely cramped by home-grown rival UCWeb and its competing browsers. However, among the users that Opera does have in China, Baidu, Sina and Tencent-own messaging service QQ hold the top three spots. Sina Weibo — China’s Twitter equivalent — sits seventh and is the highest ranked social network.

Things are somewhat different in Japan, where Google is top, ahead of popular Web portal Livedoor and Wikipedia. In a sign of the country’s 140 character obsession, Twitter ranks eighth ahead of Facebook. Despite making significant progress in Japan, after doubling its userbase in six months, Mark Zuckerberg’s social networking site is not included in Opera’s top ten list, yet.

We know that smartphone sales are growing massively across Asia — with China becoming the world’s biggest market on shipment volumes and device activations — and Opera is riding that wave with its own impressive gains on smartphones.

The firm says use of its Opera Mobile and Opera Mini browsers on smartphones has grown 460 percent in the last year. The company picks out Indonesia, a country that mobile companies are increasingly targeting, as a market that embodied this growth and has seen “significant uptake.”

For comparison, use of the two browsers on all kinds of mobile devices (feature and dumb phones included) grew by an impressive 43 percent across its selected 25 countries in Asia.

The benefit of smartphones over feature devices is more than just increased activity as the company is able to better monetise smartphone users with its ad-based system. That network was boosted in February when Opera acquired two mobile ad providers for a combined $64.5 million.

When it comes to measuring mobile Internet usage there are few better than Opera. Existing metrics often come up short — as we’ve discussed before — but Opera’s mobile browser was used by 208 million phones worldwide during July (up from 200 million in June) and emerging markets are a particular stronghold for the Norwegian company.

Finally…no, before you ask, there’s no update on the rumors that Facebook is eyeing Opera and, yes, this report is another example of the reach and benefits that Opera could provide the social network in emerging markets.

Also read: Opera releases its first mobile advertising report; iOS king of the hill, Windows Phone sucking wind

Image via Flickr / Cglosli