John Paczkowski

Recent Posts by John Paczkowski

For Apple, China Looms Large

Apple’s decision to make China top priority in its global expansion is proving increasingly prescient. The company’s four Chinese outlets are already among the most heavily trafficked Apple stores in the world. And they generate blockbuster sales and profits. For the first three quarters of fiscal 2011, Apple’s revenue in greater China topped out at $8.8 billion, a six-time multiple over a year earlier.

That’s incredible growth, and to hear tell from analysts, it’s really just the beginning. With the iPhone 5 expected at market in October and the iPad 3 presumably headed into the pipeline, Apple’s prospects in China are looking very strong right now, says Barclays analyst Ben Reitzes, in a reiteration of the same bullish growth story we’ve been hearing for months now.

“We continue to believe that Apple’s brand has significant momentum in mainland China — Asia Pacific accounted for 22 percent of revenue last quarter, growing 247 percent year-over-year,” Reitzes said in a note to clients. “We believe that Apple’s iPad and iPhone are set to see rapid expansion in the region with new product cycles next year — perhaps with new carriers as well. We continue to believe that a new iPhone will ship next month and a new iPad line with a higher resolution display will emerge in C1Q12.”

Reitzes expects the iPad 3 to hit the market sometime in March of 2012 with a thinner chassis and higher resolution display and bolstered by an array of iCloud services that will further differentiate it from its rivals and cement its already significant lead in the market.

Says Reitzes, “No clear number 2 [tablet] has emerged either in China or worldwide — as builds are being cut at some major non-Apple brands. The tone around non-Apple tablet competitors is much more subdued vs. our visits to the region last spring, which were characterized by over-zealous tablet forecasts. We believe that Apple will still dominate the market globally.”

Incidentally, Reitzes expects Apple to sell 38.9 million iPads in calendar 2011, an estimate he describes as “conservative.”


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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google