Tech giant Apple reported healthy Q2 earnings, with increased iPhone and Mac sales versus the year-ago quarter. The 35.2 million iPhones sold were a new record for the quarter, up 13% on the same quarter a year ago.

Scott Bicheno

July 23, 2014

3 Min Read
BRICs drive solid iPhone Q2 for Apple
Apple is seeing growth in the BRIC markets

Tech giant Apple reported healthy Q2 earnings, with increased iPhone and Mac sales versus the year-ago quarter. The 35.2 million iPhones sold were a new record for the quarter, up 13% on the same quarter a year ago.

Once more a major driver of iPhone sales were the BRIC countries. “We generated healthy growth in our entry priced, mid-tier and lead iPhone categories,” said Apple CEO Tim Cook, during the earnings call. “I’m especially happy about our progress in the BRIC countries, where iPhone sales were up a very strong 55% year-over-year.”

This will be especially pleasing for Apple since much global smartphone sales growth these days comes from lower price tiers in developing markets. Apple has persisted with a premium-only pricing strategy, so for it to continue to grow strongly in major developing markets is a significant achievement.

“China, honestly was surprising to us…” said Cook. “We thought it would be strong but it well went past what we thought. We came in at 26% of revenue growth, including retail and if you look at the units, the unit growth was really off the charts across the board. I found 48% off that compares to a market estimate of 24%.

“And so it’s very, very exciting what we’re seeing there. We are still in the process of rolling out along with our partner China Mobile, the TD-LTE into more cities and we’re still in early going on that. That just started in January as you know. And my understanding is that later this year there will be a license for the other operators to begin shipping FDD-LTE, which I think is another big opportunity in China.”

One possible explanation for this could be either a degree of price-cutting in markets like China, or a greater proportion of the cheaper 4S and 5C versions. This would appear to be backed up by the published data, which indicated a US$21 decrease in total iPhone ASP year-on-year.

I can tell you this,” said Cook when asked about the 5C. “That if you look at the growth rates, we don’t divide out each one but if you look at year-over-year growth rates and so this would be comparing the 5C to last year. It would be comparing the 4S, which was in the mid-tier. The growth in that sector was the highest growth during the quarter we just finished.”

In other words, the 5C is selling just fine. Apple is expected to launch 4.7-inch and 5.3-inch iPhones in the Autumn. Neil Mawston, executive director as market researcher Strategy Analytics, reckons this will have a positive effect. “We expect Apple to deliver record Q4 iPhone shipments worldwide this year,” he told Telecoms.com. “Over 60 million units globally. Apple fans and waverers who deserted the smaller iPhone models in recent years are likely to return when bigger iPhones are finally introduced during September and October.”

And then there’s the rumoured Apple wearable, which may even introduce a new gesture-driven UI in a bid to differentiate itself from the smartwatches that are already in the market. “The user-interfaces for Apple’s future wearables portfolio will inevitably require input-mechanisms beyond the traditional keypads and touchscreens of smartphones, because the available real-estate on wearables is typically smaller,” said Mawston.

About the Author(s)

Scott Bicheno

As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno

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