Apple Needs to Step on the Gas in China: Opinion
That's a big change from his old boss Steve Jobs, who never traveled to China. It demonstrates how important China is for Apple in the next five years.
What likely drove Cook's trip this time is a high-level face-to-face meeting with China Mobile's (CHL) CEO about getting iPhone on its network later this year. It would be a huge win for Apple because China Mobile is the biggest carrier in the world, with over 700 million subscribers.
But China Mobile would also greatly benefit from a deal with Apple. In the most recent quarter, China Unicom (CHU) posted nearly as many new subscribers as China Mobile, even though it has a much smaller installed base. China Unicom has been a long-time iPhone partner.
Apple has been talking about the importance of China on its earnings call for several years now. So, Tim Cook deserves full credit for recognizing the opportunities here and getting way out in front of them.
In the company's fiscal second quarter last year, Apple did $7.9 billion in revenue from Greater China. This accounted for 20% of overall sales. Just to put that in some perspective, Google (GOOG) is expected to post revenue in the holiday quarter of $12.4 billion. Facebook (FB) is expected to do $1.5 billion in revenue in the holiday quarter.
As impressive as this is, I don't think Apple's been as aggressive in China as it should have been. What I can't understand -- and what no one has been able to explain to me -- is why Apple has been so slow to open new stores in China.
It opened its first store in China in 2008 just before the Olympics in Beijing. It's one of the company's best-performing stores in the world. By the middle of last year, Apple had six stores in mainland China.
Back in early 2010, during a store opening in Shanghai, then-Apple retail head Ron Johnson estimated Apple would open 25 stores in China in the next two years. We are still far lower than that target. Why?
Johnson's departure from the company, and the recent firing of his replacement, may have something to do with it. But Apple is a well-oiled machine and once it commits to a goal, it typically delivers on it.
With all the financial success in China over this period, it's surprising that Apple wouldn't have fulfilled on its ambitious goal.
Many other Western companies are going full steam ahead into China. Burberry (BURBY) had 57 stores in China at the start of 2012 and opened 23 stores on the mainland last year. Then again, Burberry's stock tanked in September last year on a surprising profit warning (although it's made back most of those losses in the warning's aftermath).