Europe is a key market for Apple. Last quarter it remained the second-highest revenue generating region after the U.S. Yet it’s an increasingly challenging market, yielding the lowest growth of any region for Cupertino in its Q3. And for smartphones at least, it’s also a market firmly in thrall to Google’s Android OS (not that Apple would put it that way). In its Q4 earnings today, Apple reported total revenues of $8,023 billion in Europe for Q4, down three percent on the previous quarter. Total revenues in the region were up eight percent year-on-year, but sales of Macs were down three percent.
The iPhone 5 launched in the U.S. during Apple’s Q4 — but Apple does not break out iPhone (or iPad) sales by region. Cook also noted that: “We launched iPhone 5 in the US during the quarter, and while we launched in some international countries in the bulk of the world we did not launch in and so I would have expect to have seen more significant growth in the US vs the rest of the world.”
In contrast to tough times in Europe, Cook lauded a “really phenomenal” quarter in China during the Q4 earnings call, with full year revenue $22.8bn — up over $10bn year-on-year. He said Greater China “now represents about 15 percent of Apple for the fiscal year”.
In its Q3 earnings, Cupertino blamed the tough macro-economic situation in Europe for softening demand for its products and leading to “essentially flat” sales — indeed, it blamed the region for a rare miss against Wall Street expectations in Q3, along with speculation about forthcoming products (ie the iPhone 5). France, Greece and Italy were singled out as being “particularly poor” during the quarter, while Germany saw “only single digital positive growth” in Q3. The U.K. bucked the trend, delivering “solid” 13 percent growth.
Google’s Android OS is making life increasingly difficult for Apple in Europe. In its most recent report from September, market research firm Kantar Worldpanel ComTech (KWC), which tracks 12-week smartphone buying patterns, reported that Android had increased its share in Europe by a fifth (20.2 percent) in the past year — to gain more than two-thirds of the smartphone market. Android OEMs such as Samsung have driven sales by building phones with larger screen sizes than the iPhone, such as the Galaxy Note and the Galaxy SIII. KWC noted that 29 percent of the Android devices sold in the 12 weeks prior to its report had a screen size of more than 4.5 inches.
During its fiscal Q4 Apple launched an iPhone with a larger screen — 4 inches vs 3.5 inches — and announced a smaller version of its iPad tablet as it seeks to squeeze demand for Android phablets.
In additional European Apple news, the company appears to have quietly raised the price of App Store apps in select European countries. TheNextWeb is reporting it has shifted the base price of apps from €0.79 to €0.89 in countries including Belgium, Italy, Denmark and the Netherlands. We’ve reached out to Apple for comment on the price rise and will update this story with any response.
[Image: C.G.P. Grey]