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This is Tim: Apple CEO on iPhones, China, and the drive to disrupt

Serenity Caldwell | Jan. 28, 2014
As usual, Apple CEO Tim Cook was the focus of attention during the company's quarterly earnings call with analysts on Monday. And, as usual, we've got a collection of some his choicer quotes from the call.

If you look at the emerging markets, we have to grow in these areas, and grow at reasonable amounts: In Latin America we grew at 76 percent year-over-year; in the Middle East and Africa we grew at 65 percent; in Central and Eastern Europe we grew 115 percent. In China we grew at 20 percent, but as you know we just added China Mobile, the largest carrier there, this quarter; we did not have a channel-load in China Mobile last quarter.

Also, in Japan, as we've added DoCoMo, iPhone units were up 40 percent. Now, when you translate that performance into revenue in Japan, we have that issue with the yen that Peter spoke about earlier and so the revenue growth looks much less than that because of the strength of the dollar there.

In North America, we did not do as well, and this weighed our results; our North American business contracted somewhat, year-over-year. One was that, as we entered the quarter and forecasted our iPhone sales, we actually sold more iPhone 5ses than we projected. So the mix was stronger to the 5s, and it took us some time to build the mix that customers were demanding. As a result, we lost some units for part of the quarter in North America. And relative to the world, it took us the bulk of the quarter, almost all of the quarter, to get the iPhone 5s into proper supply.

The other thing that happened in North America specifically was that some carriers changed their upgrade policies. And this affected last quarter and will have some effect on the current quarter. This restricted customers who were used to upgrading earlier than the 24 months that they were allowed, and sort of stretched the time out to be a hard and fast 24 months. And so that's a major factor playing into the North American results.

So as I back up and zoom out on this and look at it, one of the most important things for us in the iPhone business was to do really well in emerging markets, and we had the best quarter ever from that respect. Another was to grow in China, because I think you can't be in the business that we're in and not have a reasonable China business. And you can see how we did last quarter, and we've now followed that up with a deal with China Mobile. And so I feel great about that.

I think part of what's happening in North America is a short-term effect because of these upgrade policy changes; this affects a period of time and then it washes through. So, as I look at it, I feel very good about where we are, and I would guess that the market numbers that — some of the stuff that you've been seeing will actually be decreased as the revisions come out, given what you're hearing about what everyone is saying.


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