Chinese demand for Apple's big-screen phones fuel sales growth

Tue Apr 28, 2015 8:09pm EDT
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By Bill Rigby

SAN FRANCISCO (Reuters) - Apple's large-screen iPhones are a big hit in China, taking market share from Samsung and selling at a pace that may make China a greater source of revenue than the Americas for Apple in coming years, analysts said.

The world's most valuable consumer electronics company reported on Monday a 71 percent increase in sales in China to $16.8 billion, driven by its new, bigger iPhone 6 and 6 Plus. In the first three months of the year, for the first time, Apple sold more iPhones in China than in the United States.

Consumer demand for the newest electronics pushed sales in China to 29 percent of total global sales for Apple in the first quarter, compared with 21 percent a year ago. By comparison, the Americas represent 37 percent of total sales, but are growing more slowly at only 19 percent last quarter.

"The bigger screens on iPhone 6 have been selling like hot cakes," said Daniel Ives, an analyst at FBR Capital Markets in New York, who estimated that China could represent as much as 40 percent of Apple's revenue by 2017. For Apple, China is "the golden goose," he said.

The surge in sales, helped by Chinese New Year gift-buying, was caused by a latent build-up in demand, analysts said.

"Apple fans in China had been waiting years for bigger-screen iPhones and they are upgrading at a furious rate to the new models," said Neil Mawston, executive director at research firm Strategy Analytics.

Samsung won over millions of Chinese mobile customers four years ago with its Galaxy Note 'phablet', creating a whole new category somewhere between a phone and a tablet, with screen sizes of more than five inches diagonally, compared to the previous standard of about four inches.

Apple is starting to win some of them back again.   Continued...

Sales staff welcome the customers to buy iPhone 6 and iPhone 6 Plus at an Apple store in Beijing, October 17, 2014. REUTERS/Jason Lee