Stop the Noiz

US Market Less Important to Apple's Bottom Line than Ever Before

Frank Fox - 2011.01.07 - Tip Jar

Apple has been growing at a rapid pace for the last few years (see Apple's Decade of Explosive Growth: 2001 to 2010 for details). For most of that time, the percentage of revenue from international sales has hovered around 40%. Sales in the United States were still the largest sector for Apple.

That changed in 2010. For all four quarters of 2010, international sales contributed between 52% and 58%, surpassing the domestic market. This is effectively a role reversal for these two sectors.

Sales in the US are still important, just not as important as a year ago.

What happened? The answer is a combination of the expansion of Apple Stores overseas and the first-time availability of the iPhone in many countries around the globe. More than half of the new retail locations in 2010 were outside the US. New stores were opened in London, Paris, Shanghai, etc. The iPhone 4 is now sold in 22 countries.

US sales as a percentage of all Apple sales, 2001 to 2010

Apple has the perfect demand channel waiting. Whenever it can't sell more to US consumers, Apple simply offloads its surplus to country after country until it's gone.

Estimating demand has always been difficult for Apple. Now they can safely over estimate slightly and use the rest of the world to absorb the difference. The main problem is getting suppliers to make enough units.

Apple's strategy to make the iPhone a global phone has paid off. The iPad is also a perfect product for the global market. Built to one standard with a little variation for the charging adapter, Apple has perfect global mass market appeal. Translating the iOS into a different language is probably the most expensive part in moving to a new market.

As an American, I find it a little discouraging to see the drop in importance, but I can't fault Apple for a well planned and executed strategy. LEM

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