The essay presents a report on the article “Apple Profit Rises 94% on Growing Global Iphone Demand”. During the last quarter, Apple Inc. realized a tremendous increase in profit. In summary, the demand for the iPhone in countries like China grew, including the sales of the new version of the iPad. All these positive reports sliced the company shares to approximately 12% in two weeks. According to the California-based Apple, Cupertino, the sales rose by 59% to approximately 39.2 billion US dollars as the net income went up 94% to 11.6 billion the same quarter. Significantly, this rise in sales took place outside the United States, mostly in China. For example, in January, the company sold more than 35.1 million latest models of iPhones in China and other dozen countries.
The iPad is one of the products that posted exemplary profits. Apple Inc. realized a sale of over 11.8 million units of the iPad. The gadget was an upgrade from its former version, which includes a faster processor, as well as a high-definition screen. According to Tim Cook, the Chief Executive Officer, the company has taken 24 years to attain such a milestone, where they sold more than 67 million iPads since its release. Predictions by Bloomberg stated that the company would sell about 31.2 million iPhones and 11.9 million iPads. Generally, in extended trading, the company rose by 7.8 % to an astounding $604.22.
In my view, the above results depict a rebound in the economy, which then lifts the results for technology bellwethers. Companies such as Microsoft Corp. realized a better corporate sale of their computers and computer products than they expected. The biggest analog chips maker, Texas Instruments Inc., also showed a huge demand for various electronic products. The biggest computer-services provider, International Business Machines Corp, also reported profit that was much higher than expected.
The report shows China as an increasing market for the iPhone. Since its introduction in 2009 Apple Inc. posted more results than before. According to the CEO, China accounted for over $ 7.9 billion, which was approximately 20 % of the overall sales. The results are three times more than the results posted in 2008. The Chinese market is fast growing especially for technology companies like Apple Inc. Notably, companies that understand China have an easy time exploring the market and taking up the opportunity they encounter.
The increase in revenue for Apple during the last quarter is because of lower operational costs and lower component prices. The gross margin amounted to about 47.4 percent, which was an increase from 41.4 % posted during the last year. These results posted by Apple Inc. contrast with those posted by Nokia Oyj and Research In Motion Ltd. These two companies fell behind in their sales of Smartphone, and, as a result, have to reorganize their operation and cut jobs, as well. The rise in sales has also raised eyebrows; the government is scrutinizing the company’s growth in details. The U.S. Justice Department accuses Apple Inc of conspiring with book publishers to increase e-books’ prices. However, the company denies such allegations.
Various economic concepts in China contributed $12.4 billion to Apple in the first quarter of its present fiscal year. Many people in China are moving into higher income groups, including the middle class, which is known to create a demand for goods. The demand for iPad is on the increase in China and in the world at large. The hunger for the device is on the rise. Apple Inc. sold more than three million during its first weekend when released to the market. The new iPads are like hot cakes. According to the Apple, various governments, schools, companies, and various gadget lovers have embraced the tablet computers on the market. Moreover, the company sold two iPads for each Mac computer. Engineers in construction companies, as well as, flight crewmembers in the US Air Force use iPads in their jobs and construction projects. Close to three quarters of the top corporations in the world use iPads too.
According to executives, general sales of gadgets using Apple’s iOS operating system have reached 365 million as several accessories and applications continue to grow. Apple also has an online Application Store that has more than 600,000 programs meant for use in the different gadgets produced by Apple. Over a third of these applications can be used in the iPad, which contributes to the reasons of increase in its sales.
The iTunes, which is an online shop for various digital contents, films and music also contributed to the high revenue. It brought close to $1.9 billion during the company’s second fiscal quarter. The iCloud service, launched by Apple in October experienced more than 125 million users. It presents users with devices to store pictures, music, video and other digital data online.
According to Santariano (2012), the increased Mac sales in China are because of the “halo effect” of increasing iPad and iPhone sales in the country. In other markets like Europe and the US, Mac sales are healthy but experience a flat growth; this is because there are consumers who usually wait for expected summer and spring updates.
In conclusion, the company increased its distribution points in China as well as in Hong Kong. The increased market in China is profitable as Apple now plans to utilize the opportunity presented in China. The success in this region came after the company launched the iPhone 4S and other different cheap iPhone models, in partnership with China Telecom, one of the China’s largest carriers.