Sales fell 30% in Greater China
The United States continued to be Apple’s largest market, generating revenue of $20.2 billion in fiscal 4Q16. However, this was a 7% fall from the revenue in fiscal 4Q15. Revenue from Europe rose 3% to $10.8 billion, whereas revenue from the Asia-Pacific region fell 1% to $2.7 billion in 4Q16. Revenue from Japan saw a significant rise of 10% to $4.3 billion.
China remains an important market for Apple
Revenue from China (FXI) fell due to the sluggish Chinese economy, the saturation of the smartphone market, and the strong US dollar. China, which accounted for over 18% of Apple’s revenue in fiscal 4Q16, is Apple’s third-largest market, after the Americas and Europe. Apple has faced falling sales and revenue in China since the start of the year. Sales fell 24% YoY in fiscal 2Q16 and 33% YoY in fiscal 3Q16. China was previously Apple’s second-largest market.
In calendar 2016, China’s regulators banned some of Apple’s digital services, including iBooks and iTunes. In June 2016, the Beijing Intellectual Property Office ordered Apple (AAPL) to stop the sales of its iPhone 6 and iPhone 6 Plus models in China. The agency held Apple and its distributor and retailer, Zhongfu Telecom, responsible for the infringement of a Baili Electronics patent. As Apple draws over 55% of its revenue from non-US markets, falling revenue from China and other economies will pose a challenge.
According to Apple CEO Tim Cook, “iPhone sales in Greater China declined during the quarter, but the initial customer response to iPhone 7 and 7 Plus gives us confidence that our December quarter performance in China will be significantly better on a year-over-year basis than our September quarter results, even as we lap the all-time record period from a year ago.”