Apple’s Feeling Europe’s Economic Crisis: ‘Essentially Flat’ Sales And A ‘Slowdown’ In Business, Says Cook

Apple often gets a lot of love in Europe, but in the last quarter that wasn’t enough to help it against the tide of economic woe hitting the region. In today’s Q3 earnings call, CEO Tim Cook described sales in the region as “essentially flat to slightly positive” — and, not unlike the wider macro-economy, “that really hampered our total results.”

Specifically, he noted that France, Greece and Italy were “particularly poor”, and Germany saw “only single digital positive growth.” Interestingly, the UK seemed immune to this situation and posted a “solid” 13 percent growth rate.

Overall, though, the performance of more mature markets in the region had a negative impact on the whole deal. “Western European countries drive the revenue [in the region] so we are certainly seeing a slowdown in business,” he admitted.

The results put Europe Q3 Mac sales at 941,000, on total revenues of $8.237 billion. That was down 10 percent on units and six percent on revenues sequentially. Year-on-year that was growth of only two percent on unit sales, and 16 percent on revenues. What that means is that while Europe remained the second-highest region, after the U.S., in terms of revenues, it showed the lowest growth of any region — not a good state of affairs for such an important market for Apple.

That’s in particular contrast to Greater China, which didn’t perform as well as in Q2 but still posted nearly 50 percent growth, with $5.7 billion in sales.

Apart from the economic situation in Europe — which is softening consumer demand for all products, not just fancy iPhone and iPad devices — Apple faces another challenge (unsurprisingly, not mentioned on the call): Android devices, some of which sell at significantly lower price points than iPhones.

Kantar Worldpanel ComTech, the market research firm owned by WPP, tracks 12-week smartphone buying patterns, and in their last report, from earlier this month, it found that Android smartphones were collectively outselling the iPhone in every major European market it covers.

Cook referred a few times to a “pause” in the market as people anticipated Apple’s next device, and held off buying the latest iPhone as a result. He didn’t say more about what that new iPhone would be, but seemed to imply that things would turn around when it did launch. (Aside: is this the closest he’s gotten to admitting something new and different really is coming?) It will be worth watching to see whether the economic climate impacts that strategy of a new launch for Apple.

The story was a little different for Apple in other, non-European markets outside the U.S. Here’s some of what Cook had to say about that:

– International markets in aggregate were “extremely strong” with growth in the triple digits for the iPad in particular. The tablet saw 84 percent growth in unit sales, and 52 percent in value, globally this quarter, and Cook noted that the average was dragged down by the U.S. But that, he said, was because the U.S. was “on a faster adoption curve” earlier on. “We’re thrilled with the numbers,” he said.

– Latin America is one of the regions seeing a tripling in sales. Cook noted that countries in the region “border on being shocking in terms of adoption.”

– India remains in a holding pattern, however — slightly surprising, given that India has a rapidly-growing middle class and a tech/mobile-crazy culture.

“I love India but I believe that Apple has higher potential …in some other countries,” Cook simply said. “That doesn’t mean we’re not interested in India — we are.” But he also contrasted the opportunities now for Apple in India with other parts of the world. “We’re going to continue putting some energies there, but in the intermediate term there will be larger opportunities elsewhere.”

[Image: C.G.P. Grey, Flickr]