Apple Sees ‘Record’ Growth in China; But Is Still in Ant’s Shadow

pexels-photo-48721Apple’s plans for China seem to be going—well, going.

During the company’s Q1 2017 earnings call yesterday, CEO Tim Cook reported record revenue for the quarter at about $78.4 billion.

$7.2 billion of that was generated by revenue from Apple services—including digital content and services, AppleCare, and Apple Pay, which continued with strong growth.

Transaction volume for Apple Pay was up 500% year over year, Cook said, noting that the company expects “the revenues [for services] to be the size of a Fortune 100 company this year.”

This seems to be quite similar the level of growth Cook reported for the service during the company’s earnings call in October 2016:

Apple Pay transactions were up nearly 500% year-on-year for the September quarter. In fact, we completed more transactions in the month of September than we did across all of fiscal 2015. And with Apple Pay support now built into Safari, hundreds of thousands of websites are bringing Apple Pay to their customers.

According to Apple, its services segment, including Apple Pay, saw this growth in several key markets, including China. Apple Pay is currently available in 13 markets, including Spain, Japan, New Zealand, Australia, Canada, France, and Germany.

Apple Pay was officially launched in China in March 2016, where it amassed 3 million Chinese users in short order and partnered with Union Pay, the card monopoly and homegrown contender to the digitally dominant Alipay service in the region. Alipay currently boasts 480 million global users, though only a very small number of those are U.S.-based.

“Singles Day, which is a huge day in China, as you know, we were the most popular U.S. brand on Alibaba. We set a new record for services in China, as the company did,” said Cook.

As Cook suggests, Apple’s strong December quarter plus the crush of Single’s Day could be partially responsible for the reported service record, but the improvement is notable—as reported above, Chinese consumers have readily adopted mobile payments, but have a marked preference for one particular brand.

Alibaba’s revenue on Single’s Day 2016 was about $18 billion. On that day, Chinese consumers used Alipay to conduct just over 1 billion transactions.

On the call, Apple also reported record sales for the iPhone (specifically for the iPhone 7, which appears to be outselling the iPhone 6, based on Cook’s remarks) and the Apple Watch, which Cook named “the gold standard of smartwatches.”

One might have to agree, based on the beleaguered state of the current smartwatch market.

To learn more about mobile payments, join us in San Jose on March 6-7 for Bank Innovation 2017, where the best conversations in fintech take place. Click here to register.

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