Why Are Apple’s Japanese Margins The Highest Among Its Geographic Segments?
Apple (NASDAQ:AAPL) margins in Japan were roughly 13% higher than the rest of the world during fiscal 2015. Below, we outline some factors that are likely causing this.
- Apple products are priced higher in Japan compared to the United States. For example, the iPhone 6S is priced at a ~10% premium to U.S. prices.
- Apple likely has good control over distribution, since it runs its own retail and online stores in Japan, unlike some other Asian markets where it relies on third-parties. Shipping costs could also be lower, since iPhones and other products are assembled in nearby China.
- It’s also possible that Apple sells a higher mix of high-end devices in Japan, given the country’s tech savvy consumers.
- Services such as the App Store are seeing strong growth in Japan. This is likely to be accretive for Apple’s Japanese margins.
- Apple enjoys very strong brand recognition and high market share in the Japanese mobile market (~50% as of Jan 2016). [1] This potentially reduces marketing and promotional spending as a percentage of sales.
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