Apple Opens First Store in Brazil

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Apple Inc. (NASDAQ: AAPL) CEO Tim Cook tweeted:

‘Obrigado’ to everyone who visited our new store in Rio de Janeiro today and to our terrific customers across Brazil!

Brazil is the world’s seventh largest country by GDP and fifth largest by population. It would be hard to argue that beyond the U.S. and Europe, Apple could find a more important new beachhead for its products–except China. And, its sales in the People’s Republic face pressure from Samsung, Lenovo and Huawei. Latin America is the best region for Apple to rev up its sales engine which made it the leader in the global smartphone industry for years.

A success in Brazil could open the door for Apple into the rest of Latin America, and particularly the large market of Argentina, Peru, and perhaps, if its political problems are ever settled, Venezuela.

Overseas sales are now more urgently needed by Apple.  In the last quarter only $20 billion of its $57.6 billion in revenue were from the “Americas”, which includes Latin America, and until now it had no Latin America stores. While revenue rose in China, Europe, and Japan in its last reported quarter, Apple’s’ “Americas” sales stalled. U.S. sales increase for iPhones sales has been modest.  Latin America is the most likely place for Apple to have success in this hemisphere

The location of retail stores demonstrates how critical markets outside the “Americas” are to Apple.  Apple has over 400 stores but only 162 are inside the U.S.  If its store locations are based on management’s belief that future growth is not in the US,  its expansion into Brazil is an important signal about Apple’s retail direction.

Apple continues to lose ground to Samsung globally in the smartphone sector. The success of its iOS has also been eroded by Google’s (NASDAQ: GOOG) Android.  As Lenovo and Huawei attempt to move beyond their home market of China, Apple will  have at least two more competitors with huge sales and strong balance sheets

Apple does not have many places where it can hope to expand rapidly. Its launch in Rio de Janeiro is a symbolically important one.