Apple's Best Hope Moves Overseas

Apple Inc. (NASDAQ: AAPL) announced that the iPhone 5 should become available in 50 additional national markets by year’s end. These include critical ones because of their sizes and number of smartphone users — Brazil, Russia, South Korea and Taiwan. In the same announcement, Apple took the opportunity to state that the iPhone 5 already has started its path to conquest in 47 other markets. Apple can claim that its flagship product can be bought almost everywhere. The news should please investors worried about Apple’s prospects.

The overseas expansion was enough to complete the press release, but Apple took the chance to describe the iPhone’s wonderful features once more:

iPhone 5 is the thinnest and lightest iPhone ever, completely redesigned to feature a stunning new 4-inch Retina display; an Apple-designed A6 chip for blazing fast performance; and ultrafast wireless—all while delivering even better battery life

And:

iPhone 5 comes with iOS 6, the world’s most advanced mobile operating system with over 200 new features including: Shared Photo Streams, Facebook integration, all-new Maps app, Passbook organization and even more Siri features and languages.

These comments were another chance for Apple to state the superiority of the iPhone 5 over rivals — foremost among them the Samsung Galaxy S III.

Much of the battle between Samsung and Apple needs to be settled in court, as each tries to make the case that the other has violated its patents. However, the Apple release shows that the U.S. company is prepared to fight any and all competition, country by country, store by store, and wireless partner by wireless partner.

Apple’s share price has dropped 14% over the past three months. Critics say this is because Apple cannot continue to grow at past levels. That is not likely to be true. About 60% of Apple’s revenue comes from overseas. Given the size of the largest cellular markets outside America and the revenue potential these represent, Apple’s footprint certainly could grow. The new countries where the iPhone 5 is available have combined populations in the billions. And most are building out, at different paces, new high-speed wireless networks.

Apple’s investors can look ahead and see that the decline in its stock has little basis in what the company can produce in revenue growth in the future — even if all that growth comes from outside the United States.

Douglas A. McIntyre