A Pleasant Retail Surprise From Apple

It all depends on how you define near-term, but Apple (NASDAQ: AAPL  ) investors are in for a pleasant retail surprise. On the January conference call, when asked about Apple's focus on the promising growth in BRIC countries, Tim Cook said:

On the second country on the list of those 4, for us, would be Brazil. I think there's a huge opportunity for us there, and we've more than begun to go deeper into Brazil. But I don't want to signal that, that means that Apple Retail would be there, because I don't envision that occurring in the near term.

It turns out that Apple's retail expansion into Brazil may be closer than previously thought. Following a handful of retail job listings that were spotted earlier this week, Apple has confirmed to a Brazilian media outlet that an Apple Retail store is coming to Rio de Janeiro, which will be the first in the country. In addition, Apple is also similarly looking to set up shop in Turkey, but Brazil is really the show-stealer here.

Why ask when?
However, Apple didn't say when consumers and investors could expect said retail store to open, or how many would follow, since it said it was planning to cater to "customers from across the entire region." In that case, no Apple stores in Brazil for the "near term" may be apt. Most would consider "near term" within the next year or so, and Cook's comments were 10 months ago. Semantics aside, retail expansion into Brazil is imminent and that's good news for investors.

With a population of nearly 200 million, there's plenty of opportunity in Brazil waiting to be tapped. Apple already offers direct online sales in the country, but growing a retail footprint would accelerate growth.

Amazon.com heads to the home of the Amazon
Apple's strategy has always been to offer a wide selection of content, profiting just enough to cover iTunes' operating expenses, in order to help sell its package of integrated hardware and software at a healthy margin. This is why it's important that Apple launched iTunes in Brazil and Latin America less than a year ago in December 2011, including local content alongside the major labels.

Earlier this year, Amazon.com (NASDAQ: AMZN  ) was reportedly looking to expand into Brazil. Of course, Amazon uses the exact opposite strategy: selling hardware at break-even in order to collect a small margin on content. Its expansion would include its general merchandise e-tail wares in addition to its flagship Kindle e-readers. Wherever the Kindle goes, the Kindle Fire (which competes with the iPad) can't be too far behind.

In June, Reuters said that Amazon was looking to tap the country and its growing e-commerce market. Just last month, Bloomberg followed up with talk that Amazon was at the negotiating table with Brazilian bookseller Saraiva for a possible acquisition.

No Nexus
On the smartphone front, Google (NASDAQ: GOOGL  ) Android naturally claims more platform market share like in most other places around the world. Kantar Worldpanel ComTech pegged Android's Brazilian market share at 46.8% in August. iOS scored just 7.5%, while Microsoft claims a healthy 14.9% slice. At first glance, Nokia's Symbian platform looks strong at 22%, but that's before you realize that's down from 71.7% a year prior.

Google's new Nexus 4 flagship is targeting international markets, but that doesn't count Brazil. The Nexus 4 is only available in seven countries in North America, Europe, and Australia. Apple's retail expansion combined with no Nexus presence could help it chip away at Android's market share.

Are we there yet?
Investors may not have a firm date on when to expect Apple's retail rollout to begin in Brazil, but they should have no doubt that it's en route. China and Brazil combined are monstrous growth opportunities for the Mac maker. This is just the beginning.

There is absolutely no argument that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 15, 2012, at 3:31 PM, Darwood11 wrote:

    I hate to rain on anyone's parade, or throw in some cold water.

    However, in a conversation with AT&T yesterday, they offered me a free iPhone4 and the addition of cellular service to my current landline for a REDUCTION per month of about $18.

    Yes, you got that right, Add an Apple iPhone and get a cell line for a total phone bill reduction in monthly fees of $18. Yeah, I know, that's an older model. So what? I'll get the best that was available "way back in April 2011." Wow, back when dinosaurs ruled the earth????

    Is this important? When AT&T offers me an iPhone to my land line and gives me a 25-33% monthly fee decrease, that is significant. Yes, the phone is free!

    My point? iPhones or their smartphone competitors are sounding more and more like commodity products to me. In that environment, the best at the best prices win. That should ring alarm bells for Applephiles, but I suspect is won't.

  • Report this Comment On November 15, 2012, at 4:20 PM, ellenla wrote:

    I have to agree. I hate to be a negative Nellie, but the fact is I have an Iphone 4 and the Iphone 5 just doesn't have the wow factor for me to upgrade, Especially when the only new features are a slightly faster processor and a new connector that doesn't match all of the appliances that I have. I am going to wait this upgrade out for another year. I would be switching to Samsung Note II if I wasn't locked in with the 50 or so paid apps that I had with ITunes. Unless they can come up with something totally astounding I will buy the stock. But I think that they are going to base their sales on the content not the technology.

    Amazon already does that with the Fire but the offer much more than just content, Am I the only one that feels Apple is losing steam?

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