'In The Next Two Years Tim Cook Could Become Fluent In Mandarin' : FBR Capital Markets Analyst

The spectacular quarterly results Apple Inc. AAPL announced recently was led to a large degree by the outstanding growth the company witnessed in iPhone sales in China. Daniel Ives, FBR Capital Markets, was on CNBC Monday to discuss why Apple will continue to grow and have tremendous success in China.  

Not $70 Billion, It’s $150 Billion

“We believe this is a $150 billion market opportunity,” Ives said. “Next 18 months we see Apple being the number one market, really in China and to some extent it’s really now about the iPhone 6, about this next leg of Growth and right now the Street is only modelling in $70 billion of what we believe is a $150 billion market opportunity in China.”

Opposite Of What The Perception Was

On China not being the market for  premium products and yet iPhone 6 selling in record volumes there proving sceptics wrong, Ives said, “I think that’s really the whole bear thesis here, is that China was not going to be the market given what we have seen in the low-end. To some extent, it’s the exact opposite.”

He continued, “And we believe just based on ASPs and market share gains, this is something the Street is really underestimating and [although] we believe it’s going to be the fuel in the tank for Apple in terms of China, incrementally we think it could add an extra $2 to EPS over the next two years.”

The Difference

Ives was asked what Apple has done differently to succeed in China which other tech majors have failed to do. He replied, “I think, they have just done a very good job navigating toe in the water, not jumping right away in. In terms of the retail space, how they built it out there. I think in the next two years, I think, Tim Cook could become fluent in Mandarin. And I think [to some extent] it’s just a company that understands the Chinese market.”