China Provides Bright Spot in Apple Earnings

China gave Apple some cheer in an otherwise disappointing earnings report, as newly broken-out results showed the gadget maker benefited from efforts to broaden distribution and increase its focus on what has become its No. 2 market.

The maker of iPhones and iPads on Wednesday for the first time broke out sales results from its greater China region, showing a 67% rise in the fiscal first quarter ended Dec. 29 from a year earlier. It also showed Apple's China sales were larger than in Japan, as well as larger than in the rest of Asia.

The figures include only a few weeks of sales of Apple's new iPhone 5, which wasn't released in mainland China until mid-December. The China sales include results from Hong Kong and Taiwan.

The figures underscore the heft Apple has won in China, as well as the stakes in the increasingly competitive market. In the fiscal year ended Sept. 29, Apple posted revenue of $22.5 billion in China, nearly double the amount from the year before.

The sales results show the growing influence of increasingly wealthy Chinese consumers who come out by the millions to buy new handsets. During Wednesday's earnings call, Apple Chief Executive Tim Cook said the company would continue to expand its retail channels in China and pointed out the speed with which the company brought the iPhone 5 to market in China.

Mr. Cook said Apple increased the number of places where consumers could buy iPhones to more than 17,000 from 7,000 in the fiscal first quarter a year ago. "Now this isn't nearly what we need and it's not the final by any means," he said. "We are not even close to that. But we are making…great progress."

The report of the sales boost comes as Apple faces intense competition from Samsung and other phone makers using Android OS. Apple's market share dropped to 4.2% of the China smartphone market in the quarter ended Sept. 30 from a 5.8% in the same period a year earlier, according to Analysys International.

But Apple continues to maintain 42% of the market for the highly profitable smartphones that sell for more than 3,000 yuan. The basic iPhone 5, with 16 gigabytes of memory, sells for 5,288 yuan in China.

Despite the rapid rise of China's smartphone market, analysts forecast there is still significant room to grow. During Apple's earnings call, Mr. Cook said iPhone sales more than doubled year over year in China.

Though the company has begun to broaden its limited retail channels in China, another distribution bottleneck remains for the company in the form of China's largest mobile carrier, China Mobile, which had 87.9 million high-value subscribers. Earlier this month, Mr. Cook met with China Mobile Chairman Xi Guohua in Beijing and discussed cooperation, stirring hopes that China Mobile may soon start offering the iPhone.