Apple's sales in Europe remained sluggish throughout 2002, according to the company's annual report released yesterday.

Apple's net sales in Europe fell by $568 million (31 per cent) during 2001, compared to 2000. The fall-off reflects the worsening economic climate in the region in the latter half of 2001, Apple says.

Total Macintosh unit sales for America were up on the year-ago period by 2 per cent, to 1,728 million units. Japan also experienced a 2 per cent increase, selling 386 million units.

Sales in the America were affected by a decline in US education sales in 2002 of $215 million, as well as a 17 per cent decline in Power Mac unit sales. However, outside of the US education channel, unit sales of consumer desktop and portable systems rose by a combined 31 per cent in 2002. More than 70 per cent of the Retail segment's Mac sales during 2002 were for iMacs and iBooks.

Consumer sales in America were hit hard by economic conditions, The company's consumer-orientated iMac fell 64 per cent in 2001. However, US education sales rose in 2001 by 7 per cent in 2001, driven largely by the iBook.

In 2002 Japan experienced growth in units sales of consumer systems, and a fall in Power Mac unit sales. Japan's iMac unit sales increased 85 per cent in 2002 versus 2001.

Apple said in a statement: "The company continues to believe that weak economic conditions over the past several years are having a pronounced negative impact on its professional and creative customers, and that many of these customers continue to delay upgrades of their Power Macintosh systems due to our ongoing transition to Mac OS X, our new operating system, and in anticipation of certain software vendors transitioning their Macintosh applications to run natively in Mac OS X.

"Further, we did not experience the anticipated increase in Power Macintosh sales, following the introduction of Adobe PhotoShop 7 during 2002. Many professional users may have postponed upgrading their systems until after the introduction of Mac OS X Jaguar (10.2) released in the fourth quarter of 2002. Others may have delayed upgrading until after the availability of other professionally oriented software applications for OS X such as QuarkXPress.

Other results saw iBook sales in Europe remain buoyant, increasing by 27 per cent this year – reflecting the global shift away from desktop systems towards portable systems. Unit sales of Mac portable-systems grew by 92,000 units (10 per cent) in 2002. Globally, iBook sales increased by 14 per cent in 2002 – compared to 9 per cent in 2001.

During 2002, portable Mac systems represented 33 per cent of total sales, compared to 31 per cent in 2001 and 20 per cent in 2000.

PowerBook G4s - Apple's other laptop range - experienced a global increase in sales of three per cent year on year, from $346 million to $357 million. A worldwide fall in sales of Power Mac G4s negatively impacted the company in 2002, suffering an 18 per cent fall off, to $766 million from $937 million.

iMac sales fared better globally, experiencing a surge of 8 per cent, from $1,208 million to $1,301 million.

Apple’s Retail segment suffered a $22 million loss for 2002. By the end of September 2002, the company had 40 retail stores operating in the US, and opened a further 11 stores during the first quarter of 2003. The Retail segment achieved annual average sales per store of $12 million, and 2.25 million visitors.

However, overheads were high. Capital expenditure for Retail in 2002 hit $106 million, compared to $92 million in 2001. As of September 2002, Retail employed 807 people, and had lease commitments of $209 million. During 2002 about 39 per cent of Retail’s net sales came from Apple-branded goods, and third-party peripherals and software.

Of the global slump in its sales, Apple added: "On a year-over-year basis, net sales and Macintosh unit sales were down in all of the company's geographic operating segments, and net sales and unit sales by product were down for each Macintosh product category except iBook.

"The company's competitors who sell Windows-based personal computers have aggressively cut prices and lowered their product margins to gain or maintain market share in response to weakness in demand for personal computing products. The company's results have been, and in the future may continue to be, adversely affected by this.

"Further, as the personal computer industry and its customers place more reliance on the Internet, an increasing number of Internet devices that are smaller, simpler, and less expensive than traditional personal computers may compete for market share with the company's existing products."