The U.S. firm's quarterly results smashed Wall Street expectations with record iPhone sales in the holiday season and a 70 percent rise in China, powering the company to the largest profit in corporate history.
               
Its result in China, as well as other emerging markets such as Brazil, marks a riposte to critics who questioned the firm's strategy a year ago not to launch a cheaper phone to lure cost-conscious buyers from Xiaomi and Samsung Electronics Co Ltd.
               
"In the long run Xiaomi is more of a threat to Apple than say Samsung," said Ben Thompson, analyst at Stratechery.com.

"But the way Apple fights that is to further differentiate, not by trying to compete on Xiaomi's turf, which is low cost," he said.
               
Instead, Apple plans to roll out around 20 new China stores by 2016, likely located in glitzy locations and rubbing shoulders with outlets for luxury brands such as Chanel and Hermes International SCA.
               
For Apple, brick-and-mortar stores help it maintain a premium image, from the product to in-store service and even packaging, allowing the firm to charge far higher prices than rivals - vital to its enviable profit margins.