Segment Information and Geographic Data

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

The Company manages its business primarily on a geographic basis. The Company’s reportable segments consist of the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. Americas includes both North and South America. Europe includes European countries, as well as India, the Middle East and Africa. Greater China includes China, Hong Kong and Taiwan. Rest of Asia Pacific includes Australia and those Asian countries not included in the Company’s other reportable segments. Although the reportable segments provide similar hardware and software products and similar services, each one is managed separately to better align with the location of the Company’s customers and distribution partners and the unique market dynamics of each geographic region. The accounting policies of the various segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.”

The Company evaluates the performance of its reportable segments based on net sales and operating income. Net sales for geographic segments are generally based on the location of customers and sales through the Company’s retail stores located in those geographic locations. Operating income for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Advertising expenses are generally included in the geographic segment in which the expenditures are incurred. Operating income for each segment excludes other income and expense and certain expenses managed outside the reportable segments. Costs excluded from segment operating income include various corporate expenses such as R&D, corporate marketing expenses, certain share-based compensation expenses, income taxes, various nonrecurring charges and other separately managed general and administrative costs. The Company does not include intercompany transfers between segments for management reporting purposes.

The following table shows information by reportable segment for 2017, 2016 and 2015 (in millions):



	2017		2016		2015
Americas:
Net sales	$	96,600	$	86,613	$	93,864
Operating income	$	30,684	$	28,172	$	31,186

Europe:
Net sales	$	54,938	$	49,952	$	50,337
Operating income	$	16,514	$	15,348	$	16,527

Greater China:
Net sales	$	44,764	$	48,492	$	58,715
Operating income	$	17,032	$	18,835	$	23,002

Japan:
Net sales	$	17,733	$	16,928	$	15,706
Operating income	$	8,097	$	7,165	$	7,617

Rest of Asia Pacific:
Net sales	$	15,199	$	13,654	$	15,093
Operating income	$	5,304	$	4,781	$	5,518

A reconciliation of the Company’s segment operating income to the Consolidated Statements of Operations for 2017, 2016 and 2015 is as follows (in millions):



	2017			2016			2015
Segment operating income	$	77,631		$	74,301		$	83,850
Research and development expense	(11,581		)	(10,045		)	(8,067		)
Other corporate expenses, net	(4,706		)	(4,232		)	(4,553		)
Total operating income	$	61,344		$	60,024		$	71,230

The U.S. and China were the only countries that accounted for more than 10% of the Company’s net sales in 2017, 2016 and 2015. There was no single customer that accounted for more than 10% of net sales in 2017, 2016 and 2015. Net sales for 2017, 2016 and 2015 and long-lived assets as of September 30, 2017 and September 24, 2016 were as follows (in millions):



	2017		2016		2015
Net sales:
U.S.	$	84,339	$	75,667	$	81,732
China⁽¹⁾	44,764		48,492		58,715
Other countries	100,131		91,480		93,268
Total net sales	$	229,234	$	215,639	$	233,715



	2017		2016
Long-lived assets:
U.S.	$	20,637	$	16,364
China ⁽¹⁾	10,211		7,875
Other countries	2,935		2,771
Total long-lived assets	$	33,783	$	27,010


(1)	China includes Hong Kong and Taiwan. Long-lived assets located in China consist primarily of product tooling and manufacturing process equipment and assets related to retail stores and related infrastructure.

Net sales by product for 2017, 2016 and 2015 were as follows (in millions):



	2017		2016		2015
iPhone ⁽¹⁾	$	141,319	$	136,700	$	155,041
iPad ⁽¹⁾	19,222		20,628		23,227
Mac ⁽¹⁾	25,850		22,831		25,471
Services ⁽²⁾	29,980		24,348		19,909
Other Products ⁽¹⁾⁽³⁾	12,863		11,132		10,067
Total net sales	$	229,234	$	215,639	$	233,715


(1)	Includes deferrals and amortization of related software upgrade rights and non-software services.


(2)	Includes revenue from Digital Content and Services, AppleCare, Apple Pay, licensing and other services. Services net sales in the fourth quarter of 2017 included a favorable one-time adjustment of $640 million due to a change in estimate based on the availability of additional supporting information.


(3)	Includes sales of Apple TV, Apple Watch, Beats products, iPod touch and Apple-branded and third-party accessories.