Apple
AAPL
benefited from strong momentum in App Store sales boosted by coronavirus-led social distancing norms in 2020.
The App Store accounted for 68.4% of total sales, which came in at $276.6 million, up 35.2% year over year on Christmas Day 2020, compared with
Alphabet
GOOGL
Google’s Play Store sales of $129 million, up 33% year over year and comprising 32% of the total, per
Sensor Tower report
.
Together Apple’s App Store and Google Play registered record breaking sales of $407.6 million, up 34.5% year over year.
Spending on Christmas day constituted 4.5% of December’s total spending so far, which reached $9 billion dollars globally on Dec 27.
Markedly, entertainment apps generated $19.3 million on App Store, making up 21.8% of all non-gaming spending.
The company’s shares have returned 82.1% in the past year, outperforming the
Computer – Mini computers
industry’s rally of 81.1%.
Year-to-Date Performance
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App Store Proves to be a Major Revenue Contributor
The App Store continues to draw the attention of prominent developers from around the world, helping the company offer appealing new apps that drive traffic.
Notably, the App Store has emerged as a major revenue contributor to the company’s Services business. As stated in a court filing, cited by a
report from The Verge
, Apple’s App Store currently has 27 million developers globally, catering to users of the more than 1.5 billion Apple devices around the world in 175 countries and over 40 languages, with more than 180 local payment methods and 45 accepted currencies. The store hosts more than 1.8 million apps.
Moreover, per Apple, the iOS app ecosystem has created roughly 300,000 new jobs since April 2019 and supports more than 2.1 million U.S. jobs across all 50 states.
Further, growing number of AI-infused apps is expected to attract more subscribers on App Store. Notably, more than 30,000 third-party subscription apps are available on App Store and the largest of them accounts for only 0.25% of Apple’s total Services revenues. This Zacks Rank #3 (Hold) company now expects to reach its target of 600 million paid subscriptions before the end of calendar 2020. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Antitrust Probe on App Store: A Key Concern
Apple’s App Store has faced backlash from third-party developers over the past year for forcing them to pay a 30% cut and only use the company’s own in-app purchasing system.
Starting with the launch of a European antitrust investigation into the App Store and Apple Pay, followed by a legal battle with Epic Games over the inclusion of Epic’s own in-app payment options in Fortnite, the array of controversies is expected to have triggered a cut in Apple’s commission charged to smaller businesses.
Further,
Facebook
FB
and
Microsoft
MSFT
have also condemned the company and its strict app store policies for third-party software. In October, a number of publishers and advertisers also filed an antitrust complaint against the company through France’s competition authority.
Starting in early 2021, Apple’s operating software will require apps to get opt-in permission from users to collect their advertising identifier, a key number used to deliver targeted ads and check how ad campaigns performed.
Moreover, on Nov 18, Apple announced that it will reduce its App Store commission fees from 30% to 15% on paid apps and in-app purchases for small developers who earn less than $1 million in annual sales from their apps and those who are new to the store effective Jan 1, 2021.
As part of Apple’s new App Store Small Business Program, the new commission structure is aimed at supporting small and individual developers as businesses adapt to a virtual world during the coronavirus pandemic.
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