Business

As Apple’s App Store revenue slows, company looks to other avenues to boost growth

iPhone 4s screen

bed

apples (NASDAQ:AAPL) service business is the proverbial apple of Wall Street’s eye, posting double-digit revenue growth and margins estimated at around 70% for several years.

But concerns that the segment is slowly slowing down are partly due to flat growth For the App Store, the tech giant is looking at other ways to fuel growth in the valuable arena.

On Friday, Apple (AAPL) announced that Apple Card users can get three months of Apple TV+ free as part of a promotion for Apple’s (AAPL) new animated film. happiness. There’s been a significant amount of buzz going around happiness, which is produced by Pixar legend John Lasseter. The film, which carries a price tag of $140 million, has done well with fans, garnering a 75% viewership on Rotten Tomatoes, although it fares far worse from the critics at 49%.

The offer applies to both new and existing Apple TV+ subscribers – although it’s not available to Apple One subscribers – and underscores how important Apple’s services business (AAPL) is to the company’s future.

It’s unclear how much revenue Apple (AAPL) is generating from the Apple Card, but the Goldman Sachs (GS)-issued credit card certainly helps keep customers loyal to the Apple ecosystem.

Apple TV+ has received more than enough critical acclaim, including winning Best Picture at the 2022 Academy Awards for its heartwarming coming-of-age story, KODA. But again, it’s unclear how much revenue the Apple TV+ will bring to the company, as will the Apple Card.

And while both of those areas might be a bit of a black box for investors, Apple (AAPL) has been steadily updating its subscription totals, ending last quarter with more than 860 million subscriptions to its services.

Among those 860 million are many people who buy digital goods and services from the App Store. Investment firm Morgan Stanley recently noted that net revenue growth for the App Store rose just 1% year over year in July, with many key markets posting declines.

Apple’s (AAPL) future growth may depend on how fast its services business can grow. Last month, Morgan Stanley analyst Erik Woodring said Apple (AAPL) could ultimately be worth $3 trillion if it focuses on “a more pronounced shift to a subscription-like model.”

Woodring added that Apple’s (AAPL) year-end installed base disclosure, which is expected to occur in January 2023, will be the “key catalyst” for the market to move towards this type of transformation. Earlier this year, Apple (AAPL) said it had around 1.8 billion active users.

However, if Apple (AAPL) made a “formal switch” to a subscription model, Woodring said it would “perhaps have an even bigger impact on valuation.”

While that can be accomplished in large part by how Apple (AAPL) sells its hardware like iPhones, iPads, and Macs, its services business is a significant part of it, especially if it can achieve “sustainable growth in spend per customer,” Woodring noted .

Woodring pointed out that users spend about $2 a day on Apple (AAPL) products and services, or about half the average cell phone bill from carriers like Verizon (VZ), AT&T (T), and T-Mobile (TMUS ).

As App Store revenue struggles amid ongoing economic headwinds, regulatory issues, and other factors, Apple (AAPL) is having to look elsewhere for growth. And maybe with just a little happinessApple (AAPL) can get what it needs.

Last month, Apple’s Chief Executive (AAPL) Tim Cook said the tech giant would be able to “accelerate” its sales even in times of economic uncertainty.

https://seekingalpha.com/news/3868245-as-apples-app-store-revenue-slows-company-looks-to-other-avenues-to-boost-growth?utm_source=feed_news_all&utm_medium=referral As Apple’s App Store revenue slows, company looks to other avenues to boost growth

Russell Falcon

Pechip.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@pechip.com. The content will be deleted within 24 hours.

Related Articles

Back to top button