Rival App Stores on iPhone Estimated to Have Limited Impact on Apple's Revenue
Bloomberg's Mark Gurman this week reported that Apple is preparing to allow alternative app stores on the iPhone and iPad in the European Union, as part of an effort to comply with the Digital Markets Act, which goes into full effect in 2024. The report said Apple is aiming for the changes to be introduced as part of iOS 17.
In a research note this week, a trio of analysts at investment bank Morgan Stanley argued that third-party app stores and sideloading would pose a "limited risk" to both App Store revenue and Apple's overall revenue given that iPhone users have "long prioritized the security, centralization, and convenience that the App Store brings."
Importantly, the proposed changes in the Digital Markets Act (DMA) are regulator-driven, not consumer-driven. From the consumer perspective, we see very little demand for alternatives to the App Store given the unmatched security, ease of use (centralization), and reliability the App Store provides. According to our Fall 2022 Smartphone survey, less than 30% of iPhone owners are extremely likely to purchase a mobile app directly from a developer website vs. the App Store.
In an implausible worst case scenario where Apple somehow lost the entirety of its App Store revenue in Europe as a result of competition from third-party app stores, the analysts estimated this would equate to just a 4% hit to Apple's services revenue and a 1% hit to Apple's total revenue. If third-party app stores are allowed globally, the analysts forecast around a 9% hit to services revenue and around a 2% hit to total revenue.
In reality, the impact on Apple's revenue could be far less, as the analysts believe it's likely Apple would still receive a commission on purchases made through third-party app stores. In the Netherlands, for example, Apple's standard 30% commission is reduced by only 3% for dating apps using third-party payment systems.
While there are still a lot of question marks surrounding third-party app stores and sideloading, Morgan Stanley believes that the reported changes do not present material risk to App Store revenue/growth or the long-term performance of Apple's stock.
Popular Stories
Apple will adopt the same rear chassis manufacturing process for the iPhone SE 4 that it is using for the upcoming standard iPhone 16, claims a new rumor coming out of China. According to the Weibo-based leaker "Fixed Focus Digital," the backplate manufacturing process for the iPhone SE 4 is "exactly the same" as the standard model in Apple's upcoming iPhone 16 lineup, which is expected to...
Apple typically releases its new iPhone series around mid-September, which means we are about two months out from the launch of the iPhone 16. Like the iPhone 15 series, this year's lineup is expected to stick with four models – iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max – although there are plenty of design differences and new features to take into account. To bring ...
A widespread system failure is currently affecting numerous Windows devices globally, causing critical boot failures across various industries, including banks, rail networks, airlines, retailers, broadcasters, healthcare, and many more sectors. The issue, manifesting as a Blue Screen of Death (BSOD), is preventing computers from starting up properly and forcing them into continuous recovery...
Israel-based mobile forensics company Cellebrite is unable to unlock iPhones running iOS 17.4 or later, according to leaked documents verified by 404 Media. The documents provide a rare glimpse into the capabilities of the company's mobile forensics tools and highlight the ongoing security improvements in Apple's latest devices. The leaked "Cellebrite iOS Support Matrix" obtained by 404 Media...
Apple is seemingly planning a rework of the Apple Watch lineup for 2024, according to a range of reports from over the past year. Here's everything we know so far. Apple is expected to continue to offer three different Apple Watch models in five casing sizes, but the various display sizes will allegedly grow by up to 12% and the casings will get taller. Based on all of the latest rumors,...
If you have an old Apple Watch and you're not sure what to do with it, a new product called TinyPod might be the answer. Priced at $79, the TinyPod is a silicone case with a built-in scroll wheel that houses the Apple Watch chassis. When an Apple Watch is placed inside the TinyPod, the click wheel on the case is able to be used to scroll through the Apple Watch interface. The feature works...
