App Store isn’t just about games anymore | Cult of Mac

App Store isn’t just about games anymore


App Store
The App Store is another major growth driver for Apple.
Photo: Ste Smith/Cult of Mac

Apple’s worth a crazy amount of money these days, but what really separates it from previous eras is that it no longer lives or dies by one product. Look at any part of Apple’s business and you’ll find reasons to be optimistic.

The latest example of this comes from Bank of America, which bumped its price target on Apple stock from $230 to $250 a share. Why? Because the bank noticed that the App Store is booming — and not just in the category you might expect.

“The strong growth rate of non-gaming categories gives us increased confidence in the sustainability of strong App Store sales, and reduces risk of dependence on one single category of Apps,” wrote analyst Wamsi Mohan in a note to clients.

The firm’s analysis suggests that mobile games now make up a less disproportionate part of the App Store’s revenue. While games remain the largest contributor in terms of bringing in cash, a large part of the revenue growth is, “now being driven by non-gaming categories.”

Mohan singled out other, non-gaming entertainment apps, along with photo and video apps, as being growing hits for Apple.

“We raise our Services revenue estimate for 2019 by about $800 million and factor in slightly higher margins, and reiterate Buy on strength in Services, stable hardware & strong capital returns,” Mohan concluded.

Services are big business for Apple

The Bank of America isn’t the only place excited about the App Store’s potential right now. Earlier this year, analyst Katy Huberty described Apple’s Services division — App Store included — as, “fast becoming Apple’s primary growth driver.”

“We estimate that in the last 12 months, users have spent over $40 billion in the App Store, of which Apple collects a roughly 30 percent cut, implying the App sore generated slightly more than $12 billion of net revenue for Apple in the last 12 months, up 29 percent year-over-year,” Huberty wrote.

In recognition of what Services now mean to Apple, the company added the term to its official business description last year. Other analysts, such as Neil Cybart, have written extensively about how the iPhone is no longer the only metric which dictates Apple’s stock price.

Source: CNBC



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