The number of downloads from Apple’s iOS App Store declined slightly last quarter, according to a report from market analysis firm Morgan Stanley.
However, revenue from iOS software is increasing, up 15 percent year-over-year.
With slowing demand for iPhone, this company is looking to other sources of revenue growth. Software sales are one of them.
Not a great quarter at the App Store
“For the first time since at least 1Q15 (as far back as we have the data), the number of quarterly [App Store] downloads declined, falling 5% Y/Y,” wrote Morgan Stanley analysts.
It’s not clear why this decline is happening, especially as the number of active iPhone users is increasing. Apple announced in January that there are more than 900 million iPhones in active use, up 75 million in the last 12 months.
Downloads <> revenue
In their note to investors, the Morgan Stanley analysts seemed to be urging calm. “While the decline in downloads is something investors should monitor, it’s not necessarily indicative of consumer app usage trends, since App Store net revenue is correlated more so with spend per download (driven by in-app purchases).”
And revenue was up 15 percent versus the same quarter a year ago, according to data from Sensor Tower. But App Store revenue grew 16 percent in the previous quarter, raising the possibility growth could continue to slow in the future. The analysts at Sensor Tower aren’t concerned though, as they recently predicted App Store revenue will double in the next few years.
Much of last quarter’s increase came from gaming in China, another sign of the importance of this country to Apple’s bottom line.
Growth in revenue in the App Store’s Entertainment category (which is different from Games) has been slowing in recent quarters. Morgan Stanley chalks this up to companies like Netflix phasing out monthly subscriptions going through Apple’s software store. The video streaming service complains Apple is taking too high a cut of the fees.
Via CNBC’s Kif Leswing and AppleInsider