Apple Inc. (NASDAQ:AAPL) might be going through a tough time in terms of gadget sales and profits, but the company repeatedly proves that people are still crazy about its services. The U.S. gadget maker recently made news of the more than $20 billion made by its App Store developers last year. According to the Wall Street Journal, the figure pulled in by the App Store in 2016 is roughly $28.5 billion. Apple only holds onto 30 per cent of all App Store proceeds. This means the tech firm only made around $8.5 billion from app sales while over $20 billion was dedicated to iOS app developers last year.
App Store defies the odds
The core driver of App Store sales was surprisingly China, a nation that is throwing hardships at Apple Inc. lately. There is a lot to be said about the appeal of the App Store in China. Steady falls in iPhone sales are evident in region while the sales of Apple applications are on the rise. Apple claims that the biggest App Store regions in 2016 were the U.S., U.K., China, and Japan. China alone managed to pull in 90 per cent growth year over year.
The People Republic of China is making things increasingly hard for the likes of Apple, and other western tech giants, to increase their influence in the region. Julie Ask of Forrester Research says American companies, even the very large ones, now find it increasingly hard to hold onto China’s attention. She has depicted numerous forces that work to slant Chinese markets in favor of local business.”It seems there is an endless stream of ways to give their own companies an advantage,” Ask reported.
However, the App Store continues to thrive in China despite the region’s increased censorship and growing competition from local providers. Apple Inc.’s App Store has faced setbacks from the Chinese government in the past. The government recently demanded the removal of both the English and Chinese versions of the New York Times from the App Store. NYT believes the ban is due to a investigative report about govt. cuts given to Foxconn — a leading Apple Inc. supplier.
Apple struggles in China
The company has to fight pretty hard to keep its relevance in the country. The issue has little to do with the features that the U.S. tech firm puts in its gadgets, but the fact that so many others in region can match its standards. Further yet, with no need to account import taxes and other such financial factors, local rivals can offer premium handsets at much lower prices than Apple.
Bloomberg reports that Apple Inc. (NASDAQ:AAPL) in China has lost significant market portions to its rivals. Local consumer tech makers like Huawei and Oppo dig deeply into the comapny’s iPhone sales. This is aided by the fact that Apple’s hugely successful 6th generation handset makes it difficult to keep growing.
One Chinese local claims that forking out over $700 dollars for a new iPhone 6S simply isn’t a viable option. His sentiments are shared by many in China, who instead opt for brands like Huawei and Xiaomi. Both these brands are massive in the country and offer cheaper phones with iPhone-like features.
Abbey Lamba explains. “It’s a function of cheaper phones becoming good enough,” she said. The Mizuho Securities analyst says there isn’t much legroom where Apple is right now. This is despite the company pushing out high appealing gadgets “[T]here’s not much more growth at the upper end of the market.”
In more Apple news, it was revealed that New Year’s Day was the busiest ever for the App Store. Almost $240 in app sales were generated on that day alone. The company also pulled in a record Christmas month last year with more than $30 billion derived during December. All of this was once again from the App Store.
Nintendo games top Apple app sales
Nintendo took top spots for the most downloaded and purchased games last year. Pokemon GO needs no introduction. It was the year’s leading mobile craze and used augmented reality and a little nostalgia to win its way onto people’s smartphones. The game was trailed by Super Mario Run, another Nintendo game that scored 40 million downloads worldwide in just four days of its launch.
While Apple Inc. (NASDAQ:AAPL) fights tooth and nail to fend of dwindling sales, it is become clear that the appeal of the company’s iOS apps are capable of thriving on their own. Does this add weight to rumors of Apple’s slow transition to a more software-intense company?