“Apple’s annual ritual of touting the prodigious growth of its App Store brought forth some breathtaking numbers: $20 billion paid out to developers just last year, 40% growth in 2016, 2.2 million apps available,” Mark Rogowsky writes for Forbes.
“Sales have about tripled over the past three years. And if 2017’s growth keeps pace, the App Store will do more business this year than Oracle — the world’s second-largest software company,” Rogowsky writes. “But for all the success Apple has had selling apps on behalf of a myriad of developers, it seems as though its just scratching the surface of what might be possible.”
“Take for example subscription services, which became available in all 25 App Store categories last fall. When iPhone, iPad, or Apple TV customers sign up for a service through the store, Apple not only gets paid once, but on an ongoing basis,” Rogowsky writes. “Look for this segment to expand substantially in the next several years as app developers embrace software-as-a-service models akin to how modern software is sold to businesses. Subscription services incidentally grew 74% last year, reaching $2.7 billion.”
“Against that backdrop, it becomes reasonable to argue that Apple should do whatever it takes to get a bigger slice of the smartphone and tablet pies, pushing for share gains on iOS,” Rogowsky writes. “The more Apple can grow the App Store overall, the more it has a recurring revenue business that, while related to continued sales of high-margin iPhones, doesn’t boom and bust precisely along with them.”
Read more in the full article here.
MacDailyNews Take: Rogowsky’s argument for Apple to offer more affordable iPhones and iPads — taking the margin hit upfront for recurring revenue over time — is strong.
iPads are too expensive relative to the perceived competition and Apple has obviously done a piss-poor job of marketing the iPad family (read: clearly explaining to the hoi polloi why they want an iPad over an Amazon or other Android tablet).
Sticker price is the biggest reason why iPad sales struggle to return to growth (the next biggest reason is that iPads’ useful lives last so damn long, they’re not rapidly replaced).
We would have purchased iPads for family members this year if they had been updated as they should have been for the holiday season and if the prices were a bit more palatable. Yes, we know what an iPad offers. Yes, we know they’re worth the money Apple’s asking for today; even being last year’s models. But, Apple should really do the math and consider making certain hardware more affordable in exchange for the backend revenue and increased mindshare and market share that will deliver.
For the same reason – mindshare – Apple should make their own Apple displays, even to the point of taking a loss of each and every one, so that other companies’ logos on frankly ugly products that do not match Apple design sensibilities are not in users’ faces all day long. That’s not a difficult concept to grasp; even an inveterate beancounter might be able to get it.
Apple’s App Store earned $8.6 billion last year – January 5, 2017