Apple's App Store Steps Up Sales -- WSJ

By Tripp Mickle 

Apple Inc. said its App Store generated record revenue of more than $20 billion for developers in 2016, as that business roughly maintained its growth rate even as iPhone sales volumes declined.

The figure released Thursday implies the App Store's total revenue topped $28.5 billion, with Apple collecting about $8.5 billion based on its 30% share of such sales.

A year ago, Apple said only that its App Store billings in 2015 exceeded $20 billion, suggesting developers took in more than $14 billion and Apple's revenue topped $6 billion.

That implies growth of roughly 40% in 2016, matching Apple's estimated growth for 2015. The company doesn't provide exact figures that would allow for a definitive comparison.

App Store revenue has soared over the years on rising sales of iPhones world-wide, but with iPhone volumes down in the last fiscal year, growth came from a mix of surging app sales in China, new games and rising subscription billings.

Apple said last year's sales of apps rose 90% in China, where the App Store has faced pressure from the government. For example, Apple on Wednesday confirmed that it had pulled the New York Times from its App Store in the country, following a request from Chinese authorities.

On Thursday, Apple said Nintendo Co.'s new game "Super Mario Run" last month generated more than 40 million downloads in its first four days, though only a portion resulted in billings. Subscription billings for apps such as Netflix and Tinder increased 74% last year to $2.7 billion.

The company said the App Store generated record sales for a single day on Jan. 1, 2017, with nearly $240 million in purchases. That followed more than $3 billion in sales during the December holiday season.

The App Store represents just a fraction of Apple's overall sales, which totaled $215.64 billion during its fiscal year ended Sept. 24, but most of the revenue from apps flow straight to the bottom line, making it an important contributor to the company's $45.69 billion in annual profit.

The roughly 2.2 million apps available on the online store also boost the appeal of iPads and iPhones and help create a universe where customers benefit from owning multiple Apple devices on which apps are synchronized.

Amid mounting criticism from President-elect Donald Trump for producing the iPhone and other products in China, Apple has increasingly pointed to its App Store as an example of the types of jobs it has created. It said more than 1.4 million U.S. jobs are attributable to its iOS platform and the App Store, and these jobs didn't exist before the App Store launched in 2008.

Apple said that since the store's inception developers have earned more than $60 billion.

Write to Tripp Mickle at [e-mail]

(END) Dow Jones Newswires

January 06, 2017 02:47 ET (07:47 GMT)

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