iPhone: will alternatives to the App Store hurt Apple’s profits?

In 2023, Apple will have to authorize alternatives to the App Store on iOS at the request of European regulators. Will iPhone users massively turn away from the default store to third-party stores, at the risk of reducing Apple’s revenue? A survey carried out by Morgan Stanley provides some answers.

From next year, Apple will change the way iOS works, the iPhone operating system. The DMA (Digital Markets Act)the law that regulates digital markets in Europe, will indeed force the American giant to offer alternatives to its App Store.

As is the case on Android, it will be possible to install applications outside the default store. Sideloading, the bane of the Californian group, will therefore be an iOS reality. According to information from Mark Gurman, Apple intends to incorporate these size changes into the iOS 17 updatewhose deployment in a stable version is planned for the fall of 2023, after the release of the iPhone 15.

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Limited impact on Apple’s revenue

According to analysts at investment bank Morgan Stanley, the arrival of third-party stores on iOS will not not melt the revenue generated by Apple. Financial experts believe that sideloading is just one “limited risk” for the enterprise, whose App Store has generated nearly $70.6 billion in 2021. In detail, developers earned $60 billion, compared to $10.6 billion for Apple.

Analysts believe that iOS users will not overwhelmingly turn to third-party stores. As Morgan Stanley points out, the changes proposed by the Digital Markets Act are driven by regulators, not consumers”. Most users should continue to visit the App Store. Since its creation in 2008, the store has become a must for iPhone users. Thanks to its strengths, the App Store has nipped in the bud the demand for competing stores.

“From a consumer perspective, we see very little demand for alternatives to the App Store given the unparalleled security, ease of use (centralization), and reliability provided by the App Store”underlines Morgan Stanley.

Less than 30% of iPhone users

A survey carried out by the American bank corroborates the disinterest of iOS users for alternatives to the App Store. Less than 30% of iPhone owners say to themselves extremely susceptible » buy an app outside the App Store, directly from a developer’s website. On iPhone, sideloading is far from being rooted in habits. We imagine that most consumers are simply accustomed to going to the App Store for each application search.

In the scenario in which all European users turn away from the App Store, Apple’s financial losses are also expected to be limited. By putting a cross on the revenues generated by the store in Europe, Apple would only lose 1% of its global turnover. Revenues from the App Store in Europe represent only 4% of the profits earned by the brand’s services. Consequently, European legislation should not call into question Apple’s business model, especially since developers will continue to offer their apps on the App Store. De facto, the firm will always receive a commission, from 15 to 30%, on all purchases made.

Same story if the alternatives to the App Store end up imposing themselves around the world. Deprived of all of the store’s revenue, Apple would not lose than 2% of its turnover, and 9% of profits related to services. Obviously, these are scenarios that are as extreme as they are improbable. In fact, the impact of App Store alternatives on iOS should be easily absorbed by Apple, which remains one of the most profitable companies in the world.

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iPhone: will alternatives to the App Store hurt Apple’s profits?

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