Apple just announced its third straight year of record App Store sales. Enterprises attempting to survive the current environment must now think deeply on what this might mean for their business.
Keep your distance
Apple’s statistics reflect the socially distanced global business environment. This is also reflected in the company’s Mobility Trends report, which shows a decline in routing requests through Maps in most locations.
With millions of iPhones, iPads and Macs sold across the period (we’ll learn more on this during the company’s forthcoming fiscal call later this month), millions of consumers went online. U.S. online retail spending rose 49% between October and Christmas Eve, according to Mastercard Spending Pulse. Apple is likely to have seen some activity in online sales, given Apple Pay can also be used online.
The need for social distance is also boosting acceptance of Apple Pay at retail. You can now use your iPhone as a wallet at 90% of stores in the U.S., 85% of UK stores, and 99% of those in Australia.
Interestingly, the trend toward online purchasing has seen a wave of bankrupt high street retailers being acquired as investors see whether they can pivot them into becoming online retail brands. Enterprises with local, national, or international brand identities may find they can make similar pivots — even professional personal services may find a way to re-present themselves to core markets more effectively online. Local SEO and community outreach on a local and national basis should be part of this attempt.
Going ‘out’ at home
App Store sales also showed a cultural shift. Naturally, game sales took the biggest chunk of App Store business, but not all of it.
The last three years of App Store sales during the period tend to expose this: Dollars spent on digital goods and services at the Apple App Store between Christmas Eve and New Year’s Eve:
- 2018: $1.22 billion.
- 2019: $1.42 billion.
- 2020: $1.8 billion.
New Year’s Day is traditionally one of the biggest app store sales days of the year. New Year’s Day 2021 saw an astonishing $540 million spent at the App Store, up from $386 million in 2020 and $322 million in 2019.
While Apple has broken App Store sales records each year for three concurrent years, the 33% jump in sales on New Year’s Day 2021 is significant. It most certainly reflects a reality in which consumers worldwide withdrew as infection spiraled following the holiday season.
In a statement, Apple noted developers selling digital goods and services have now earned more than $200 billion since the App Store launched in 2008.
Once again, enterprise professionals need to consider this. As global experience becomes increasingly virtual, business needs to consider virtualized B2C experiences even more seriously than they already did. Increasingly, this extends across the entire business experience: You and your employees want to be remote, and your customers want the same.
As the current emergency is slowly placed under control, many of the solutions developed by enterprises to maintain business during it will become exploitable advantages for a new normal.
If nothing else, subscriptions and digital services may help enterprise maintain in the current storm.
How much is too much?
Apple’s senior vice president of Internet Software and Services, Eddy Cue, alluded to the year, which Apple calls one “like none other.”
“Now more than ever before, customers around the world have found inspiration and value in the breadth and quality of Apple’s services, which have impacted their lives in big and small ways every day,” he said. “We’re incredibly optimistic about where we’re headed, and we believe that the opportunities for developers and the creative community are endless, as are the positive and meaningful benefits to our customers.”
Apple generated $53 billion in services revenues in FY2020 — around 20% of company revenue. Apple continues to face criticisms around its App Store business model, which the company is beginning to tweak in an attempt to provide a better deal for start-ups and small business, while ensuring the biggest developers shoulder the largest burden in terms of running costs for the operation.
Some might consider it refreshing to see Apple begin to understand the importance of financial models in which the most successful carry the biggest share of the cost of essential infrastructure for the benefit of the wider community. (Note: the company recently chose to make executive bonuses partially dependent on social and environmental performance.)
That said, the explosion in App Store sales and the creation in just over a decade of a whole new multibillion-dollar digital business sector — one that has helped maintain business continuity during the pandemic — also represents the importance of maintaining a level playing field.
Why? Because we have reached a point at which services — from broadband to app stores — become utilities upon which the world depends.
While it seems appropriate for those entities that provide platforms for such services to make a profit, the clamor around how much is too much will inevitably grow as the global economy becomes ever more dependent on the spaces provided by the likes of Apple, Google and even Epic.
That’s a puzzle. That puzzle being: “What is the appropriate charge a multinational should levy against developers for the right to operate on its platform when circumstance means more traditional modes of business are inherently unviable?”
The next couple of years will now inevitably see discussion on this topic grow.
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Copyright © 2021 IDG Communications, Inc.