Apple Inc. (NASDAQ: AAPL) announced App Store billings topped a record $20 billion during 2015. Customers made this holiday season become the biggest ever for the App Store which setting new records during the weeks of Christmas and New Year.
“The App Store had a holiday season for the record books. We are excited that our customers downloaded and enjoyed so many incredible apps for iPhone, iPad, Mac, Apple Watch and Apple TV, spending over $20 billion on the App Store last year alone,” said Philip Schiller, Apple’s senior vice president of Worldwide Marketing. “We're grateful to all the developers who have created the most innovative and exciting apps in the world for our customers. We can't wait for what's to come in 2016.”
Apple takes $0.3 of every dollar which flows through the App Store. $20 billion sales generated more than $6 billion for Apple revenue during 2015, and the rest money is for developers.
App Store was created for the iPhone in 2008, and then add more apps for iPad. It built software marketplace for the Apple TV box and the Apple Watch later 2015. Apple supplements the basic features of its products, then opening those products to software from outside developers.
The company said it had its biggest day of sales in the App Store on Jan. 1 when customers spent more than $144 million.
However, even App Store is growing at an impressive clip, there are signs of slowing growth of Apple. The company had stated App Store billings grew 50% in 2014, but Apple’s figures suggest that sales growth fell to about 40% in 2015. It is hard to say definitively because Apple didn’t provide exact figures for comparison.
On Monday, Japan’s Nikkei Asian Review reported that Apple is expected to reduce the output of the latest iPhone models by approximately 30% for the first quarter 2016 compared with original plan.
The decision to reduce iPhone production by 30% for the first quarter 2106 should not be a surprise to the investors given the current iPhone models failed to live up to the consumer expectations on a higher compensation. The current iPhone models offered nothing materially new from the 6 and the 6Plus and that the incremental improvement on hardware simply does not justify consumers to trade up from the prior models.
Even Nikkei also noticed that the production is expected to return to normal for the second quarter 2016 if the inventory adjustment is complete, it heavily dependent on the pending price cut for the current iPhone models to drive demand and to make room for the upcoming new iPhone model.