App Store economy generated half a trillion dollars in 2019, Apple says

Posted:
in General Discussion edited June 2020
An independent economic study found that the App Store supported $519 billion in commerce throughout 2019, Apple announced on Monday.

Credit: Apple
Credit: Apple


According to the study, carried out by economists at the Analysis Group, direct payments made to app developers only accounted for a fraction of total billings and sales in the App Store economy.

Throughout 2019, Apple made $155 billion direct payments to developers through the App Store. While substantial, the authors of the study note that direct monetization "significantly underestimates the size of the Apple App Store ecosystem."

For example, physical goods and services facilitated by mobile apps accounted for $413 billion of the $519 billion that the App Store supported in 2019. That category further breaks down into specific subsections, such as:

  • Retail apps, which include traditional stores like Target and physical good marketplaces like Etsy, accounted for $413 billion in sales.

  • Travel apps, like those from airlines or hotel booking sites, clocked in with $57 billion in sales.

  • Ride-sharing apps comprised $40 billion of the m-commerce category.

  • Food delivery apps made up $31 billion of the total amount

  • Grocery apps, which are their own category, generated $14 billion.

App Store Study


Digital goods and services made up $61 billion of the 2019 total. That's a wide-ranging category that includes games, music and video streaming apps, ebook platforms, dating services, and more.

In-app advertising accounted for a similar chunk with $45 billion, 44% of which came from ads shown in games.

The Analysis Group relied on the proportion of use that occurs on apps to estimate sales both on and outside of the App Store. That's because direct billings are a reliable indication of total sales generated by so-called "multi-platform apps."

Although the study didn't cover a time period impacted by coronavirus, Apple notes that the global health crisis has changed how people interact with their devices.

"In a challenging and unsettled time, the App Store provides enduring opportunities for entrepreneurship, health and well-being, education, and job creation, helping people adapt quickly to a changing world," Apple CEO Tim Cook said.

Social media apps, business and education platforms, and food and grocery delivery services have all seen a surge in demand and usage during COVID-19 pandemic. Many traditional retailers are also turning to mobile commerce.

Signs of that boom are already apparent, with investment bank Morgan Stanley tracking 39% year-over-year net revenue growth in May 2020.

During its April 30 earnings call, Apple reported that the App Store hit all-time revenue records for the second quarter and that third-party paid subscriptions grew more than 40% from the year before.

The App Store launched in July 2008, and nearly 12 years later, it's become one of the most influential app marketplaces available in 175 countries across the globe.

"We're committed to doing even more to support and nurture the global App Store community -- from one-developer shops in nearly every country to businesses that employ thousands of workers -- as it continues to foster innovation, create jobs, and propel economic growth for the future," Cook said.

Comments

  • Reply 1 of 10
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    edited June 2020 SpamSandwichwatto_cobra
  • Reply 2 of 10
    XedXed Posts: 1,028member
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    You certainly can. This is just showing how important how Apple's App Store is to commerce. It wouldn't be wrong to determine the importance of how other goods are moved in other ways. One such example I recall is that 80% of all physical goods are transported by trucks in the US which helps put into perceptive the importance of the trucking industry.
    chiaMisterKitRayz2016watto_cobra
  • Reply 3 of 10
    melgrossmelgross Posts: 33,034member
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Sure, since generating commerce is what they’re talking about. The economy is a very tangled web. Take one part away, and others fall too. This is standard economic analysis.
    chiaurahara
  • Reply 4 of 10
    flydogflydog Posts: 1,005member
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Not questionable at all. Our company sells apps on the App Store, but our customers purchase upgrades on our web store. Without the App Store sales, those "off App Store" sales would never have occurred. 

    While your scenario is a little more disconnected, people do buy cars after renting them and enjoying the experience. 
    chiawatto_cobra
  • Reply 5 of 10
    melgross said:
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Sure, since generating commerce is what they’re talking about. The economy is a very tangled web. Take one part away, and others fall too. This is standard economic analysis.
    Right, and these standard economic analyses are usually pretty worthless.

    Billions of dollars were spent on Amazon purchases via the Amazon iOS app.  What percentage of these sales wouldn't have happened if there were no Amazon iOS app?  1%?  50%?  I'm sure it's closer to 1% than 50%. Yet this analysis counts 100% of sales via the Amazon app.  And that type of "economic activity" dwarfs the commerce in apps that Apple is actually involved in.  
    SpamSandwichurahara
  • Reply 6 of 10
    XedXed Posts: 1,028member
    melgross said:
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Sure, since generating commerce is what they’re talking about. The economy is a very tangled web. Take one part away, and others fall too. This is standard economic analysis.
    Right, and these standard economic analyses are usually pretty worthless.

    Billions of dollars were spent on Amazon purchases via the Amazon iOS app.  What percentage of these sales wouldn't have happened if there were no Amazon iOS app?  1%?  50%?  I'm sure it's closer to 1% than 50%. Yet this analysis counts 100% of sales via the Amazon app.  And that type of "economic activity" dwarfs the commerce in apps that Apple is actually involved in.  
    You really don't think it's important to know how much e-commerce is being had via the Amazon app on an iPhone and iPad v the web browser? If I were running that department at Amazon I certainly would want to know if pushing resources into an App Store app was financially viable. Which also means that I startup I'd be looking for these stats to know if the investment into an App Store app was worth it, or if the website would yield the best results with the least amount of overhead.

    Anecdotally, I can say that I much prefer the Amazon app over the web browser on my iPhone, and will even grab my iPhone to check the iPhone app even when I have my Mac right in front of me.
  • Reply 7 of 10
    sflocalsflocal Posts: 5,730member
    Xed said:
    Anecdotally, I can say that I much prefer the Amazon app over the web browser on my iPhone, and will even grab my iPhone to check the iPhone app even when I have my Mac right in front of me.
    I'm the exact opposite.  I do almost all my Amazon shopping via a web browser on my Mac than using my iPhone.  The screen is too small for my preference when searching and comparing items.
  • Reply 8 of 10
    melgross said:
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Sure, since generating commerce is what they’re talking about. The economy is a very tangled web. Take one part away, and others fall too. This is standard economic analysis.
    Right, and these standard economic analyses are usually pretty worthless.

    Billions of dollars were spent on Amazon purchases via the Amazon iOS app.  What percentage of these sales wouldn't have happened if there were no Amazon iOS app?  1%?  50%?  I'm sure it's closer to 1% than 50%. Yet this analysis counts 100% of sales via the Amazon app.  And that type of "economic activity" dwarfs the commerce in apps that Apple is actually involved in.  

    I know a much more useful one.

    For goods purchased on mobile devices, iOS accounts for almost 80% of sales, completely dwarfing Android despite having far fewer users.

    It’s well known that iOS users are the most valuable and generate the most revenue. This study, although using a different methodology, simply reinforces what we already know.
    Xedwatto_cobra
  • Reply 9 of 10
    XedXed Posts: 1,028member
    melgross said:
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Sure, since generating commerce is what they’re talking about. The economy is a very tangled web. Take one part away, and others fall too. This is standard economic analysis.
    Right, and these standard economic analyses are usually pretty worthless.

    Billions of dollars were spent on Amazon purchases via the Amazon iOS app.  What percentage of these sales wouldn't have happened if there were no Amazon iOS app?  1%?  50%?  I'm sure it's closer to 1% than 50%. Yet this analysis counts 100% of sales via the Amazon app.  And that type of "economic activity" dwarfs the commerce in apps that Apple is actually involved in.  

    I know a much more useful one.

    For goods purchased on mobile devices, iOS accounts for almost 80% of sales, completely dwarfing Android despite having far fewer users.

    It’s well known that iOS users are the most valuable and generate the most revenue. This study, although using a different methodology, simply reinforces what we already know.
    That's an excellent real-world example of why how these blanket retail sales figures can be so helpful. If you're build an Android app you can use such information to see how much value the app will have over resources put to iOS and iPad OS apps.
    watto_cobra
  • Reply 10 of 10
    melgrossmelgross Posts: 33,034member
    melgross said:
    Questionable methodology.  Are we going to give "credit" to car companies for sales at brick-and-mortar stores too?
    Sure, since generating commerce is what they’re talking about. The economy is a very tangled web. Take one part away, and others fall too. This is standard economic analysis.
    Right, and these standard economic analyses are usually pretty worthless.

    Billions of dollars were spent on Amazon purchases via the Amazon iOS app.  What percentage of these sales wouldn't have happened if there were no Amazon iOS app?  1%?  50%?  I'm sure it's closer to 1% than 50%. Yet this analysis counts 100% of sales via the Amazon app.  And that type of "economic activity" dwarfs the commerce in apps that Apple is actually involved in.  
    They’re actually not. Without th App Store Apple created, a lot of this business might not have occurred at all. Apple also announced they paid app developers $155 billion. That certainly wouldn’t have occurred. In fa ct, most software sales in the world now come from the App Store model, which Apple is responsible for.
    watto_cobra
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