IT News on November 3rd: Apple's service business revenue remains at a historical high, but the pressure it faces continues to increase. As the core of this business, App Store is impacted by both regulatory pressures and a sluggish mobile gaming market, which has dragged down the growth of its service business.
However, during the financial report conference call on Monday local time, Apple signaled its consideration of leveraging third-party apps to boost service revenue. But what this specifically means is not yet clear.
When discussing the potential of artificial intelligence to "drive revenue growth in the future," Apple's Chief Financial Officer Kevin Parker ( Kevan Parekh ) stated: "From a product perspective, we believe that artificial intelligence can be an important reason for users to upgrade their devices and switch to Apple products in order to experience the latest features. At the same time, we also see growth opportunities in third-party applications, collaborative projects, as well as Apple's own business."
Parake didn't further elaborate on what opportunities third-party applications could tap into. However, according to a report by Reuters on Monday, investors are speculating whether Apple will distribute third-party AI intelligents through App Store and extract a portion of the profits from it.
IT has noticed that although Apple's overall service business continues to grow, new regulatory and judicial measures introduced in various regions have reduced App Store's commission revenue. For example, estimates from third-party institutions in August showed that Apple's commission revenue in the US market declined by 18%; after new regulations were implemented in Brazil and Japan, local commission revenue also saw a decrease. In the past, Apple had strict control over the payment process within its app store, taking a cut from all transactions within App Store. However, lawsuits initiated by Epic Games ultimately forced Apple to allow apps to direct users to external payment channels, and other related legal disputes around the world have continued to impact this business.
During the financial report conference call, Parekh mentioned the difficulties faced by App Store, and once again expressed that Apple's services business is expected to explore new directions.
"We have indeed observed some factors that have affected the performance of App Store. In the September fiscal quarter, the performance of App Store was basically on par with the same period last year; the number of paid subscription users for third-party applications within the stores reached a new high, maintaining double-digit growth," said Parek. "At the same time, the mobile gaming business still faces the unfavorable factors we mentioned earlier, and it is expected that this pressure will continue into the summer fiscal quarter."
Parake added, "Looking ahead, we expect the service business growth rate for the December fiscal quarter to be between 8% and 9%. This forecast takes into account both the resistance to sequential growth, which mainly comes from the third-party licensing business, as well as the additional negative impact of 0.5 percentage points due to exchange rates, which I just mentioned."
