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Re-emergence of China market is driving Apple's App Store recovery

Morgan Stanley sees games driving App Store growth

Last updated

Morgan Stanley is telling its investors that the growth of Apple's App Store is accelerating after a previous decline, and that this is due to the a recovery in revenues from China.

In a research note to investors seen by AppleInsider, Katy Huberty of Morgan Stanley claims that what it calls 'meaningful' growth in China of 20% year over year, has pushed overall App Store revenues to grow approximately 19% during July.

Morgan Stanley had previously reported on the App Store's growth slowing, and attributed it to US/China trade tensions. Now Huberty says that the quickly changing fortunes suggest that June's slowdown was due to more short-term issues such as a reduced number of gaming licenses.

App Store net revenue growth is accelerating, says Morgan Stanley
App Store net revenue growth is accelerating, says Morgan Stanley

Most significantly, games in the App Store saw revenues from China grow an estimated 21% year on year in July compared to just 1% the previous month.

Three of Apple's five geographic areas — China, US and Taiwan — showed an overall acceleration in App Store net revenue growth. Britain and Japan saw a slight deceleration but still grew more than 16% year over year.

Morgan Stanley concludes from the figures that there is what it calls a "healthy underlying mobile app ecosystem." While the company says it's too early to draw conclusions for September or beyond, these figures are a positive start to the quarter.

The company also recently reported it believes investors are being "unnecessarily negative" over Apple as a whole. It is maintaining Apple's $247 price target.