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Instant Analysis: Apple, Inc. Announced Record App Store Holiday Sales

By Evan Niu, CFA - Jan 6, 2016 at 12:45PM

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Apple sold a lot of apps and in-app purchases over the holidays.

What happened?
Today, Apple (AAPL 2.14%) announced that its popular App Store enjoyed a busy holiday shopping season. The company said that during the two weeks ending January 3, it generated $1.1 billion in revenue from apps and in-app purchases, which set back-to-back weekly records in terms of both traffic and purchases. New Year's Day alone was the biggest sales day ever for the App Store, with customers spending more than $144 million.

Marketing chief Phil Schiller, who just recently took over leading the App Store, said that customers spent more than $20 billion in the App Store throughout 2015. Cumulatively, Apple has now paid out almost $40 billion to developers since the App Store was launched in 2008, with a third of this revenue being generated within the past year. Apple also pointed out that the App Store is now a potent job creator.

Does it matter?
Apple's robust content ecosystem of apps and other categories has long been a key to its success and customer loyalty. The majority of the innovation within the iOS platform comes from third-party developers, and Apple recognized this a long time ago. iOS is also the most promising platform for developers, because Apple users have a higher propensity to actually spend money on content and apps compared to Android users.

The Mac maker's broader services segment, which includes the App Store, has generated nearly $20 billion in revenue during the past four quarters. With today's announcement, this figure will likely exceed the $20 billion threshold when Apple reports fiscal first-quarter earnings later this month. Apple has often said that it operates its content stores around breakeven, but there's a good chance that App Store operating income is well into positive territory by now.

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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