By Senad Karaahmetovic
Morgan Stanley analysts weighed in on the FT report that Microsoft (NASDAQ:MSFT) is exploring a potential launch of an alternative App Store on mobile phones starting in 2024.
If Microsoft indeed launches its own App Store, they believe such action would pose a “limited direct impact” on Apple (NASDAQ:AAPL). Still, it’s a “longer-term risk worth watching.”
“We believe a potential MSFT app store would be an immaterial risk to AAPL at just 3% of App Store revs and <1% of Apple's total revs/EPS. However, MSFT's strong brand and tech leadership still represents a potential long-term threat to keep watching,” they said in a note.
The worst-case scenario sees an 8% hit to App store revenue and 2% of the Services revenue.
“Our work would suggest that while regulators are pushing for greater App Store competition, consumers continue to overwhelmingly prefer the App Store's unmatched security, centralization, and convenience. While the risk of competition is likely higher should a large player like Microsoft enter the space, we expect the risk to be limited to just Europe for the foreseeable future (and Europe represents just 13% of total App Store spending),” they added.