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Will Microsoft’s App Store Be a Game-Changer for Apple?

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According to Morgan Stanley, it would be a “immaterial danger” to Apple (NASDAQ:AAPL) if Microsoft (NASDAQ:MSFT), assuming its agreement with Activision Blizzard (ATVI), were to open an app store for smart devices as early as 2024.

Apple (AAPL) analyst Erik Woodring pointed out that Microsoft’s (MSFT) app store option would only affect 3% of Apple’s App Store revenues and less than 1% of its overall sales and earnings. He has an overweight rating and a $180 per share price objective on Apple (AAPL).

According to Woodring, a “worst case” scenario of a Microsoft (MSFT) app shop capturing all of Apple’s (AAPL) App Store gaming revenue in Europe would equal merely 8% of overall App Store sales because the Digital Markets Act is currently focused just on Europe. In addition, only 2% of Apple’s services income and 1% of the company’s overall sales and earnings per share would be affected, according to Woodring.

In an interview with the Financial Times on Monday, Phil Spencer, head of Microsoft’s (MSFT) gaming division, stated that the company was investigating the viability of a Microsoft app store.

Less than 30% of Apple (AAPL) customers in the U.S. and China, the company’s two main markets, would be prepared to purchase apps directly from the developer, according to Woodring, who cited research from Morgan Stanley. The apps would also need to be about 35% less expensive for them to do so.

Shares of Apple (AAPL) and Microsoft (MSFT) were essentially unchanged in Tuesday’s premarket trade.

Investment company KeyBanc Capital Markets reported last week that expenditure on Apple (AAPL) goods and services in February was higher above the three-year average based on its own data.

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