Google Steals Apple's iPhone Thunder

A recent Infoworld article tells us that application development for the Apple (Nasdaq: AAPL  ) iPhone is doing very brisk and profitable business for a lot of small business owners. But I think that Google (Nasdaq: GOOG  ) will give them an even better opportunity to make money off fairly tiny development projects.

The article explained that the average iPhone user downloads about eight apps in the first month of owning the phone. Other smartphones don't see any of that action; their users tend to download less than one application a year. Apple reported more than 10 million downloads in the first week its App Store was open, and most programs sell for less than $10 apiece.

The iPhone is reportedly easy to write programs for, but some developers have been disappointed by Apple's secrecy, not to mention its top-down management of the available applications. It's a great developer program all in all -- but Google is doing its best to steal Apple's programming talent.

When Deutsche Telekom's (NYSE: DT  ) T-Mobile launches the first Android handset next Wednesday, the Android app store will be fully stocked with its own user-friendly applications. Google hosted a programming competition with a total of $10 million in prizes to ensure that there would be top-notch applications available on Day One. The Android team wants a "vibrant third-party developer community," and here's the kicker -- all of the app store revenue will be passed on to the developers. Google keeps nothing. (Apple takes 30% of all revenue from its App Store offerings; developers get the other 70%.)

Microsoft (Nasdaq: MSFT  ) must be shaking in its boots. Good luck reviving the Windows Mobile platform after a one-two punch like this one.

Apple will still win if the Android is a complete disaster, of course. But short of that unlikely scenario, there will be two strong contenders vying for the attention of talented and ambitious application programmers everywhere. Google is happy just sharing revenue for the Android platform itself, and reaping the online advertising rewards of ever-more-ubiquitous Internet access everywhere we go. Google is still in the early days of figuring out how to generate cash flow. This Fool recommends buying the stock for cheap now, and enjoying the good stuff later.

Further Foolishness:

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Fool contributor Anders Bylund is a Google shareholder and a T-Mobile subscriber, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure dreams of electric sheep.


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  • Report this Comment On September 20, 2008, at 9:17 AM, jbkendrick wrote:

    I guess the real test will be how seamless synching with applications on your computer is and how the app download and firmware updates are handled.

    Apple has a very good handle on this and makes updates to the iPhone very easy. The synching is just about foolproof. You plug in your iPhone to charge overnight and all of your photos, tunes, podcasts, etc. are all updated when you unplug it in the morning.

    And with the cloud, aka MobileMe, after a very rough start, my calendar, address book and email are even more seamless, updating between my Mac and iPhone at least every 15 minutes throughout the day.

    I wonder if the Google implementation will include GPS? I didn't think I would use it, but find it very useful when my dedicated GPS lets me down.

    If you're interested, you can read about my experiences with many of the web and native apps I've used since my original iPhone and more recent iPhone 3G purchases on my blog at http://johnkendrick.wordpress.com Just click on the index for a complete listing. John

  • Report this Comment On September 20, 2008, at 9:50 PM, Mac007 wrote:

    Competition is good and this can only help keep Apple on it's toes. I certainly don't want Apple becoming bloated and arrogant like Microsoft is now.

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