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Who Will Win The App War? Google Inc (GOOG), Apple Inc. (AAPL)

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Google Inc (NASDAQ:GOOG) Chairman Eric Schmidt believes that Android’s war with Apple Inc. (NASDAQ:AAPL)’s iOS is just about over — and that his team won. Speaking to Bloomberg in an interview, Schmidt said that Android’s ongoing market-share battle with Apple’s iOS is of the scale of 20 years ago — Microsoft Corporation (NASDAQ:MSFT) versus Apple. He went on to say that in his opinion, “We’re winning that war pretty clearly now.”

The next frontier for profits on mobile phones, after hardware and operating systems, will be in offering different services via robust apps that will generate new revenue streams. Apps are the building blocks to monetize a mobile operating system.

Google Inc. (GOOG)Google’s Android and Apple’s iOS operating systems are undoubtedly the most popular mobile platforms, and Google may have won the OS war as Schmidt claims. But as an investor I’ve tried to find out if Google is in the best position to grab the maximum market share from mobile apps. In this article I will share my view about Google’s potential in the future of mobility.

Is it true that winning the OS war naturally leads to winning the apps war? Yes, to some extent it is true, because many necessary apps come preloaded with the OS. But with the advent of the Internet of Things or M2M opportunities, customers will have to buy costly apps from app stores, where cross-platform compatible apps are also available.

Google is Getting Their Services on iOS Devices

Devices based on iOS are Apple’s main cash cow, while to Google Android is only 1 of 7 of their core businesses, and it barely makes any money, but they don’t care at all. For them it’s about getting their services in front of as many users as possible.

Google has quietly worked to offer a host of mobile and web services that now makes the Mountain View giant a force on Apple’s mobile platform. Google’s dexterity here is quite impressive, as it can provide services for VOIP, chat, local, news, and so much more.

Mobile apps are core utilities, and Google is tactfully providing their services to iOS users by developing loads of useful apps for the iOS platform. Since Apple will not be able to undertake a similar strategy for Android, Google’s position to lock Android users into its integrated services and utilities will only get stronger. Moreover, if they can continue to build superior iOS apps, it will bolster their position for services — the next frontier for profits on mobile.

Play Store vs. App Store

A new report has compared both app stores to see which one raked in more revenue in 2012. Google Play Store’s combined daily revenue has grown by 43%, according to the report. Apple’s App Store, in contrast, only grew by 21%. In terms of growth over the entire year, Apple’s App Store has seen an increase of 51% in the 20 nations analyzed in the report. This includes Australia, Canada, China, Denmark, Finland, France, Germany, Israel, Italy, Japan, Korea, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland, Taiwan, the UK, and the US.

The App Store earned $15 million in average daily revenue in November, just after the launch of iPhone 5 and iPad Mini, while the Google Play Store only reached $3.5 million at that time. This surge in app purchases has caused app prices to slump down by 8% compared to last January for Apple’s iPad. However, on a month-over-month basis, app prices were up by 16% for the iPhone.

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