As Louis Basenese recently noted in his article, Investors Are Playing the Mobile Revolution All Wrong, the big selling point of the smartphone market isn’t hardware. Instead, it’s the thousands of mobile applications (apps) for them.
Need proof? Consumers downloaded 7.9 billion apps last year, according to ABI Research.
And 70% of those downloads came courtesy of Apple (Nasdaq: AAPL) – no surprise when you consider the company has more than 350,000 apps available, with around 34% free of charge.
But Apple had better not let its foot off the gas because Google (Nasdaq: GOOG) is gaining. Fast.
Google’s app offering has exploded by around 127% over the past six months, with over 275,000 apps now available to customers using Android-enabled devices. And it trumps Apple by giving 66% of them away for free.
But don’t let the word “free” throw you off…
Apps Are Worth Much More Than Their Face Value
Apps aren’t just free… they’re incredibly sought-after. So consumers have no problem spending $199 on a phone if it allows them to access these apps. It’s why Google has worked so tirelessly to increase the size of its app store.
And clearly, the move is paying off.
Consider this: in January 2010, Research in Motion’s (Nasdaq: RIMM) BlackBerry owned close to 45% of the mobile market, while Google owned less than 10%. Today, Google has edged ahead, with a 31% share, while RIMM has dropped to 30%.
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Still, it remains a two-horse race between Apple and Google. Because for as long as they control the apps, they control the market.
But the Wholesale Application Community (WAC) is looking to change that…
The WAC is Ready to End the Reign of Apple and Google
The WAC was formed in response to Apple and Google’s near-total domination of the mobile market. Its goal is to create standard, universal apps that work on all mobile devices.
If the plan succeeds, it would seriously level the playing field for companies like Research In Motion and Nokia (NYSE: NOK). And users of Hewlett-Packard’s (NYSE: HPQ) Palm devices, who currently have access to only 6,000 apps, would also gain access to thousands more.
At this year’s Mobile World Congress, Samsung announced it’s about to launch its own app store, featuring all WAC-compliant apps. Soon after, Ericsson (Nasdaq: ERIC) will do the same.
Alex Sinclair, Chief Technical Officer of trade group, GSMA, says the WAC community could bring together as many as three billion independent app developers. He notes: “To a certain extent it’s a tribute to Apple in terms of pointing out just what an app warehouse is supposed to look like.”
So could the end of Apple’s domination of the app market be around the corner? One thing seems certain: as consumers are presented with comparable app offerings from other companies, it will eat into Apple and Google’s combined 56% market share.