Apps: Google narrows Apple’s lead

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Five years after popularizing the term “app” and sparking a mobile-software boom, Apple is losing its advantage in smartphone apps to Google. Pictured: Google Play store. (Courtesy of Google Play Store)

SAN FRANCISCO — Five years after popularizing the term “app” and sparking a mobile-software boom, Apple is losing its advantage in smartphone applications to Google, diminishing one of the iPhone’s selling points.

Sales of applications from Google’s online store doubled in the fourth quarter from the prior three months while Apple’s revenue climbed 20 percent, according to market researcher App Annie. And some software firms such as Ngmoco, which historically wrote programs for Apple before Google, have put the two operating systems on equal footing — in some cases developing for Google first.

Apple was for a time the biggest smartphone maker and its mobile operating system was the most widely used, in part because of the company’s leadership in downloadable games, magazines and productivity tools. It fell behind in software to Google’s Android in 2010 and ceded the top hardware spot to Samsung Electronics last year. After trailing Apple for years by number of apps available, Google caught up last year, saying in October that its Google Play featured 700,000 applications, the same number Apple boasted that month.

“It’s growing exponentially — we’ve seen an inflection point the past six months,” said Clive Downie, chief executive officer of the Ngmoco unit at DeNA, which bought the apps maker in 2010. “We treat Android and Apple the same. They are equal partners to us and we put equal amounts of resources toward both platforms.”

Google’s gains are mirrored by the companies’ share prices. Google closed at a record high on Feb. 1, while Apple’s stock has tumbled 37 percent from its peak in September. Apple is trading at a 55 percent discount to Google on a price-to- earnings basis. That’s the widest spread since July 2006, about a year before the iPhone was introduced.

Three of four handsets sold in the $260 billion global smartphone market are powered by Google’s Android operating system. To press the advantage, Google has been making it easier for programmers to build apps and simpler for users to find and purchase them.

As consumers increasingly turn to mobile devices to complete computing tasks once done on desktop machines, Google’s push into apps is helping sell phones that run Android software from companies such as Samsung and HTC Corp. Google’s app advance has been accelerated by Samsung’s Galaxy S III, the No. 2 handset behind the iPhone 5 in the fourth quarter, according to Strategy Analytics.

Google is catching up to Apple

Apple has had measurable advantages since co-founder Steve Jobs introduced the App Store in 2008 along with the “there’s an app for that” marketing campaign. The company limits iOS mobile-software updates to once a year, making it easier for developers to create new titles. It simplifies purchases by using the millions of credit cards stored in users’ iTunes accounts.

Apple has more than 800,000 apps in its online store, the company said last month. More than 40 billion apps have been downloaded from the App Store, generating more than $7 billion for developers, Apple said in January. That’s up from $5 billion in June.

“Google is definitely starting to catch up,” said Chris Carvalho, chief operating officer of video-game maker Kabam, whose “Hobbit” game is among the top sellers for Android. “The gap is still there a little bit, but it’s closing.”

BlackBerry, which ranks a distant third behind Apple and Google with less than 5 percent of the smartphone market, said last month that it has more than 70,000 apps for its new Z10 touch-screen handset. BlackBerry’s lack of apps helped devices from Apple and Google usurp market share.

While Google doesn’t disclose comparable sales figures, the company said in September that at least 25 billion apps had been downloaded since the Android app store started in 2008, with a growth rate of about 1.5 billion a month. Google Play posted a fourfold increase in payouts to developers last year.

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Source: By Brian Womack and Adam Satariano

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