Google, Apple mobile war heats up

07 January 2010

NEW YORK: The competition between Google and Apple in the mobile sector is continuing to intensify, and this trend has now extended beyond software and hardware to advertising.

Figures from eMarketer, the online research firm, show that US mobile adspend stood at just $416 million (€290m; £261m) last year, but this total is set to rise to $1.6 billion by 2013.

Piper Jaffray, the consultancy, has also predicted that search expenditure through this platform will reach $295m in America this year, and climb to more than $1.1bn by 2012.

The main driver of this trend is expected to be the heightened uptake of smartphones and other technologically-advanced devices, which will encourage greater interest in the wireless internet.

By the end of 2009, some 17% of adult cellphone subscribers in the US were using this type of handset, up from 11% in 2008, and 7% in 2007, according to Forrester.

Apple is one of the biggest players in this category, with its popular iPhone enjoying considerable currency with consumers and being credited with attracting growing numbers of brands to this medium.

The Cupertino-based firm has also recently acquired Quattro Wireless, a mobile advertising specialist, for an estimated $275m.

Disney, Ford, Procter & Gamble and Visa are among the agency's clients, and it offers a wide variety of services ranging from online video to serving ads on portals such as those for Time and CBS Interactive.

Analysts have suggested that Apple's entry into the advertising market is motivated by its desire to provide the developers of “apps” for the iPhone with a means of monetising these tools.

Some 3 billion applications have been downloaded to date, but 80% of these have been free, with paid-for alternatives, like the iFood Assistant built by Kraft, being very much the exception.

Julie A. Ask, a mobile analyst at Forrester, said: “My hypothesis is this has more to do with ensuring their platform is as valuable to developers as any other platform.”

Google, which dominates the online search arena, has also now introduced its own smartphone, the Nexus One, which is its first piece of hardware, and is described as being the place where “web meets phone”.

Produced by HTC, and utilising Google's Android operating system, the Nexus One will deliver up to ten hours of talk time, seven hours video playback and 6.5 hours online access via a wi-fi connection.

Andy Rubin, vice president of engineering for Android at Google, has forecast that sales levels for this offering will be somewhere in the region of 150,000 units this year.

In November 2009, Google acquired AdMob, the mobile advertising company, for $750m, and it has previously stated an intention to heighten its focus on this aspect of its operations.

Susan Wojcicki, vp of product management at Google, has argued that mobile advertising is “still in the early stages of development”, but has “enormous potential as a marketing medium.”

Google has also been highly active is in promoting Android to network providers, and, among others, it is currently being used by T-Mobile in the US and China Mobile, the state-owned Chinese telecoms provider.

The iPhone still boasts more “apps” than are available on Android phones – with totals of 100,000+ and 18,000

Data sourced from New York Times/Wall Street Journal; additional content by Warc staff