Apple vs. Google: Mobile divorce approaching

Apple vs. Google: Mobile divorce approaching

Summary: Piper Jaffray analyst Gene Munster reckons that iOS will only provide 2 percent of Google's total revenue in 2012, or $4.5 billion.

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TOPICS: Google
17

Apple is likely to push Google Maps out of the way next week at its WWDC powwow in what's a long march toward nixing the search giant---friend now mobile foe---as a default service provider.

The longer war between Apple and Google will revolve around courting developers.

Flurry's Peter Farago sums it up:

This month, the world’s two largest mobile app platform providers, Apple and Google, enter what is arguably the most critical month of the year for each company, when each hosts their annual developer conference, the Apple Worldwide Developer Conference (WWDC) and Google I/O. While engaged in a multi-year platform war, their success largely depends on innovation provided for their platforms by the third party developer community. If the developer community embraces one platform over the other, developers will build the software that infinitely extends the value of the consumer experience, giving a platform a meaningful edge.

Bottom line: Developers will follow the money. With Apple developers garner more app revenue---folks pay for iOS apps, but Android versions are often free. Google will have to push its iOS wares through the app store. Any built-in service will eventually get the boot.

Related: With 3D maps, Google looks to 'magic' to fend off AppleGoogle Maps heading to new directions (pictures)Google announces full offline mapping mode for Android smartphones | Google Maps heading to new directions (pictures)

Today, Apple's ongoing effort to replace Google Maps and other services has little to no financial hit. Piper Jaffray analyst Gene Munster noted:

Media reports continue to suggest that Apple will replace Google Maps with its own solution in iOS 6. While the immediate financial impact to Google is minimal, we believe the move would suggest a clear strategy on Apple's part to minimize Google on iOS. Moving forward, we expect a continued tug-of-war between Apple and Google. We believe Google is likely to push more of its apps through the App Store, including Chrome, while Apple will continue to innovate around discovery on the iPhone through Siri.

Financially, Munster reckons that iOS accounts for 2 percent of total Google revenue for 2012. Munster said in a research note:

We estimate Google will generate gross mobile revenue of ~$4.5 billion in 2012 ($500 million coming from display and $4 billion from search). We believe iOS is likely to be the biggest or close to biggest portion of mobile search revenue. Assuming the iOS generates around 40% of total mobile search revenue ($1.6 billion) and Google keeps half after TAC, iOS would generate about 2% of Google's net revenue in 2012.

A few thoughts:

  • If Apple replaces Google services users aren't likely to notice.
  • These moves by Apple to replace Google services will probably lead up to nixing search. If Google is replaced as an iOS default search that will be the ultimate test case for users.
  • Developer loyalty appears to be with iOS based on Flurry data. Indeed, most apps go iOS first and then Android.
  • Siri may be the wild card. What happens if Siri excludes Google results over time?
  • It's unclear that Google can cut it in the App Store framework. Google has multiple free apps, but its biggest ones check in as No. 70 on the charts and below.

Topic: Google

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17 comments
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  • apple will lose

    people prefer FOSS to apple's proprietary wares.
    The Linux Geek
    • wait...

      I may be wrong, but I have never ever seen any apps written by google for iOS to be FOSS...
      KSLGW95
      • Not only for iOS

        Has anyone ever seen any Open Source coming from Google?

        It seems that Google is just an big black hole.
        danbi
  • FOSS SUCKS!

    FOSS SUCKS!
    TimeForAChangeToBetter
  • 2% is totally wrong calculation

    For $4.5 billion to be 2%, Google would have to have $225 billion revenue in 2012.
    DDERSSS
  • Google has about $40 billion in revenue, not $200+ billion

    Nice arithmetic. I guess your division isn't very strong.
    goingbust
  • get the math right first !!!

    The arithmetic says it all, most bloggers are incompetent in Zdnet, a perfect example is AKH with his most stupidest Win 8 article today... sorry...a disappointed reader...
    owllnet
    • right sure

      Oh poor baby, so when will you be writing your articles after all your so incredible talented. ROFL children talking out of their back side.
      Kiljoy616
  • FTC complaint coming...

    Do I smell an FTC complaint? Apple leveraging its dominant market position in the tablet domain to enter a different market in the mapping domain? Especially by a unilateral fiat? Sherman Antitrust violation for sure.
    BorgX
    • Absurd.

      Compare your comment with:

      "Do I smell an FTC complaint? Microsoft leveraging its dominant market position in the desktop domain to enter a different market in the search domain - Bing."

      "Do I smell an FTC complaint? Google leveraging its dominant market position in the mapping and search domains to enter a different market in the mobile phone domain [Motorola]."

      etc.
      StandardPerson
      • re: Absurd.

        Microsoft and Apple will become the duopoly and that's getting Google pretty scared
        rcm0502@...
  • Google Search isn't going to be replaced ...

    until somebody else has a search engine and database that equals Google. I've tried Bing and others multiple times, and none of them has come close to finding what Google finds. And if Apple or anybody else thinks that standing up a top-tier search engine is simple, they are sorely mistaken.

    So Apple could potentially set the default to something else, but people will quickly understand when they are being limited or shortchanged, and all it takes is 30 seconds to figure out how to get back to Google.
    terry flores
    • Wolfram Alpha

      Don't discount this Apple relationship. Certainly, Wolfram Alpha in it's current form is not a Google replacement. That being said, Apple obviously is trying to phase out any dependency on Google, so I wouldn't discount Apple partnering with WA (i.e. throwing a ton of $$$ at them) to develop a Google competitor or even buy them outright and do it themselves using the intellectual capital of WA. We may be years away from that seeing light of day, but remember, Apple did buy up a couple of lesser known mapping companies over the last couple of years that are serving as the foundation of this pending announcement.
      TroyMcClure
  • I wonder if ....

    When it was learned that SIRI's features weren't what was advertised Apple's big response was "Don't use it then."

    If Apple's navigation features gets people lost, will their response be the same?

    It seems that Apple writes software. They just don't seem to be that good at it though.
    fldbryan@...
  • about time

    Its about time, Google has done a good job on Android with the Maps but on iOS they are not going to make it any better. So good for Apple to step up and do some cool innovations of their own. As for Siri she works just fine for a Beta and really if you can say a few words to get something done you really need to put down that iPhone and go get something else. Its ok neither Apple or I care if you do, but I guess you do ROFLMAO.
    Kiljoy616
    • Jobs would disagree

      Didn't the Apple God, er I mean Steve Jobs, say he would use all of Apple's cash to fight Android? That sounds like he would care a lot if consumers drop the iPhone and go get something else.

      Siri ads are a complete JOKE. My child even realizes Siri doesn't work anything like the Apple ads. If Siri is beta, that is even worse, because they definitely don't advertise that.
      gatormba2003
  • Good for Apple, good for Google, good for the user

    Apple will be less dependent on Google.
    Google will be less dependent on Apple.
    We will finally see native Google Maps application on iOS. Google Earth is already there..

    Where is the problem?
    danbi