Apple vs. Google: Mobile divorce approaching

Piper Jaffray analyst Gene Munster reckons that iOS will only provide 2 percent of Google's total revenue in 2012, or $4.5 billion.
Written by Larry Dignan, Contributor on

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.

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