Google to Gain from Apple Loss, as App Downloads Grow

Mobile application downloads are expected to grow to 5 billion by 2014, from the approximately 2.3 billion that were downloaded in 2009, according to a Dec. 17 report from ABI Research.

The firm additionally predicts that the growing popularity of mobile application downloads will lead to a drop in their prices — as applications face competition from free or advertising-supported substitutes, a phenomenon already occurring, with Google offering free turn-by-turn navigation service — as well as to a lessening of Apple’s share of the mobile applications market, as Google’s share grows.

“The iPhone’s share of the app market will contract from its 2010 level during the latter part of the forecast period, but it will remain the leading platform for applications,” Bhavya Khanna, an ABI analyst, said in a statement.

“The big beneficiary will be Android, which will see its market share of total application downloads increase from 11 percent of the market in 2009 to 23 percent in 2014,” Khanna continued. “This rapid growth is driven by the mass adoption of the Android OS by both vendors and consumers from 2009 onwards.”

In October, use of the Apple iPhone operating system topped that of Microsoft’s Windows Mobile for the first time, and in November, the number of offerings in Apple’s App Store passed 100,000.

Palm, Nokia, Research In Motion and Microsoft have spent the year working to grow their mobile application numbers. When in June Palm launched the Pre, with its new webOS, it had fewer than a dozen applications in its App Catalog, but by October it had boosted this to more than 250.

Google, however, with its open-source Android OS, has grown its shop quickest of all. In Oct. 2008 the Android Marketplace opened with 30 apps, which within a year exceeded 10,000.

In September, AdMob estimated that the App Store was a $2.4 billion-per-year business for Apple. Google, on the other hand, was making approximately $5 a month, or $60 million a year, from its Android Market.

“There are now more than 14 phones that run the Android OS, and many more will launch in 2010,” said Khanna. “This, coupled with the rollout of application stores from both smartphone vendors and network operators, will see the iPhone’s share of the total market shrink between 2010 and 2014.”

T-Mobile, which supported the U.S.’s first Android-running smartphone, the HTC G1, still offers more Android devices than any other U.S. carrier. Sprint released two Android phones in time for the holidays — the HTC Hero and the Samsung Moment — and on Nov. 6 Verizon Wireless launched the Motorola Droid, which Time named its gadget of the year.

Google recently gave its employees an Android 2.1-running smartphone to try out, and it’s rumored that the company will launch the device itself, dubbed the Nexus One, in January. Analyst Jack Gold, with J. Gold Associates, however, has said he believes Google is just a diligent company using its employees to help it produce a solid product.

In addition to growing numbers of applications stores, ABI points to the increased adoption of smartphones — sales of which it says increased by 20 percent in 2009 — as another contributor to the upcoming surge in application downloads.