Apple Profits From Google’s Misfortune

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China Mobile (NYSE:CHL) is looking to profit from the fact that Google (NASDAQ:GOOG) is not open for business in China because of censorship concerns. Google’s Android operating system runs two-thirds of the smartphones sold in China, but Google is unable to push its online app store across the country because of restrictions from the Chinese government.

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China Mobile launched its Mobile Market store for Android apps in 2009, with over 158 million registered users and more than 630 million app downloads today. The Mobile Market is the world’s largest carrier-operated app store, fueling China Mobile’s revenue growth as its core business matures.

Clearly, China Mobile has taken advantage of not having to compete with the official Google store, but that does not mean that the company does not face any competition in China. Mobile Market’s biggest rival is Apple’s (NASDAQ:AAPL) App Store. Phones running Android accounted for 68 percent of sales in the fourth quarter, while Apple’s iPhone made up 5.7 percent. Apple’s online store raked in roughly $2.9 billion in global app sales last year, compared with about $618 million for Google. China Mobile’s store has 68,663 apps, compared with 560,957 for Apple.

In China, mobile applications and services are set to jump 80 percent to $35 billion this year as cheaper smartphones make surfing the Web more affordable. According to market researcher IDC, shipments of smartphones in China are projected to jump 52 percent this year to 137 million units, making it the world’s biggest market and over taking the U.S. for the first time. As for Mobile Market, the business jumped 15 percent last year to 139.3 billion yuan, compared with an 8.8 percent growth in total sales.

All Web content in China is censored, which includes restrictions on online stores selling apps, games, and e-books. Mobile Market and Apple’s Chinese-language store abide by government censorship restrictions and do not offer apps to access websites that are blocked in China, including Facebook (NASDAQ:FB), Twitter, and YouTube.

China Mobile is not the only Chinese company looking to fill the Google gap for Android apps in the country. Carriers like China Unicom (NYSE:CHU), China Telecom (NYSE:CHA), and device maker Lenovo Group are among 13 major app stores in China looking to get into the app store space in China. The stiff competition in app platforms will make it more difficult to monetize. However, China Mobile’s advantage is that it offers the highest percentage of paid apps versus free apps among all stores in China.

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