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Mobile Commerce: Competition Gets Tougher

 May 06, 2011 12:10 PM

The market for the most-popular smartphone applications is expected to reach $3.8 billion this year. Leading the pack, of course, is Apple, which has the lion's share of the market as indicated by their $2.91 billion posting. Falling far behind is Android, the second largest application company with revenue totaling $425.36 million. IHS Screen Digest recently released the application market data.

Becoming a Technological Superpower

In all, around 10.3 billion free and paid applications were downloaded from the AppStore in 2010. A majority of these applications were downloaded either through the iPhone, iPad, or touch-screen iPod. In 2010, Apple generated revenue of $1.78 billion by selling these applications. The company managed to clock a handsome year-over-year growth rate of 63.4 percent. Apple is a successful company and may be one for the ages if they continue to boast such impressive and remarkable numbers.

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The Emergence of Google in this Space

Apple currently commands an application market share of 76 percent. By 2012, according to analysts, the application market will be generating revenue in excess of $5.6 billion. In 2014, when the market size exceeds $8.3 billion, Apple's share in the application market should decline to 60 percent due to Google's growing emergence in the online application marketplace.

The NFC Pursuit

Arch-rivals in the mobile computing space, Google and Apple have been busy developing near field communication (NFC), which will enable smartphone owners to make payments using their handsets. On the other hand, a business consortium of AT&T, Verizon, and T-Mobile - named Isis - has been working on a payment system with the help from Barclay Bank and Discover Financial Services. The difference between the two was is that Google and Apple propose to use existing mediators (Visa, MasterCard, and Amex) to carry out the transactions whereas Isis wants to develop a system of its own.

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Isis Standing Still

In either case, the companies would earn commissions on each transaction ranging from 2 to 4 percent, bringing in millions of dollars in revenues. This is how a modern day credit card company operates and how it generates most of its income. This is why these other companies want to break into this field. However, if recent reports are to be believed, Isis is in a limbo since the participants feel that the entire system would be too tedious and capital intensive to implement. So it appears the Google and Apple strategy is more practical. Isis now plans to use existing credit card details of customers to carry out its payment gateway plans. No recent developments have been announced by Google or Apple in regards to NFC.

Increased Efficiency

With NFC, owners of an NFC enabled smartphone will be able to make purchases from retailers just by swapping their handset's over the payment machine or scanning device. This will give a big boost to the mobile commerce industry, and the online marketplace will witness unabated growth in coming times. It may even speed up the wait to buy Red Vine licorice or an entire cart of groceries.  

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