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Google's Android Gains on Apple iOS

Google's (GOOG) Android mobile-operating system is winning over an important group of allies in its fledgling rivalry with Apple: application developers.

More than half the 2,733 developers surveyed by Appcelerator, a mobile-software tools provider, see Android as having the greatest long-term potential among operating systems. About 40 percent of respondents said Apple's (AAPL) iOS would have the best long-term outlook, according to the survey released today.

The study adds to evidence that Android is gaining ground against iOS, which will power the new iPhone 4. With some 60 Android-based devices and more than 60,000 apps available, the operating system is adding more than 100,000 users daily, according to Mountain View (Calif.)-based Google. Android will eclipse iOS as the world's second-most-popular mobile-operating system in 2012, researcher Gartner has said.

"Google and Apple are playing a chess game, and everyone else is playing catch-up," says Scott Schwarzhoff, vice-president of marketing at Appcelerator, also in Mountain View.

It's not just in phones that Android may challenge Apple and other smartphone software makers, including Microsoft (MSFT), Research In Motion (RIMM), Palm (HPQ), and Symbian, the world's most popular mobile-operating system. Dozens of manufacturers such as Sony (SNE), Logitech International (LOGI), and Toshiba (6502:JP) are readying tablet computers, netbooks, set-top boxes, e-readers, and TVs that will run on Android. "Android is the only viable alternative to Apple right now," says Ken Dulaney, a vice-president at Gartner in San Jose.

shades of the Microsoft-Apple PC war

Steve Dowling, a spokesman for Cupertino (Calif.)-based Apple, declined to comment.

The competition for connected electronics evokes the battle that played out between Apple and Microsoft in the 1980s and early `90s, when the personal computer operating system market was still up for grabs. "Now you get the Microsoft-Apple war in PCs on the mobile devices," says David Owens, vice-president of marketing at Sprint Nextel (S), the third-largest U.S. wireless provider, which has introduced three Android-based smartphones since late last year.

Robust Android sales boosted HTC's U.S. smartphone share to 9.4 percent in the first quarter, from 7.3 percent in the third period of 2009, according to preliminary data from researcher IDC in Framingham, Mass. Motorola (MOT), maker of the Droid, saw its share jump to 12.4 percent, from 2.1 percent. "They feel this is something that, moving forward, is really going to help them," says Will Stofega, program director at IDC.

Motorola, based in Schaumburg, Ill., plans to unveil a new Android handset today, according to Verizon Wireless's feed on Twitter. Suwon, South Korea-based Samsung Electronics is "putting a lot of investment" behind its Galaxy S phone debut in the U.S. through AT&T (T), says Justin Denison, vice-president of strategy for Samsung Telecommunications America. He called the device the company's "most important product in the premium smartphones category this year."

Carriers that include AT&T, the iPhone's exclusive U.S. service provider, are hungry for Android. Since offering its first Android handset in March, AT&T released HTC's Aria in June and has said it will soon offer Samsung Captivate. "We are planning a robust Android portfolio," says AT&T spokeswoman Dawn Benton.

Google power: name plus support

Verizon Wireless has run big promotions for Motorola's Droid. As the company expands its Android portfolio, "we are going to do as well as if we had the iPhone" said John Killian, chief financial officer at co-parent Verizon Communications (VZ), at a technology conference last month.

Google's support and its well-known brand are helping fuel Android's surging popularity among consumers. "People know Android is from Google," says Sprint's Owens. "That market knowledge has translated into consumer interest."

Competitive pricing has helped, too. In the past six months, Verizon Wireless offered two Droid phones for the price of one. It currently sells HTC's Droid Eris for $50 with a two-year contract. By contrast, the cheapest iPhone retails for $99. The new iPhone 4 will be released on June 24, starting at $199.

Phone makers are working on developing even cheaper Android smartphones to take share from so-called quick-messaging devices, whose use has exploded in recent years, Gartner's Dulaney said. Such "junior smartphones"—with less memory and lower-resolution screens—should become available in late 2010, he said.

Many of Android's early bugs are getting worked out and the software now offers more features. "They've learned from those mistakes," IDC's Stofega says. "Android is now mature."

Kharif is a reporter for Bloomberg News and Bloomberg Businessweek in Portland, Ore.

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