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As competition grows, Apple's iPhone still has App Store advantage

In the face of new competitors like Google's Nexus One, Apple's iPhone still has the advantage with more than 100,000 applications and 3 billion downloads from its App Store.

Officially announced Tuesday, the Nexus One has been dubbed by Google as a "superphone," one the company hopes will expand the Android platform and slow some of the momentum of Apple's iPhone. But in a note to investors this week, analyst Mark Moskowitz of J.P. Morgan said it's the iPhone App Store that will keep it ahead of its peers.

"We continue to believe that Apple's iPhone should benefit from the partial buffer of its App Store, which is replete with a developer base seemingly more focused on mobile applications for the iPhone versus other competitive products," Moskowitz said.

He noted that mobile apps help to define the user experience, as customers now expect to use their smartphones for voice, e-mail, games, Internet, music and more. As the market leader in terms of apps, Apple has a distinct advantage in offering the software users have come to expect on their phone.

Similarly, Gene Munster, senior research analyst with Piper Jaffray, said Wednesday that though Google's Nexus One will present increased competition for the iPhone, it likely will not slow the momentum of Apple's handset.

"Apple's App Store has over 100k apps, while Android offers 20k," Munster said. "Internationally, the iPhone is available in 77 countries, while Android devices are available in 48 countries."

Android, Google's mobile operating system, was revealed this week to have user interest and satisfaction approaching the levels of the iPhone, according to a new study. Of those who plan to buy a smartphone in the next three months, 21 percent are interested in an Android device, while 28 percent would prefer the iPhone.

Apple's commanding lead in the mobile software space has led to a blistering pace of downloads from its App Store. Tuesday, Apple announced that its App Store downloads topped 3 billion. It was just 99 days before that when Apple announced the 2 billion threshold had been crossed. Over that span, applications were downloaded at a rate of more than 10.1 million per day.

One department where Google's newly announced Nexus One and others do have an advantage over the iPhone, however, is the total cost of ownership. BillShrink.com put together a comparison of the monthly plan costs with the Nexus One on T-Mobile U.S. versus the iPhone 3GS on AT&T. For an unlimited plan, Nexus One users would pay $2,579, compared to $3,799 over two years for the iPhone on AT&T. The average AT&T iPhone plan runs $2,839 over the 24-month period, while the Nexus One and T-Mobile cost $2,339.

BillShrink