Piper Jaffray’s Gene Munster late yesterday sent a note to clients regarding Google (GOOG), whose shares he rates Overweight, with a $730 price target, in which he concludes that about 2% of Google’s annual revenue comes from Apple‘s (AAPL) iPhone.
The note, put out in response to recent chatter that Apple is seeking more and more to get Google out of its “iOS” operating system for the phone, and the iPad and iPod Touch, concludes that the removal of Google’s mapping service from the iPhone, should it happen, won’t necessarily hurt that 2% per year.�The Wall Street Journal‘s�Amir Efrati this morning offers an overview of that battle.
“In the next 3-6 months, we expect to see Google become more aggressive in offering mobile Apps on iPhone including Maps and Chrome,” writes Munster.
“Longer term, we believe iOS will be a significant platform of mobile advertising growth and expect Google to find ways to participate in those ad dollars.”
Apple’s “Siri” natural-language assistant will extend the battle between the two companies, writes Munster, but Google may respond by being “more aggressive” in offering its own Apps for iOS, including a mapping app.
Here’s how Munster breaks down the revenue result from iOS:
We estimate Google will generate gross mobile revenue of ~$4.5 billion in 2012 with approximately $500 million coming from display and $4 billion from search. We believe iOS is likely to be the biggest or close to biggest portion of mobile search revenue. Assuming the iOS generates around 40% of total mobile search revenue ($1.6 billion) and Google keeps half after TAC, iOS would generate about 2% of Google’s net revenue in 2012. We do not expect any material impact to these assumptions if Google Maps were to no longer be the default mapping application on iOS.
Google shares today are up 80 cents at $581.37.
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