The Apple (NASDAQ: AAPL) App Store may have 300,000 downloadable software applications, but Google (NASDAQ: GOOG) is gaining on that number at a remarkable pace. The Apple app figure doubled in 2010. Android apps grew six-fold to 130,000. Google’s app number could pass Apple’s later in 2011 at their current growth rate.

The next two challengers in the app wars are so far behind the two leaders that they are unlikely to ever catch up, according to research firm Distimo. “BlackBerry App World and Nokia Ovi Store showed triple digit growth in the last year as well, to nearly 18,000 applications and 25,000 applications, respectively.”

Distimo also reported that the growth in free apps was faster than paid ones which brought down the average amount charged for software

The data shows that Apple’s concerns about Android should be growing. Android’s market share as an operating system on smartphones passed Apple’s last year in the US according to many accounts. The critical difference between the two operating systems is that Apple’s only runs on the iPhone. The Android OS is open source software and runs on dozens of handsets built by several smartphone manufacturers.

Apple faces the problem that Android has become progressively more useful to its users. Apps tether users to handsets that use them. Consumers load sets of applications on their smartphones to make them much more than voice and data transfer devices. These same consumers are reluctant to switch operating systems because they have essentially customized their smartphone to fit their daily habits.

Apple’s App Store with its 300,000 apps has been critical to the proliferation of the iPhone. Owners of the smartphone have been able to set up their handsets with  nearly infinite number of permutations. The reasons for the iPhone’s growth go well beyond its hardware advantages.

Google’s Android has nearly matched Apple’s countless number of applications. The most popular applications for games, news, entertainment, and travel run on both platforms. Apple has begun to fall behind in building what is the most important moat between it and the competition. The all-powerful iPhone may have lost some of its strength.

Douglas A. McIntyre

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