NEW YORK (
is launching yet another battle with
, as Apple takes a foray into mobile advertising with its iAd system.
Apple announced on Thursday that its new iPhone, which will debut this summer, will include updated 4.0 OS software that will allow ads to run on applications.
At Apple's meeting Thursday, CEO Steve Jobs criticized the current form of mobile advertising and said Apple will change the delivery, design and content of advertising in the space.
The iAd system will not open up a new browser window, allowing users to instead stay within the application they currently have open.
The battle with Google for the mobile ad space began in January, when Apple acquired
, a mobile ad firm. Quattro raked in about $20 million in revenue in 2009.
Google is currently looking to purchase AdMob, Quattro's rival, for $750 million, but those efforts may be stymied by the Federal Trade Commission. The argument against Google owning AdMob, from a regulatory standpoint, could be that Google already dominates the online ad market.
Thus, Apple's announcement might actually be a positive for Google in its attempt to secure AdMob, Susquehanna analyst Marianne Wolk wrote in a note. "A second major player investing significantly in the mobile advertising market could assuage the concerns of the FTC regarding Google's acquisition of AdMob," she wrote.
Right now the mobile ad market is tiny, at $300,000 million, but it could one day dwarf the $20 billion U.S. Internet ad space, Wolk wrote. Google currently holds 10% of the mobile ad market, while Apple has 7%, pretty much making the market anyone's game. AdMob could boost Google's share of the market to 21%, Wolk said.
Google, of course, already has substantial relationships with advertisers, while Apple lacks relationships with the top 200 advertisers and agencies that control most of the worldwide display market, Wolk wrote. The Internet search engine also has more favorable pricing for publishers, sharing between 75% and 85% of ad fees with its partners, versus Apple's 60%.
Without the AdMob deal, however, Google has limited mobile display or mobile in-app sales. It also has a less significant reach, with just 8 million Android phone users and 25,000 apps. In comparison, Apple boasts 185,000 apps and a massive target base with its iPhone, iTouch and iPad.
Taking all of this into account, we ask you: Will Apple's iAd system ultimately hurt Google's place in the mobile ad market? Take the poll below to learn what
has to say -- and don't be afraid to leave a comment.
-- Reported by Jeanine Poggi in New York.
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