Google ( GOOG ) recently announced the new version of Android operating system named Ice Cream Sandwich. The unique thing about this new version is that it will be compatible with any device. Previously Google maintained different versions for smartphones and tablets. For example, Android's version named Honeycomb was specifically made for tablets.
Over the last few quarters, Android has picked up momentum, which has resulted in market share gains. According to a recent report from Comscore, Android's share in the U.S. smartphone subscriber market increased from around 29% in December 2010 to around 35% in March 2011. Apple ( AAPL ) experienced a slight increase, while Research in Motion's ( RIMM ) and Microsoft's ( MSFT ) market shares declined.
We currently maintain a $576 price estimate for Google stock , which is about 5-10% above market price.
Google Benefits from Search Business Expansion
Higher Android adoption benefits Google by enabling more searches from Google's platform, as Google search is the default search engine on Android-based phones and tablets. Google is already the leading player in the search advertising market with a share of 68%, but it could gain even more from wider adoption in the mobile search market.
The mobile search market is increasingly becoming a key component of the search business. According to Google, revenues from mobile search advertising could have been around $1 billion in 2010 for Google alone.
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