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Yandex Challenges Google With Alternative Applications Store

February 25, 2013

Yandex Challenges Google With Alternative Applications Store

Employees work at their desks in the Yandex NV company headquarters in Moscow. Photographer: Andrey Rudakov/Bloomberg

Yandex NV (YNDX:US), Russia’s largest Internet search engine, has developed its own applications store for Android-based smartphones and tablets, challenging global competitor Google Inc. (GOOG:US)

The company started offering its store to phonemakers and operators as an alternative to Google Play, the head of Yandex.Store Alexander Zverev said in an interview in Moscow. Russian mobile operator OAO MegaFon (MFON) and gadget producer Oppo Electronics Corp. are among the first companies to adopt the service, he said.

Almost 69 percent of the 722 million smartphones sold worldwide last year were devices based on Google’s Android operating system, according to the International Data Corporation Worldwide Quarterly Mobile Phone Tracker. Manufacturers of Android-based phones such as Samsung Electronics Co. or HTC Corp. (2498) are using the Google Play applications store as well as Google’s search and maps functions.

“We have great search and maps with traffic jams, and by adding Yandex.Store we can offer the entire ecosystem to a phonemaker,” Zverev said. “We also offer operators using our store under their own brand name, which is impossible with Google Play.”

Yandex will be presenting the Yandex.Store to phonemakers and operators at its stand at the Mobile World Congress exhibition event in Barcelona this week, the company said.

Small Manufacturers

About 30 percent of Android-based smartphones are produced by small manufacturers including Chinese ones and aren’t granted the license to use Google Play. “This is the niche we are targeting,” Zverev said.

Google started Android Market store, later renamed Google Play, in 2009 following the success of Apple Inc.’s (AAPL:US) App Store. Customers have downloaded 40 billion applications via App Store, with nearly 20 billion in 2012 alone, Apple said last month. Apple has paid more than $8 billion in royalties to developers through the App Store, according to its website.

Developers get 70 percent of revenue, while Apple gets 30 percent. Google Play uses the same revenue split. Yandex also plans to pay 70 percent of proceeds to developers and will share the remaining 30 percent with phonemakers or operators. It will offer maps and other services for free, Zverev said.

While Yandex leads the Russian market with a 61 percent share in Internet search versus Google’s 26 percent, it’s lagging behind on Android devices where it has just 35 percent versus Google’s 63 percent, according to analysts at Moscow- based Renaissance Capital.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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