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Three reasons to buy Google stock now (NASDAQ:GOOG)

While Twitter and Facebook shares skyrocket on private exchanges, stock in the world’s largest search engine Google Inc. (NASDAQ:GOOG) has flatlined. Google shares are down 2 percent since the start of the year. Over the past 12 months, the Dow Jones Industrial Average has out-performed Google by more than 10 percent. Social networking, it seems – not search – is the tech sector du jour.

Still, there are signs that now might be the perfect time to make a big bet on Google. Here are three reasons to consider adding the stock to your portfolio today:

1) Google Android eats the iPhone OS for breakfast. Android, Google’s free operating system for mobile phones, has started cannibalizing market share. The OS should be running on 49 percent of all smartphones worldwide sometime next year, according to research by Gartner Inc. (IT). Google gives away the OS to phone manufacturers, but the company gets a 30 percent cut of all paid apps that are purchased in the official Google app store – aka the Android Market. Apple’s App Store fueled the company’s record-breaking profits for several years now, and Google finally appears poised to catch up.

2) YouTube gets serious about bringing home the bacon. In a move aimed at taking market share from Netflix, Inc. (NASDAQ:NFLX), Google’s looking to turn YouTube into something like a Web-based television station. The company’s planning to invest as much as $100 million to finance professionally-produced original programming, according to MediaPost. As YouTube moves from computers to home televisions, the site’s ad revenue should start climbing – particularly if they can create and stream compelling original content.

3) Death to the iPad. Just as Google’s challenging the iPhone’s supremacy in smartphone app downloads, Android tablets could do the same to the iPad. A number of Android-powered tablets have already gone to market or will do so soon including the Motorola Xoom and the Samsung Galaxy. As more Android tablets land in consumers’ hands, app sales in the Android Market should start heating up. Google’s 30 percent rake on each app download will be like money in the bank.

Still not convinced Google’s a buy? Consider the fact that the company’s new CEO Larry Page seems to realize Google’s sagging. An internal memo that went out last week informed employees that their bonuses could rise or fall by 25 percent depending on the success of Google’s social strategy in 2011. Google realizes search isn’t the be-all end-all, and I expect that will mean good things for profits moving forward.

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Rovio stock suddenly becomes hot commodity

With the news that Angry Birds-maker Rovio Mobile has secured $42 million in Series A funding, Rovio stock has suddenly become another hot stock that investors can’t buy. The funding round was led in part by venture capital firm Accel Partners, which got in early on Facebook, Groupon and AdMob.

Accel’s not quite got the cache of Digital Sky, but the venture capital firm is well on its way. Accel was founded by Niklas Zennstrom – the same Zennstrom who co-founded the file-sharing site Kazaa and the soon-to-IPO Skype.

Zennstrom has a knack for sniffing out up-and-coming tech trends, and he’s apparently pouring a lot of heart into Rovio Mobile. He’ll sit on the company’s board of directors as Rovio looks to transform Angry Birds from a mobile game to a multi-platform global phenomenon.

Already some 40 million users play Angry Birds every month and Rovio boasts that the game is the No. 1 paid app on the iPhone in 67 countries from the U.S. to Kazakhstan and Macau. Talk about a success story. It’s hard to wrap your mind around just how explosive the growth in Angry Birds has been.

Rovio was on the cusp of bankruptcy before starting work on Angry Birds in 2009. The company had made 51 mobile games for other companies, and the time had come – they decided – to start marking their own games. Rovio’s founders thought they’d have to make 10 or 12 games, Wired reports, before coming up with a blockbuster. It only took one.

Now, on the strength of Angry Birds downloads, stuffed toy sales and licensing deals, Rovio’s revenue is estimated at $50-70 million. With just 50 employees, the company’s already profitable, and the fun is just getting started. Angry Birds is available on all of the major mobile platforms (outside of the Blackberry), and it will be available on major game consoles including the PS3, XBox 360, and Wii next year.

A broadcast cartoon is in the works. Rumors of a movie deal are floating in the ether, and a Facebook App should launch in May. Rovio, it seems, is doing what Zynga hasn’t been able to do. It’s turning itself into more than a mobile game developer. The latest funding round is proof of that, and I’m a believer. Now, I just wish I could buy some shares off a disgruntled employee.

Since that probably won’t happen, the question becomes whether or not Rovio will sell out or look to go it alone and IPO. Possible suitors aren’t difficult to imagine. How about Google, Inc. (NASDAQ:GOOG) or The Walt Disney Company (NYSE:DIS)? If I were them, I’d be booking a flight to Rovio’s headquarters as soon as possible. Accel’s cash infusion may have shut the door on acquisition talks in the short-term, though. Why look for a buyer when the birds are just taking flight?

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Smartphone market share and penetration in the U.S. in 2010

Time for the State of the Mobile Union Address from TradingStocks.me: The U.S. population is approximately 310 million. As of October of 2010, 234 million of the roughly 264 million Americans ages 13 and older used mobile devices, according to comScore.

Of the 234 million U.S. mobile users, 60.7 million owned smartphones, again per comScore. That means roughly 26 percent of the mobile market in the U.S. uses smartphones. That rate is growing at nearly 15 percent per quarter, which means that by the end of 2011, we should see the smartphone market share eclipse the 50 percent.

It’s important to note, though, that just because someone owns a smartphone, that doesn’t mean they’re using it to browse the web, check email or surf the Internet. In fact, just 36 percent of smartphone owners used their devices to browse the web. Just 33 percent downloaded an app, and 21 percent used their smartphone to access a social networking site.

According to these numbers, just 21 million or so of the smartphone-toting American population are online. You can look at that as a small number, or a market that’s poised for explosive growth over the next five years. I choose the latter.

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Biggest iPhone app game earnings of 2010

Plants Vs. Zombies iPhone App

The ballooning world of mobile game and app development has minted a lot of basement millionaires, and it’s an industry that’s still so young that a kid with a laptop can compete alongside a giant corporation for cash. For all the buzz we hear about social gaming companies like Zynga Game Network Inc., which has an estimated market cap of $5 billion on private exchanges, there are thousands of other small-time operations that are making a killing building mobile apps.

Mashable just released their Top iOS Apps of the Year, and I quickly browsed through their lists of the Top 10 Paid iPhone Apps and Top 10 Grossing iPhone Apps to see if any game publishing companies are really starting to differentiate themselves in the field. Here are the things that immediately jumped out at me:

1) Just because an app makes the list of the Top Paid iPhone Apps, that doesn’t mean it’s going to make the list of the Top Grossing iPhone Apps. Take the example of TomTom U.S.A., an app that provides turn-by-turn GPS-based navigation for iPhone users. It’s not on the list of Top Paid Apps, but it definitely makes the list of the Top Grossing Apps. It probably should at a cost of $49.99 per download, too!

2) Game development is the overwhelming winner when it comes to making money with iPhone apps. Of the 20 apps on both lists, just four were NOT games: MLB.com At Bat 2010, FriendCaller 3 Pro, TomTom U.S.A., and, arguably, The Moron Test. It is interesting to note, though, that MLB.com is the highest grossing iPhone app of the year. Currently free (since it’s the off-season), the app retails for as much as $14.99 for unfettered access during the season.

3) There are only two game development studios that have more than one app on either list. They’re Chillingo Ltd., which publishes Angry Birds and Cut the Rope, and PopCap Games, Inc., which publishes two of the more bizarre titles on the lists in Pocket God and Plants vs. Zombies.

4) Dorky games seem to out-perform more sophisticated games. Presumably, this is because the mobile app market caters to a young audience that isn’t afraid to shell out cash for binary-based products. The kids buying Angry Birds today are the ones who will be using their mobiles to pay their mortgages and buy their work slacks 10 years from now. That means that if you’re a publisher of any sort, you better start gearing up to cater to a mobile audience. Otherwise, you can start plans for closing down your business sometime in 2015 or so.

5) Mankind’s fascination with zombies is seemingly endless. Three zombie-based titles in Plants Vs. Zombies, Zombie Farm and Call of Duty: Zombies made either or both lists of Top Paid iPhone Apps and Top Grossing iPhone apps of 2010. Make an iPhone app that focuses on Zombies and you just might start making some money.

[Shameless plug: My friends over at the mobile app development company SpringTide Software and I just released what I consider the best horoscope app for the iPhone in The Interactive Horoscope. Download it and let us know what you think!]

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