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Google says app stores are a dead end, reports Wired.

Vic Gundotra, Google’s engineering vice president and developer evangelist, said on Friday at the Mobilebeat conference in San Francisco that the future of the mobile industry lies in web-based applications, rather than native software coded to run on specific smartphone operating systems.

Many within Google believe cloud computing will take off, especially after their Chrome OS launches in 2010. It will run on Netbooks in lieu of Windows or Linux and utilize on-line applications such as Google Docs and the Web Office Suite.

“Many, many applications can be delivered through the browser and what that does for our costs is stunning,” Gundotra was quoted in a Financial Times report. “We believe the web has won and over the next several years, the browser, for economic reasons almost, will become the platform that matters and certainly that’s where Google is investing.”

The market for mobile applications, or apps, will become “as big as the internet”, peaking at 10 million apps in 2020, according to Ilja Laurs, chief executive of GetJar, a leading independent application store. However, the developer community will decline drastically as each developer makes less money.

Raven Zachary, an analyst and president of iPhone strategist firm Small Society disagreed with Google’s assessment of cloud applications as the wave of the future. He said that the App Store makes it clear that native apps are proving a better experience for consumers.

“It’s pretty clear that native apps and on-phone distribution are by far the most efficient and compelling ways to have consumer apps,” Zachary said.

Apple currently runs the most popular application store with over 65,000 applications. Last week it notched up another milestone with 1.5 billion downloads.

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