In Michael Arrington’s recent Techcrunch post about the iPhone 3G, he mentions that Apple is not competing with the current cellphone technologies as much as Google’s upcoming Android platform.

This made me wonder if the current shift in openness (see Facebook, MySpace, Google, etc.) could apply to Apple’s mobile ambitions. Apple started out in the consumer electronic devices area with the iPod, a stack that included hardware, software and marketplace. This vertical integration (some argue vertical monopoly) allowed Apple to control the minutiae of the product and ultimately it worked. Apple controls something like 70% of the portable audio player market now.

Now, Apple has proven themselves to be a player in the mobile space. They moved 6mm iPhone’s in the first year and will likely sell another 4mm in the second half of 2008. However, there are billions of handsets in the world, and it’s projected that the number of mobile handsets will eventually be roughly equal to the population of the earth.  So Apple’s cut, while a great first-effort, is not entirely game changing. Maybe the new iPhone price will accelerate their market share, but that remains to be seen. In the US the iPhone is bound to the AT&T network (unlocking aside) and that is a non-starter for many people, myself included. AT&T might be great in Albuquerque or Laredo, but it sucks in Boston.

So, the smart play for Apple might be for it to open up it’s current vertical stack of mobile offerings. Namely, they could allow the AppStore to distribute applications for all mobile devices. If Google’s Android platform could take advantage of the AppStore to sell applications and download them, it could be a windfall for both companies. Apple could also open iTunes to Android devices, and allow those customers to buy music, movies and games and sync them to their phones with the desktop software and via the over-the-air store. Google products are often missing the consumer-facing shine that Apple has perfected, and Apple is lacking the massive adoption of computer services that Google has achieved; working together could solve both issues.

Although this might be an unlikely scenario, it’s definitely not impossible. There are already tight ties between Google and Apple, with Google’s CEO Eric Schmidt sitting on the board of directors at Apple. I think both companies develop revolutionary technology, Google just tends to leverage open source and standards more than Apple. Seeing Apple standardize and open up its marketplace would be a major departure, but it could prove to be a smart decision.