Could the browser eventually kill apps?

November 14, 2012: 12:34 PM ET

Yu Yongfu, CEO of China's largest mobile browser UCWeb, thinks so.

By Kurt Wagner, reporter

ucbrowserFORTUNE -- Mobile Internet browsing is quickly overtaking traditional web surfing, particularly in emerging markets where few people own expensive PCs but many own smartphones. For many of the world's technology users, mobile Web is the preferred, if not only, Internet option. This past summer, mobile Internet traffic in both China and India surpassed desktop Internet traffic for the first time in history.

One company in China is riding that wave -- and hoping to expand its business in the U.S. "For companies that aspire to really become billion-user companies I think there are two key [things] that they have to focus on: mobile Internet and Asia," argues Yu Yongfu, CEO of China's largest mobile browser, UCWeb. UCWeb is akin to Apple's (AAPL) Safari or Google's (GOOG) Chrome for mobile devices. Major mobile players often focus on operating systems or apps, but UCWeb believes the mobile browser is the most important gateway to billions of customers around the world.

The company has demonstrated the potential reach of such software, capturing 40% of the market share in Asia. Founded in 2004, UCWeb's users now generate more than 160 billion page views per month. Yu hopes to reach the billion-customer mark in the next five years, not an unrealistic goal given his firm's footing in Asia where mobile browsing is booming. China alone has over one billion mobile subscribers with more than 400 million active mobile Internet users. India's subscriber base is also rapidly closing in on one billion. "Most people's first personal interaction with the Internet in developing markets is going to be a mobile device of some kind," says Johnathan Nightingale, Director of Firefox Engineering at Mozilla.

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The speed and functionality of mobile browsers have greatly increased since they were first unveiled for smartphones in 1997. For the most part, mobile browsers offer open-source platforms that allow users to freely navigate between websites. Most apps are closed source, in contrast, allowing communication between users and app developers, but limiting the freedom to interact with third parties. "Whether we're talking about Google, Facebook (FB) or Amazon (AMZN)," says Yu, "I don't think any company is going to continue to be willing to have someone stand in the middle taking 30% of the cut." He is referring to the cut companies like Apple and Google take of purchases made within apps; transactions on the Web aren't subject to such fees -- even when made from a mobile device.

Browsers boosters say they offer a number of advantages over apps: Developers of websites accessed through a browser do not need to wait for approval to release their products. Utilizing mobile browsing also lowers maintenance costs because developers do not have to design for multiple operating systems like Microsoft (MSFT) Windows Phone or Apple's iOS. Updates can be rolled out more seamlessly as well.

If any company is in a position to prove this theory, it may be UCWeb. Aside from its dominance in China, it also claims more than 20% of the market in India. UCWeb browsers come pre-loaded on most major handsets in Asia, including Samsung, LG, HTC, Motorola and Lenovo -- but not the iPhone. Yu has since turned his attention to the U.S., opening an office in California's Silicon Valley last month. UCWeb is in the process of hiring American engineers and developers to tailor its product to an American audience, a step that Yu believes will provide a higher-quality browser capable of competing with established American browsers like Firefox, Chrome and Safari.

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Displacing Apps may be a challenge, though. The app market was worth more than $8.5 billion in 2011 and is predicted to reach a whopping $46 billion by 2016. In Q2 2012, China accounted for only 3.1% of App Store revenue.

In Mozilla's case, the software community recently announced the creation of its own Firefox OS. The OS is scheduled to launch in Brazil early next year, an attempt to establish credibility in another emerging market: South America. Mozilla's partnership with Telefónica means that the OS will come equipped on the company's Vivo handsets. Obviously, Firefox OS will come pre-loaded with the Firefox mobile browser. If mobile companies hope to join Facebook (FB) at the billion-user level, it is clear that expansion into both emerging and established mobile markets is a must. "We need to be more like a Chinese-American company and less like just a Chinese company coming to the U.S.," says Yu. "We don't consider ourselves to be going global, we consider ourselves to be going 'glocal.'"

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