One would think that Google Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) would be friends. Google CEO Eric Schmidt sits on Apple's board and his company partners heavily with Apple's iPhone for Google's web products. That is, except when Google is trying to do an end-run around Apple partner AT&T Inc. (NYSE: T).

This is what it comes down to: Google Voice, the service that gives you a universal phone number that you have total control over (and even provides free text messaging!) was blocked by Apple's App Store, most likely at AT&T's request. After all, AT&T surely does not want customers bypassing its margin-heavy text messaging plans to use a free Google-provided solution.

Did anyone think that Apple, Inc. (NASDAQ: AAPL) would ever count 1.5 billion downloads of applications from its iPhone/iPod App Store? In a little over two years, the iPhone has become a worldwide mobile phenomenon, with three versions so far (the original, the 3G model and now the 3GS). In a little over a year, the App Store that carries 65,000 downloadable programs (give or take) has seen 1.5 billion program downloads.

What Apple has created is yet another ecosystem of products and services that mesh so well together that it can't help but be successful. Just like the iPod/iTunes universe that locked customers into a world where the hardware and software worked flawlessly, so does the iPhone/App Store combination. The competition has launched download stores as well, and even Research in Motion Ltd. (NASDAQ: RIMM) has seen some slight success with its BlackBerry App World.

Apple (NASDAQ: AAPL) is making a big deal out of the fact that 60 million software applications have already been downloaded by iPhone customers. New numbers show how modest the return is on the new business.

According to The Wall Street Journal, "If sales stay at the current pace, Apple stands to reap at least $360 million a year in new revenue from the App Store." The data show the extent to which Apple is still a hardware company. Apple's revenue run rate is now about $30 billion a year.

The software figures point to a misconception about Apple. Its iTune and Mac OS products only drive very modest revenue for the firm. It could be argued that these services help sell computers, phones and iPods, but their small returns show that Apple is still saddled with a lower margin business -- building products with fairly high component costs.

Apple likes to perpetuate a fiction for its shareholders that it will move into the ultra-high margin business of software and will get great leverage for its earnings. Looking at the numbers, there is very little truth to that.

Douglas A. McIntyre is an editor at 247wallst.com.

Apple Inc. (NASDAQ: AAPL) is opening its online App Store for iPhone software in a move some think is more important than the 3G iPhone launch on Friday. The App Store will let iPhone users choose from over 500 software applications to download, including games, educational programs, mobile commerce and business productivity tools.

In business, and specifically in technology, there are some people who live in the past and can't see beyond familiar and existing systems. Lucky for us, there are the true visionaries, those who innovate and take things further. Steve Jobs is one such visionary.

After seeing the success of Palm (NASDAQ: PALM) smartphones initially, and then the addictive-like relationship Research in Motion (NASDAQ: RIMM) BlackBerry owners have with their handsets, it is no wonder Apple could zero in on what consumers want and give it to them in an intuitive way. That has been Apple's mark all along.

Indeed, the Mac OS has always been touted as being the better operating system, and yet it is Microsoft (NASDAQ: MSFT) with its Windows OS that dominates the market. Many say that Jobs' was overprotective of the software, causing third-party developers to shy away. If that's the case, Jobs has learned his lesson and is amending his stance now with the iPhone software, hoping to achieve a new computing platform.

It is not enough that Apple (NASDAQ: AAPL) wants to sell a lot of iPhones. Now the company is making it clear that it wants to create the dominant software systems for smartphones.

According to The Wall Street Journal, Apple "will open its App Store, an online bazaar that will attempt to do for mobile applications like games, reference guides and other software what Apple's iTunes Store has done for music."

Apple believes that it can help enhance phones so that they are more like the new PCs, bringing the power of computing to wireless devices. There are several drawbacks to the plan.

It may be a number of years before the processors or memories in handsets will come even close to rivaling what PCs can offer. Connections to the internet are also only as good as the cell grid. Coverage can come and go. With computers, that problems does not exist.

But the greatest problem may be screen size. Americans are used to larger and larger PC monitors. They are better for playing games, viewing spreadsheets and watching movies.

Who wants to have a tiny screen and even smaller keyboard for doing the majority of computing.

And what do people do when the handset battery runs out?

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• The Wall Street Journal reported that Toyota Motor Corporation (NYSE: TM) is set to revamp its manufacturing operations in the U.S. in response to rising gasoline prices that have led to a shift toward fuel-efficient models. Officials at the auto maker said key moves may include dropping plans to produce the Highlander car-SUV crossover vehicles in a Tupelo, Mississippi plant, instead producing the Prius at the plant.
• Tomorrow Apple Inc (NASDAQ: AAPL) is set to launch its second version of the iPhone but it also will be opening its APP Store to software developers--an online bazaar--with the intent of bringing more applications to the phone as it has with music via its iTunes stores. Apple's goal is to turn the iPhone into a gadget that more resembles a personal computer, the Wall Street Journal reported.

OTHER PAPERS:

• According to sources, the South China Morning Post reported that Wynn Resorts Limited (NASDAQ: WYNN) is considering a secondary listing in Hong Kong that would raise as much as $3B. The source said that the fund-raising plan has yet to be approved that that the company is a "long way" from a share sale and "might never do it."

WEB SITES:

• In an interview, Bloomberg reported that Former St. Louis Federal Reserve President William Poole said there is an increasing chance the U.S. may need to bail out "insolvent" Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, and Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac. Poole said data provided show that the fair value of Fannie Mae's assets fell 66% to $12.2B in Q2, while Freddie Mac owed $5.2B more than its assets were worth during the quarter.