Google just ate Motorola Mobility for 12.5 billion, because it wanted all of Motorola’s patents.
The reason Apple is so successful is that they control the entire software and hardware experience of the iPhone and iPad. It’s a much different proposition to do that with a company you acquire versus doing it organically with your own company, but things have just gotten a hell of a lot more interesting in the smartphone world because Google can potentially create their own hardware and software for handheld devices. And, unlike Palm or Danger, this new company is going to have tons of cash.
Gin & Tonic
It’s not just about controlling the hardware and software of the platform, it’s also (and maybe primarily) about having the best industrial designers in the business. One small example from recently – that magnetic disconnect thing on the power cord. Anybody could have thought of that, but nobody else did.
Zifnab
I’m curious if this means patent reform is dead. I can’t imagine Google would have gone ahead with this purchase if it thought Congress was going to start shaking up the patent market in the next few months.
me
I don’t believe Google wants to make hardware. I bet they sell the handset business.
Baud
@Zifnab: I doubt patent reform would disturb existing patents. Usually those types of laws are prospective only.
General Stuck
Someday, newborns will arrive with a handheld networking device attached to their skulls, in some kind of evolving Darwinian nightmare, where nobody ever communicates in person. I’ll be long dead wormfood when that happens. But you can still reach me by email.
Kobie
12.5 billion? I guess there’s some money to be made in this internet fad.
I’m going to invent an app that invents apps.
Kobie
@Zifnab: IF Congress were going to start fucking with patents, it would be viewed as “anti-business.” Hence, it won’t happen.
Belafon (formerly anonevent)
Having been in the telecom industry, a lot of this is about leverage. The companies playing in this area are very quick to sue for even dubious patent infringement claims, to try to slow down competitors – Cisco and Qualcomm come to mind. With Google crossing into the telecom market so much, they need some leverage. That was why they first went after Nortel’s patents – and why I wish they had gotten them rather than that Microsoft centered group.
When you have enough patents, on the other hand, companies are reluctant to sue you because you can quickly countersue, and the patents are all so vague that almost anyone is violating someones patent.
stormhit
It wasn’t a Microsoft centered group. MS didn’t even end up with the patents in the final ruling, they were ordered to sell off their stake while keeping the existing licensing agreement that they already had in place for those patents. Which is all they were interested in anyway.
Belafon (formerly anonevent)
@stormhit: I still consider it Microsoft centered because it wouldn’t have succeeded without Microsoft’s money, and Microsoft’s purpose was to keep the patents out of Google’s hands. It’s not like MS needed the patents, they just had to make sure who didn’t get them was someone that is big enough to compete against them.
But that wasn’t the center point of my argument anyway.
ericblair
@Kobie:
Go read some of Vernor Vinge’s scifi works. He’s also a CS professor. The coders of the future are basically archeologists: everything that you would want to do has been done before in some form, and it’s their job to muck through the multi-hundred-year codebase to patch existing stuff together.
This has more than a grain of truth to us, which is why the software patent war is such a damaging thing. The joke used to be that physicists saw far by standing on the shoulders of giants, but CS researchers ended up standing on each other’s feet. Now everybody’s standing a hundred yards apart waving restraining orders at each other.
Zifnab
@Kobie: Nah. “Anti-business” is just code for “Republicans disapprove”. Actual anti-business measures get passed all the time (see: our latest austerity budget, cuts the Medicare/Medicaid, cuts to HSR funding).
If the right people with the right lobbyists in Washington want something passed, it is plenty “pro-business”.
The Raven
It’s not clear to me that there is any marketing motivation in the usual sense. Google does not make its money selling handsets, and this isn’t likely to change. They do make money selling services via handsets, but it’s only a hope that more handsets will lead to a better market for Google.
I think Google’s big goal is to drive the handset (really, handheld computer) market. The telcos are stifling innovation in this area: until Apple, and then Google, shook them up, they were trying desperately to keep handsets as limited as possible, and to charge for every byte to or from a handset. Google, both as a matter of idealism and practicality, wants open handsets that will use more Google services.
As to how it all ends, who knows?
Another possibility: there is in principle no reason why a handset could not run the entirely open Chromium. All that is holding that back is the telcos, who do not wish to connect open devices to their networks.
cleek
take a look at the responses from the CEOs of other phone companies who use Android.
notice any similarities?
Belafon (formerly anonevent)
@ericblair: That’s an interesting idea, but that would be saying that all of mathematics is an archaeology dig just because of Euclid, Gauss, Euler, and Turing, or that physics is archeology just because the universe already exists.
scarshapedstar
@ericblair:
+1. Some of the Apple patent trolls are so bad that they appear to cover classic high school CS homework assignments, e.g. picking a phone number out of a block of text.
Villago Delenda Est
@General Stuck:
You’re describing the Borg collective.
JerseyJeffersonian
In more Google news:
http://news.softpedia.com/news/Google-Admits-Handing-over-European-User-Data-to-US-Intelligence-Agencies-215740.shtml
Play ball with the Feds, and you’ll get along just fine. If I recall correctly, a few years ago one telecom was unwise enough to question the legality of warrantless surveillance when the Feds were telling them to turn over their data without recourse to the mandated FISA procedures. Things did not go well for them with the government; suddenly the usually toothless, rent-a-cop attitudes of the regulators were suspended in favor of hardassery. Don’t think that this was lost on our corporate leaders.
This is another element of Full Spectrum Dominance, only this time manifesting in the cyber world. As one commenter on this report noted, put your information on the cloud, and expect to lose any control over access to it. It’s a feature, not a bug.
And speaking of Full Spectrum Dominance, here’s a little item of interest; authoritarian kill switches over phone/net access come to your neighborhood:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/08/12/BAEU1KMS8U.DTL
Money quote in the last paragraph. While I understand the public safety issue that supposedly animated the BART authorities, there are other ways to handle this. In banquet halls and public gathering places, it is normal for there to be occupancy restrictions to address safety concerns. Under this principle, a temporary limit on occupancy of the platform areas could easily be imposed at access points to the stations without much difficulty. Police regularly cordon off areas to preserve public safety. Shutting off all cell service within the stations makes it impossible for someone with an an actual emergency such as a heart attack or an assault to contact 911. Well, I guess this would just be collateral damage. But, gee whiz, if the Empire has an unfortunate incident in Afghanistan, say, you might at least get a couple goats by way of compensation. Here? Well, tort reform!
Agoraphobic Kleptomaniac
As others have stated, this is less about Google wanting to build handsets, and more to do with the fact that Apple and Microsoft are suing Google for patent infringement with the patents the bought from (iirc) Palm.
As the recent This American Life put it, this is about having nukes because your opponents have nukes, and you want to discourage them from using their nukes.
Patent bidding wars break out because it’s about the number of bombs you own, even if they aren’t actually bombs but are filled with vanilla pudding.
Smiling Mortician
@cleek: Android and its partners are the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life.
Villago Delenda Est
@ericblair:
These people are bound and determined, in their greed, to destroy a goose that lays golden eggs, by destroying the concept of intellectual property with this patent bullshit.
This is an old story, the short term greed destroying long term prosperity. Major League Baseball did this for years…restricting first radio broadcasts (for fear of losing butts (and money) in the seats) and then television broadcasts. The fact is, both radio and television coverage of baseball INCREASES interest in the game, and puts more butts in the seats over the long term…not to mention the revenues generated from the broadcast rights. The Lords of Baseball are idiots. Repeatedly.
Sherean
When Larry Page returned as CEO earlier this year, he promised a more focused Google. He cut a lot of products out altogether(Google Health, Google Labs) and was said to be doubling down on Android, among other things, so I suppose this is part of that effort.
http://www.theatlantic.com/technology/archive/2011/07/larry-pages-first-100-days-as-google-ceo-focus-focus-focus/242270/
jeffreyw
If Google can bring me no cap, high bandwidth connectivity I will gladly bow down. Verizon and Hughes cocksuckers already have me tithing my income for the shit services they deign to provide. Shambling towards salvation, one Mb/sec at a time.
The Tim Channel
Somebody is gonna get rich(er), and maybe one day in the future, there will actually be a better mobile product to buy than an Apple Iphone. Today is still not that day.
Can you imagine what might be possible if only every other electronic manufacturer in the world didn’t seem intent on copying Apple (poorly)? Think of what could be accomplished with all that wasted time and effort. Are we sacrificing flying cars because of wasteful spending by deep pocketed corporations intent on wasting money blindly trying to parody Apple?
Enjoy.
Gin & Tonic
@JerseyJeffersonian: That’s partly why, although I live in the US, I use an e-mail service provider incorporated and hosted in an EU country with much stronger data protection laws, and connect to them using https.
James Hare
@Kobie:
Google already invented App Inventor. They’re trying to discontinue it now along with the rest of the Google Labs stuff.
Culture of Truth
I love Apple products, but after months of searching I built a PC and plan to get an android phone soon. I couldn’t justify the markup and the monthly iphone fees. Still I admire Apple as a company. I can only imagine how rich they’d be if they had customers like me as well.
James K. Polk, Esq.
Anything to slow down the largest and douchiest corporation in the US is fine by me…
bago
Mobile UI is just the gooey glue between you and your data. The data is the important part, so worrying about the vehicle for data transport seems a bit silly. You need to worry about what it means that everyone anywhere can know know anything. We are evolving from from a universe to an omniverse, to coin a phrase. There are are hundreds of datacenters around the world replicating data all over the world. The notion of a program only executing on a single piece of hardware is incredibly quaint, and should be determined to be obsolete.
Monkey Business
As has been previously stated, this is all about patents.
Google and Android providers like HTC are getting hammered by Apple and Microsoft because they have thirty years of patents, both developed and acquired, that they can use as a bludgeon to slow Android development.
Google has already said they’re leaving Motorola Mobility as a separate company that won’t become Google-branded hardware, unless they compete with LG, HTC, Samsung, etc. for the Nexus project.
With any luck, Google’s newly acquired suite of patents will give it cover from Apple and Microsoft.
stormhit
@Belafon (formerly anonevent):
Except Apple contributed 2.6 billion of it.
And I already explained why Google’s entirely misleading version of events doesn’t actually make any sense. MS previously licensed the use of those patents(obviously they actually valued the IP) and the auction potentially threatened that arrangement. Plus, they invited Google to be in the consortium- it obviously wasn’t a matter of not wanting them in Google’s hands.
Google threw a tantrum because- you’re right- they wanted to use the patents against other companies. The consortium’s goal on the other hand was lowering overall industry patent liability.
Brachiator
This is an interesting stumble on Google’s part. The patents will be very useful, but Google has no particular strength in software design or even operating systems. The Android device marketplace is based on multiple vendors and a degree of openness, so if Google tried to suddenly shift the focus of the market by exerting Apple like control, they will only create confusion and stall development. While Apple folks are waiting for the announcement of the release of the next iPhone, Android folks have a variety of devices to choose from.
And money isn’t everything. Apple has used some of its money strategically, to maximize supply availability, it is still sitting on a mountain of cash. Other companies have overspent in buying other companies and in forming questionable partnerships. And if consumers decide that your product is no longer sexy, as is happening with Blackberry, it doesn’t matter how much control or money you have.
RareSanity
@cleek:
It makes sense for them to respond the way they have. Although I’m sure there is some nervousness on their part, they know Google acquiring Motorola’s intellectual property, is essential to the survival of Android as a whole.
Google’s best interests are served by as many manufacturers as possible, putting Android in as many products as possible, and putting those devices in as many hands as possible. Let us not forget, above any and everything, Google is an advertising company.
I think this was a smart move for Google. It allows them to be the “pace car” for other manufacturers, similar to what they did with the Nexus One. All of the tech pundits decried the Nexus One a failure because of its low sales numbers but, without the Nexus One, you don’t have today’s Android “superphones”. Until just recently, the Nexus One could still outperform the majority of the Android devices available.
Sherean
Just read this on a Forrester blog. Sounds like this might be a win for Microsoft in the long run:
“There are three broad justificiations for the deal:
1. Access to the Motorola patent portfolio which it could then license to partners like HTC and Samsung to protect against the long arm of Apple’s lawyers.
2. An integrated hardware/software play to compete with Apple. The problem with this logic is that the deal does not address the fragmentation on the Andoid platform which is the bigger issue.
3. The set-top business to bolster its lagging Google TV offering.
This said, the deal leaves Google in a very awkward position of being half-pregnant and trying to be a provider of an open source “environment” while at the same time competing with its “customers.” It also means that there are four integrated hardware/software offerings: Apple/iOS, HP/WebOS, RIM/QNX, and now Google/Motorola and potentially a 5th if this deal emboldens Microsoft to pull the trigger on the long-rumored full take over of Nokia. The Apple story of simplicity and focused innovation at the app level has won out over complexity and innovation at all levels. Unfortunately, the deal extends the overall market fragmentation at a platform level well into 2013 to the frustration of developers.
So where does this leave the Asian OEMs HTC, Samsung, and LG? If Microsoft passes on the Nokia aquisition, this deal could throw Windows Mobile a temporary life-line. Forrester can hear Steve Balmer and company pitching the Asian players on how Microsoft is the only hardware agnostic player left and that HTC, Samsung, and LG should increase their support for Windows Mobile as protection against Google favoring its own hardware play.”
I don’t know what he’s talking about with the set top business but think he’s right about this making Google half-pregnant and in the potential position of competing with its customers. If they go that route. We shall see.
Paris
Motorola was making noises about suing other Android handset manufacturers. Google’s purchase quashes this and allows Android to flourish without all the lawsuits and cross licensing nonsense.
Roger Moore
FTFY. Apple has tried to control the hardware and software experience of their products going all the way back to the first Macs. It never let them overtake Microsoft in the desktop market. If they’ve done better than that with the iPod, iPhone, and iPad, it’s because:
1) Steve Jobs took advantage of his entertainment industry contacts to create the first usable on-line music store. iTunes, more than the “innovative user interface”, is what made the iPod such a winner.
2) They did a very good job of leveraging their leadership in the music player market to get into the phone market and later the tablet market. This was more about good branding than controlling the UI.
3) Through the whole process, they’ve done their best to make money every time somebody tries to put new stuff onto their iGadget. The appstore is the dream of every computer hardware maker: a way of charging users every time the install an app on their hardware.
MikeBoyScout
Look, for reasons that are very complicated there is a brewing war over patents.
The consumer electronics companies are currently arming themselves for the coming battles.
In part, this is why our Obama administration is talking “Patent Reform”. Part of the arming is getting the laws changed to benefit one side or the other.
Amanda in the South Bay
Well, minor quibble, its Windows Phone 7, not Windows Mobile anymore. The big news for Microsoft is that Mango (7.1) is supposed to be out sometime this fall, but who the hell knows. I agree, MSFT should just acquire Nokia, but what about RIM? MSFT buying RIM has also been a tech blog fantasy over the past several months.
Martin
So, Motogoogle is going to compete with Samsung, LG, HTC, etc. but not compete? Motorola is going to keep producing 50-odd handsets, tailored to each carrier – particularly the Droid line which is only for Verizon? They’re going to keep hacking Android with Motoblur? And Motorola earns approximately $0 per year.
Sounds like a solution to a legal problem, not a solution to a market problem. I expect Motoblur to get tossed, Google to try and run Moto like Apple with few handsets and muscle the phones onto the carriers, the other Android licensees at least hedge their bets with Windows Mobile (which is overall a pretty impressive platform) since their ‘free phone component’ is likely to get quite unfree at least in the cost of competition, and the DOJ who is already investigating Google for antitrust to jump even farther up their small intestine.
Brachiator
Darn autocorrect. I meant to say that Google has no particular strength in hardware design.
There has also been a lot of noise about Google giving its software engineers more power. This may not be as good a thing as they think.
RareSanity
@stormhit:
That is a bit naive, don’t you think?
The reason that the “consortium” wanted Google in the group was that if Google was in the group, all of the patents in question would be unusable by Google, to ward off other patent lawsuits against Android.
If this were really about “lowering overall industry patent liability”, wouldn’t the members of the consortium have pledged to immediately forfeit any right to said patents, so that no company would be subject to patent liability?
The DOJ saw through this ploy and forced Microsoft to sell off its portion of the patent pool. It is possible that the same thing will happen with the recently acquired Nortel patents.
Whatever Google’s motivations are, because of their lack of a large IP portfolio, they are leading the charge against software patents. That is a good thing.
MikeBoyScout
And unless you are sitting there during the discussions about patents at any of the big consumer electronic companies and the associated patent troll companies, you will have practically no understanding of the strategies or tactics they are employing to what end.
Terry Chay
Googles goal is to commodotize the smartphone market. Whenever you have a main business in tech (google mobile search, microsoft software), you commoditize your complement (google smartphones, microsoft hardware).
Google may be doing this to build a patent portfolio (they have none in this space and lawsuits not only from apple and Microsoft but even oracle), they may be doing this to provide an avenue to allow them to insert themselves as a defendant in android lawsuits.
If that is it, 12.5billion is a hefty pricetag.
Think if you are a smaller android manufacturer and your platform provider just spent 12.5 on your competitor. They are going to want to turn this into money and you will be squeezed out.
burnspbesq
@Brachiator:
“Android folks have a variety of devices to choose from.”
A variety of devices, none of which can provide an overall user experience remotely close to Apple’s mobile devices.
Variety is not inherently good.
Martin
@Sherean:
Google honestly doesn’t have the innovative sense to get set-top right. The problem with set-top isn’t hardware and software, it’s content licensing and how to pay for content. Google doesn’t know fuck about that and they don’t want to know. That’s where the innovation needs to happen, and Netflix is currently leading that charge, though I don’t think they know how to get from where they are to where they need to be.
My money is still on the guy who built his own movie studio from the ground up and has the keys to the hardware and software. He knows it’s a content licensing problem and he knows how to solve content licensing problems.
cleek
@RareSanity:
sure, but that’s not my point. my point is that all four of those quotes are, essentially, the same words. they’re reading from a script.
Martin
@Brachiator:
I can think of two things Apple may want with that cash:
1) Buying a major wireless player like Verizon or AT&T
2) Buying Intel
Apple has always been hamstrung by their processor decisions in the past, and having to design products around what Intel is willing to offer more recently. Their threat to Intel to walk if they didn’t make processors more suitable for products like the MacBook Air is curious, especially when there are limited places to walk to.
For the former, one of the bigger hurdles to iPhone adoption in the US has been the AT&T exclusivity, but larger than that it’s the fragmentation of wireless standards and the ungodly shitty service of US carriers – from coverage to customer service to larding up phones with shit to the profoundly stupid and annoying way they set up their plans. That’s really what forced Apple into making that exclusive deal.
Apple will need to use that cash to plan for the next market they are going to move into – they’re huge now, and eventually the incremental growth from selling phones is going to flatten out. They need to build new revenue streams and to do that, they need to unfuckup the areas surrounding them.
Martin
@RareSanity:
But they aren’t really doing that. They only lead the charge when they fail to buy that IP themselves. Google bid over $3B for Nortel patents and Apple, etc. beat them, then Google whined about patents. Had Google won that auction should Apple have whined and become the company leading the charge against software patents?
Google has no noble motive here. They’re the team that loses the game and then declares that the game wasn’t really all that important after all.
tBone
@cleek:
“Why yes, Google, that pig does look very nice with lipstick on!” {/androidoemcannedprstatement}
RareSanity
@cleek:
Agreed.
@Sherean:
Nokia screwed themselves by making this deal with the devil in the first place. Microsoft has been in the “mobile OS” game since the beginning. They are incapable of executing a mobile operating system. The old Pocket PCs were the most successful mobile OS, and I mean the PDAs, not Pocket PC phones. Everything since those Pocket PC PDAs, have been complete failures. The Zune, when they changed Pocket PC to “Windows Mobile”, all failures. Windows Phone 7 is actually a viable operating system but, as usual, Microsoft is utterly failing in the execution. It will ultimately fail…
@Martin:
I think that you are misunderstanding what “type” of set-top box is being developed. This is not something like a TiVo or a Roku, or even Apple TV. These are cable set-top boxes. Motorola is not responsible for licensing any content for it’s set-top boxes, the cable operators are.
The possibility is that some type of Google TV offering, sitting on top of Android, could replace the the current operating system. They would no more be responsible for licensing content then Motorola or Scientific Atlanta is now.
RareSanity
@Martin:
I certainly hope so. I don’t care who leads the charge, as long as the end result is the weaking of the current software patent system.
That was my point in saying “whatever their motivations”. I don’t think for one second that they have noble motivations. I do know that because of their position, it benefits them to fight the battle.
tBone
@RareSanity:
And Comcast/Time Warner/et al would tell them to take GTV and shove it up their ass. Anything that allows easy (or even horribly convoluted, in Google TV’s case) set-top access to the web is not something cable companies are interested in providing.
BDeevDad
Point of Information: Palm is now part of HP which is trying to use WebOS in everything and has a lot of cash.
Sherean
@RareSanity
I actually had an HTC Mogul Windows 6 (I think) phone that I loved. It got me through my pregnancy and many sleepless nights reading blogs during the 2008 primary season. My son was born on Election Day. I liked it because I could surf on my phone just as I could on my computer.
While I appreciate apps and am the beneficiary of the app market (my company has started developing some), I actually miss the days when I could get a decent reading experience on my mobile browser which is what Windows Mobile did for me. I didn’t need an app to read the NY Times in a font that was legible.
@Martin and @RareSanity –
While I haven’t read enough about Google TV’s plans, I have worked in media most of my life. I don’t know if it’s a content play, which Netflix is certainly working hard to solve the licensing issues, or if it’s a device play, a la Scientific Atlanta. But what I suspect is that somehow that content has to be organized and monetized – and Google will want in on that. I think that’s what you’re getting at @RareSanity when you say that GoogleTV would be an OS of types?
James K. Polk, Esq.
@burnspbesq:
600000 devices activated per day says the average consumer thinks you’re wrong.
RareSanity
@tBone:
Maybe.
If they keep losing TV subscribers at the current rate, the smart thing to do, would be to use anything that stops the bleeding.
But, I’m with you, cable companies will be extraordinarily resistant to any such possibilities. You’ll never lose betting on cable companies to be stubborn even to their own detriment.
me
@Martin: Maybe you didn’t notice, but it’s Apple and Microsoft making it non-free, not Google.
dollared
@Martin: To be fair to Google, they are not losing the game. They are winning the game, outside of patents. And they have a phenomenal engineering staff and ownership of the entire internet as a distribution platform, so about the only thing that keeps them from disrupting everyone else is patents.
And of course, they rapidly imitate (steal IP from) a lot of other companies in order to do this. So patents are a nuisance.
So if they can’t change the rules, they will play to win within the rules. It just raises their cost of winning by a few billion.
Apple will never complain about patents. They learned their lesson in 1992 when they figured out that Microsoft had worked around their IP protection.
Brachiator
@burnspbesq:
I never claimed that Android devices were better, nor was I comparing the user experience of the two platforms. I am absolutely agnostic on any of the Apple vs Android fanboy crap. I was simply commenting on the perception of Google’s business decision in purchasing Motorola.
That said, I know people who love Android specifically because it is not as tightly controlled as Apple. This is a market looking to be satisfied, and they have no interest in anyone replicating Apple’s model in the Android market.
And curiously enough, the most avid Android people are not looking for “an overall user experience.” Rather they value a user customizable user experience. They want a device that they can easily root and tailor to their individual needs.
You see this point driven home all the time on the various tech programs devoted to Android (e.g. The TWIT podcast “All About Android”).
@Martin:
I can’t see Apple buying Verizon or AT&T, nor could I ever see this deal getting approved by any regulator. A bold idea, though.
A play for Intel would be interesting, but ultimately I think also unlikely. These deals would be good for Apple, but terrible for the overall industry. And now that the smartphone market is more mature, Apple can expand to other carriers without having to buy any of them.
But there is another angle to this. Apple’s iOS5 and the rise of Cloud services, along with the steady increase of streaming services like Netflix, Walmart, Apple TV, Roku, etc are hitting natural and artificial constraints put up by service providers. This is going to be the next battle ground.
It will also be interesting to see whether Amazon gets into this, especially if they unleash a tablet, presumably running Android.
dollared
@burnspbesq: I don’t know if I fully agree that none of the android devices are comparable to the iPhone, but I am not an iBot.
But – you are right -I think you are seeing Google make a bigger decision than just buying a (really great) patent portfolio. Google did a brilliant job of imitating the Microsfot Windows biz model with Android. But Windows could never approach the Mac user experience because Microsoft could never control the hardware implementation. It’s strength is its weakness. Android has similar problems – craplets preloaded on the phone, no control over app quality, funky hardware experiences.
Google is taking the next step here. They now have great hardware engineering and the ablity to create reference implementations for consumer, prosumer, small business and corporate.
Microsoft was always afraid to take this path to improving PCs, for fear of pissing off the PC manufacturers. It looks like Google may take the next step, make their own hardware designs (especially for iPad competitors, where they are clearly failing), and take them to Korea and Taiwan.
RareSanity
@Sherean:
I won’t really argue the “quality” of Microsoft’s mobile offerings, it is such a personal thing. I have owned Pocket PCs PDAs and phones as well as Windows Mobile phones. My point is, that even when you throw in the Zune, Microsoft cannot seem to cultivate and grow mobile operating systems.
Google TV was pretty much a shot in the dark when it was first released. Although it was a good idea, I knew it wasn’t going anywhere because it didn’t integrate any kind of DVR type functionality. Or tie in very well with “regular ole TV”.
However, if it were to be integrated into the set-top box, it is a totally different conversation. Google is drooling at the opportunity to get Android in way, shape or form, into the cable operators set-top boxes. It’s the same Holy Grail that TiVo, and of host of other companies would like as well.
And yes, initially, it would be a device play. But, as the proprietor of this blog says, it would be the proverbial, “foot in the door”. It won’t be easy though. As far as revenue, like @Martin said, Google doesn’t want to be bothered with revenue off of content delivery. There is still money to be made by writing software to help cable companies “manage” their users.
Personally, I think it’s stupid for cable companies not to just charge companies like Netflix for access to their cable boxes. But, greed really does blind them. They still think that they can position themselves as the sole provider of content.
dollared
@Brachiator: Apple/carrier? I can’t see it. I could see them buying a content network first.
And yes, the Kindle takes Amazon down a long path to competing with Apple on all form factors. Kindle is being run by the former VP of Microsoft Windows product strategy. All things to all people….
And Apple’s threat to Intel is about ARM. They can license ARM and own their own processors. Or JV with Qualcomm. Qualcomm has been simply brilliant over the last five years, moving into this space.
trollhattan
My Appletise is primarily derived from cursing itunes, so anybody who can help ensure I never own an iphone gets a gold star from me.
stormhit
@RareSanity:
In terms of Windows Phone 7, it’s really going to depend on how much marketing pressure they ramp up with the 7.5 release and Nokia coming on board. I’m not convinced the launch last fall was anything but a place holder to get a toe back in the market and to establish the app ecosystem. That aspect seems to actually be going fairly well, but only releasing one round of hardware last fall with very little hadware or carrier advertising support isn’t the way to making any marketshare in-roads.
me
@dollared: Apple bought PA Semi, a CPU design company, and already have an ARM license so that is more then hypothetical. Apple probably wishes they’d bought ARM before it became something the DOJ would object to.
Brachiator
@dollared:
Good point. I don’t follow this aspect of the industry, but hasn’t Intel been late to the party in terms of supplying chips for smartphones and tablets?
As an aside, I find some stuff about PC hardware to be both puzzling and amusing. For example, I keep seeing stuff about laptops and other devices with 3D, which nobody really seems to want. And I don’t understand why every desktop, laptop and applicable device does not come with USB 3.0 standard, instead of continuing to go with USB 2.0 and a smattering of 3.0. Yeah, I know that cost may come in, but I would think that speed would be highly desirable, especially since people are buying cheaper external drives with greater capacity.
Martin
@RareSanity:
Those devices take too long to get into the market, and the cable companies are only interested in DVR options anyway because there’s money there, so that’d need to be built in, and that’s non-trivial.
Cap'n Magic
Nokia rode Symbian way too long and shortchanged Maemo/Meego when both looked like they could actually get some traction, and bit the Redmond apple of death.
Martin
@James K. Polk, Esq.:
That number is very suspect, btw. There’s 130M Android devices out there according to Google, and they’re adding .5% per day? Something isn’t adding up there. And a lot of those devices aren’t smartphones. Some aren’t phones at all. Microsoft used to count DOS/Windows based retail POS systems as evidence of consumer choice and devices available for software adoption.
If there were 600K consumers choosing Android each day, their traffic/app numbers shouldn’t be so much below the iPhone’s which is selling at a known 200K per day.
Martin
@me:
Apple and MSFT make the costs known. They sell the OS. Google hides the cost. They sell you and as part of that deal, they retain specific kinds of control over the platform.
Nothing in life is free, kid. It’s all costs known or unknown, but the costs are there.
How can Mots competitors differentiate their products when Google dictates specific features that their phones must support, provides the OS features, and presumably not tailors the OS to Mots market strategy, and Mot to Google’s, including sharing of information that other Android partners won’t get? There’s a real cost to the other handset makers there that Mot won’t face. Google is trying to have it both ways and it isn’t going to end well for the platform.
dollared
@Brachiator: Yup, Intel was so worried about crushing AMD that they forgot to figure out the next market.
And PC configuration is perplexing. Overall, remember that nobody is investing in the space. So…3D makes no sense for me (on phones?! Why?!), but it must be super cheap to implement and the PC manufacturers must think that movie watching is a must-have user scenario. And USB 3.0 must cost money to implement. I wonder also, without knowing bit transfer rates these days – does it matter that much to be able to transfer to a local device any faster than the speed of your wireless connection?
Sadly, I think the answer is that if were implemented on the iPod, it would be a must have…..
burnspbesq
@James K. Polk, Esq.:
The average consumer is an idiot. And they’ll know soon enough that they made a bad choice.
me
@Martin: There were many companies using Android without paying Google a cent (see Barnes and Noble). They didn’t use the parts that Google kept to themselves, Gmail app and such, but now they have to be afraid of someone else coming up behind them and beating them up with patents. As far as Motorola goes, it’s in Google’s interest to cause their partners to flee so it’s absurd to think that their going to give Motorola priority and like I said above they’ll probably sell or spin them off if they can’t find a buyer as quickly as possible.
burnspbesq
@Brachiator:
We must run with very different crowds. Most people I know want their mobile devices to work 100 percent of the time in predictable ways, and don’t much care about anything else. Put another way, they are users, not tinkerers.
RareSanity
@Martin:
No, it’s not trivial. That is all the more reason to put forth the argument that as a cable company, you benefit from having an extremely flexible software platform in the next generation of set-top boxes.
Martin
@dollared:
What are they winning? They’re winning marketshare to sell advertising on. That’s basically it, and what they’re winning is getting increasingly expensive relative to what they’re earning. Apple is banking more cash each quarter than Google has in total revenues. Google is trying to further expand and saturate the ad market indirectly, a strategy that I can’t see scaling well over time, given how much of the market they already have.
Now, with this move the game shifts quite a lot for them. Instead of all moves being in support of collecting personal information and selling ads, which for their history has been their sole business model, they’re now going to make handsets presumably to be sold under the existing carrier model. That’s a HUGE business model change, not one to be taken lightly, and one that in many ways is in conflict with the primary business model.
So, they may be winning something, but I’m not sure what it is. Marketshare is only useful if revenue/profits follow to justify the marketshare cost, and Google isn’t saying if that’s actually happening. Usually companies like to brag about what’s working. So when you see Apple and everyone else bragging about profits or about revenues, but Google bragging about how many activations you should wonder why Google isn’t talking about the stuff that really matters.
dollared
@Martin: Yes, yes and yes. There is no way to argue with Apple’s cash flow. Google’s goal has been dominant market share of web activity, and from that dominant share of web advertising. Underneath that was a belief that hardware could not be an infinitely scalable, hugely profitable business.
These concepts predate Apple’s explosion, and FoxConn’s invention of mass paid slavery in support of Apple, which removed all the scale limits on Apple’s business. We may be seeing Google simply buying patents in the Moto transaction, or we may be seeing Google trying hard to apply what they’ve learned from Apple’s explosion.
It’s fun to watch, but I do wish I had bought AAPL five years ago.
Joel
Computer patents have gotten ridiculous.
RSA
@burnspbesq:
This is a good approximation of the average computer user.
Martin
@dollared:
@Brachiator:
@me:
Apple co-founded ARM and is the largest ARM partner. They don’t need to own it. In fact, they benefit quite a bit from it being the way it is, much as Google benefitted by not owning Motorola – the two way street just ended.
The threat to Apple, specifically the Mac, is instruction set. Intel is effectively the only game in town for the Mac and that’s a big problem. If you look back at the impediments to Apple, particularly once the mismanagement was addressed, you find that every barrier to Apple’s success was something from outside the company that Apple couldn’t control – from retail experience (solved by Apple Stores), to developer tools (Metrowerks solved by XCode), to embedded technology (postscript, display postscript from Adobe), to CPU/instruction set (PPC solved by moving to Intel) to little things like lack of print drivers, etc. Apple has steadily grown by exerting greater and greater control over their products and their sales and as a result the customer experience.
Every single time Apple took out one of those impediments they grew. For many critical things, Apple is now the dominant buyer – flash memory, touch screens, batteries, even assembly – Apple buys more of these things than anyone else and they buy any given product spec in massive volume. They effectively control these markets as a result, so they don’t need to own them. This is why nobody can compete with Apple on thin laptops – nobody can make the cases because Apple owns that market almost outright, let alone the specific batteries and screens. However, they’re still a smallish player for Intel CPUs. They’re not yet a big player for wireless radios – particularly when they want universal ones where everyone else ships different phones for different carriers. And they’re a big player for music sales, but not yet for TV/movie sales. Other places where Apple may want to gain control.
These are the kinds of problems that Apple will want to gain control of, so either they’re going to move the Mac to ARM CPUs, or they’re going to gain control of the x86 instruction set, either buy buying Intel or becoming the largest buyer of Intel CPUs.
And to be clear on the carrier plans – Apple wouldn’t run it like a conventional carrier. They’d push out coverage and switch to a handful of flat pricing models. No massive, massive upcharge on texting (you realize carriers charge more per 130 character text message than they do to stream a movie from Netflix, which is over a million times more data?) or separation of phone/data. Pay this per month, here’s your phone, no hidden fees, no fucking around. It’d cost more for most people, but dealing with them wouldn’t fill you with the sense of dread and anger that people usually reserve for their dentist. And having a data network would allow Apple to include built-in data services to further differentiate their products. If you look at the cloud plans, Apple is basically giving you free storage for content through their services. I’d imagine they would benefit significantly from being able to push free bandwidth for content using their services. Why wouldn’t they want to give you free bandwidth for OS updates, for example? They want you to update. Why make you then pay extra to do that?
tBone
@dollared:
As opposed to all of the Android OEMs, who have their devices constructed by merry elves in Magic Gumdrop Unicorn Land?
Martin
@dollared:
I bought in mid-97. Took ages to convince my wife to let me carve off part of our home downpayment money. It seemed like a lot to a pair of 20-somethings. Today she wishes we had dumped it all in AAPL and rented for 2 more years.
Still sitting on 90% of what we bought.
Mike
This was the first I heard of them cancelling App Inventor, and I am baffled as to why they would do something so stupid. The good news is that they are going to open source it, at least, which means that the tool will probably grow and expand at a much greater rate now. Can you imagine Apple or MS open sourcing anything that they put in the garbage can? Thanks, Google!
The only problem is that app inventor is a “cloud based” tool, so who the heck is going to host it for free?
Martin
@dollared:
Foxconn has been around doing this for ages. Most laptops were built by them. And even if Apple was doing the final assembly, a lot of the finished components that they would be assembling would be coming from Foxconn – PCBs, stuff like that which is out of Apple’s control (and the fact that they’re being made in the same factory as iPhones is a big reason why iPhones are made there).
I’m all for arguments why the US should do more manufacturing, but those arguments need to recognize the reality of how manufacturing works in these sectors, and call for meaningful changes – and not just having the last step of the process brought domestically while 99% of the production chain remains as-is.
Djur
Can you tell me where to buy an iPhone with a physical keyboard, please? It’d really help me with my work.
dollared
@tBone: Touche. However, it doesn’t change the fact that we shouldn’t be importing goods made under those labor conditions.
dollared
@Martin: Agreed. For all categories, we shouldn’t be importing goods made under those conditions.
phil
As @BDeevDad: pointed out Palm is now part of HP, and they have plenty of experience in both manufacturing hardware and producing software.
Brachiator
@burnspbesq:
You have apparently and wisely avoided the Device Religious Wars. All the geeks insisting that Apple is evil because it is a closed system, puts all kinds of restrictions on app developers, etc, while Android is an open system, and so on.
My boss only uses Android and disparages Apple. He points out that many of the features in the upcoming iOS 5 already exist in the Android market, but he ignores the areas where Apple has innovated and modified these processes to make them more reliable and usable. And yeah, he is a tinkerer.
The IT guys only use Android, and try even to avoid touching an Apple device. A couple of the sales people have Android phones, but depend on the IT guys to set them up and customize them for them. A core of young support guys all have iPhones, but they are heavy gamers and have all “jailbroken” their iPhones so that they can add non-Apple apps and processes.
If you ever listen to Leo LaPorte, you learn that while he loves the iPhone camera, he is an Android user specifically because he, like many in the tech world, value the more open aspects of Android and the ability to customize these products. His funniest faux pas was in getting the notoriously nontechie Bill Handel (KFI radio) to buy an Android phone. Handel could never figure out how to operate the thing. He could barely turn it on. He ended up getting an iPhone and is much happier.
I agree with you that there are tons of people who just want their devices to work. But the industry and the direction of innovation are dominated and pushed by tinkerers, who sometimes have to be reined in by more practical hands.
DZ
I hope that some of you bought Motorola Mobility. There was real money to be made there today.
Uncle Clarence Thomas
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@Djur:
Can you tell me where to buy an Android phone with four physical keyboards, please? It’d really help me with my work.
.
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Herbal Infusion Bagger
“It’s fun to watch, but I do wish I had bought AAPL five years ago.”
A friend, who wasn’t an Apple user, asked me whether she should be buying Apple stock back in the Gil Amelio days when it was $4-8/share.
To my surprise, she still speaks to me.
me
@Martin: If Apple bought a carrier and did that I’d be very impressed, although I think it’s unlikely. They’d be better off buying a smaller one, like T-Mobile or Sprint, rather than Verizon or AT&T which would be a very large pill to try and swallow plus there’s no way to buy them without the landline service which Apple wouldn’t want.
Brachiator
I didn’t realize that Motorola Mobility had revenues of $3 billion and a loss of $58 million for the last quarter.
It’s going to be interesting to see what Google does with this purchase, if it is approved. The grumbling begins.