Tag Archives: Google

Android is dead man walking

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And that is not (merely) my opinion.  It is the view of Antonio Rodriguez:

More specifically, three events in 2011 burned it [Android success] and we’re now holding on to a charred corpse that is quite different: an Android so splintered that it will make the glass on your Galaxy Nexus S2 Prime Pie dropped on concrete look like an ice skating rink.

The three events: 1. Google buying Motorola and alienating all of the tier one handset makers (none of which to this day have the spine to state it publicly but all of which have now come up with their “plan B”), 2. Microsoft extracting licensing fees from these same handset makers in the form of IP indemnification and 3. Amazon shipping a wildly successful, yet unidentifiable, version of an old Android build over the holiday… and making it a wild success. Of the the three, #1 was completely avoidable but the other two may just have been the name of the game when there is so much at stake in the fight of who paints the interface for the next generation of computing.

…

It not a particularly well-kept secret that when WebOS was in its death spiral, HP would happily pay developers to port any application which had shown traction to their platform. To my knowledge the Android tier one handset guys have not done this yet, but given a little time it may become a reality. There will still be all sorts of headaches involved, and you might be better off taking the love from Microsoft, but in a world of several warring Androids, you are the scarce commodity. Though the more popular splinters such as Amazon’s will likely never have to pay for developers, especially given the fact that with only one Christmas under their belt, they are already outperforming the standard Google Market in terms of downloads for some app categories, the rest will, probably in inverse proportion to how valuable they will be to getting you users. And in the meanwhile consider them non-dilutive equity financing sources.

Read the entire piece. Not good news for Android, but he promises another post on iOS which is said to provide warnings for that side as well.

I think he is onto something with a very clear explication that goes beyond the typical “Android as a platform is splintered” claims that many make.

And there is this:

The iPhone 4S, along with cheaper older models, has helped Apple close the distance on Google’s Android, drawing within a few percentage points in recent smartphone sales market share in the U.S., according to the NPD Group. In a CES telecom fact sheet, the research firm said that iOS has zoomed up to 43 percent of sales in October and November, compared with 26 percent in the third quarter. Meanwhile, Android’s share dropped from a high of 60 percent in the third quarter to 47 percent in October and November.

By the way, the same NPD survey said the top three phone models were the iPhone 4S, the iPhone 4 and the iPhone 3GS.

Whatever you think about the above, one thing is clear: RIM is not the walking dead. It is the inert, immobile, and truly dead.

There are exciting, nail-biting day ahead for investors, my friends.

Disclosure: I am long APPL.

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How profitable are Android-based phones?

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Well, if you look at the numbers, it is a good question. MG Siegler takes a look.

The three largest Android OEMs are Samsung, HTC, and Motorola. Samsung just posted record quarterly profit. So far so good. But HTC just reported its first profit drop in two years. And Motorola just warned that its 4th quarter sales were going to miss as well. When you have to warn ahead of actual earnings, that’s a very bad sign.

So one of the three top Android OEMs is doing well. The other two are doing poorly. This matters because of what it means for the future.
If OEMs aren’t actually making much money as a result of Android, why would they keep using it? Well one reason is if Google buys you, as is happening with Motorola. But what about HTC? You can bet they’re asking themselves this question.

Every OEM in the industry is looking at Apple and drooling when it comes to profits. (Making money is what matters at the end of the day for a company after all.) That includes Samsung. If you actually read the story about their record profits, you’ll note that a large part of those profits is a one-time gain from selling their hard-disk drive business. The phone business may be doing very well, but you can bet those profits are not Apple-level profits.

Disclosure: I am long APPL.

So much for open

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Google Android fans and promoters continue to call the Android operating system “open” in contrast to Apple’s iOS.

But how open is this?

Google Inc. says Verizon Wireless is keeping it from building its new mobile payments application into a new line of smartphones powered by the search giant’s Android operating system.

Verizon, which is pushing a competing mobile payments platform, will begin selling the Galaxy Nexus this month. But the smartphone, developed by Google and Samsung Electronics Co., but it won’t include the Google Wallet, a payment and rewards app that is key to Google’s attempt to tap the local-business advertising market.

And, while we are on the topic of Android, some of its openness leads inexorably to huge security risks.

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The enemy of my enemy is my friend

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Business competition can generate strange bedfellows and here is a good example. According to an article in The Daily, Microsoft is busy working on bringing Microsoft Office to the iPad (and a new version of Office for the Mac). Given that Microsoft is planning to launch a touch-based tablet operating system as a major part of Windows 8 sometime in 2012, why would they want to help Apple sell more iPads now?

The reason seems clear: to better compete with Google by weakening the attraction of the Android platform, while simultaneously using the huge number of iPad users to mount an assault of Google Docs, which is a direct competitor to Office.  Further, Microsoft Office is a huge seller on the Mac and therefore is actually a major generator of revenues for Microsoft. Finally, establishing an Office beachhead on the iPad is way for Microsoft to hedge the risk that their own tablet efforts fail to generate significant earnings.

Interesting times.

Tech quote of the day

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I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong.  I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this.

– Steve Jobs, as quoted in the new biography Steve Jobs by Walter Isaacson. The book goes on sale Monday. Click the link to pre-order from Amazon.

Tech quote of the day

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Image representing Andy Rubin as depicted in C...

Andy Rubin

I don’t believe that your phone should be an assistant.

– Andy Rubin, co-head of Android software development at Google.  I think that millions of iPhone 4S users already disagree, less than a week after launch.

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Google stock downgrade

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In reaction to Google’s purchase of Motorola Mobility, S&P has downgraded Google stock from “buy” to “sell.”

After further consideration of GOOG’s plans announced yesterday to purchase Motorola Mobility, we see greater risk to the company and stock. We expect the transaction to be consummated next year, but later than early 2012, which GOOG indicated. Moreover, despite MMI’s extensive and valuable patent portfolio, we are not sure it will protect Android from IP issues. We also believe the purchase of MMI would negatively impact GOOG’s growth, margins and balance sheet. Based on revised DCF analysis, we are cutting our 12-month target price.

While the deal might provide some patent defense to Google in connection with its Android platform, it also means that Google will be a direct competitor to other Android phone manufacturers. If the other manufacturers leave the Android platform, Android’s ability to attract developers and continue to grow will be threatened.

Reactions to Google’s acquisition of Motorola Mobility

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Overall, it is looking like a highly questionable (and perhaps desperate) move:

Henry Blodget:

…let’s be real: This deal could end up being a disaster.

How?

Well, for starters, the deal creates major channel conflict: Google is now competing with its partners. And hardware manufacturing is an entirely different kind of business than Google’s core business. And hardware manufacturing is a crappy, low-margin commodity business. And Motorola is massive–Google has just increased the size of its company by 60%. And the deal appears to be purely a defensive move, not an offensive one. And so on.

Dan Lyons (aka Fake Steve Jobs):

…today it all makes sense. Google just sandbagged its rivals. The whole thing was a rope-a-dope maneuver. Google never cared about the Nortel patents. It just wanted to drive up the price so that AppleSoft (those happy new bedmates) would overpay. Today, with the Motorola deal, Google picks up nearly three times as many patents as AppleSoft got from Novell and Nortel. More important, Google just raised the stakes in a huge way for anyone who wants to stay in the smartphone market.

Better yet, Google got its rivals to spend a few weeks defending the practice of using patents to attack other companies. Apple fanboys bent over backward to say that Apple was doing the honorable thing here by suing everyone in sight. All this slimy patent warfare that is so despicable when others do it becomes magically noble when Apple does it. Teaming up with other companies, including the evil Borg, to gang up on Google is all perfectly legitimate, par for the course, smart business practice, blah blah.

Arik Hessedahl:

To say that Google is going to face some opposition to its proposed $12.5 billion acquisition of Motorola Mobility is what you might call a bit of an understatement.

First of all, the deal will give a lot of fresh meat to the U.S. Federal Trade Commission, which is already investigating several aspects of Google’s business, including its Android mobile operating system business. As The Wall Street Journal reported last week, investigators from the FTC and from the offices of several state attorneys general have been exploring whether or not Google prevents phone manufacturers who become Android partners from using the smartphone operating systems of other companies.

MG Siegler:

Both Apple and Microsoft already have ongoing patent lawsuits against Motorola itself. These thousands of patents Google just acquired, while important, are not necessarily the full deterrent they need.

As usual, FOSS Patents has a great breakdown of all of this, if you’re really interested.

As for Lyons’ assertion that Google simply maneuvered the Nortel situation in such a way to drive up the price for their competitors — that’s laughable. If he would look over the court documents for how this played out, he’d see that Google itself bid upwards of $4 billion and at a few points, nearly won the auction for several billion dollars.

Both Apple and Microsoft (and Google, for that matter) have billions of dollars that really are burning a hole in their pockets. Eventually, they need to figure out how to spend this money. Does anyone think Apple is sweating dropping $2 billion (their reported share) on valuable patents when they have nearly $80 billion in the bank?

Chris Ziegler:

Overall, the theme across Android licensees’ initial statements is unwaveringly supportive at this point.

Considering that Google’s primary goal is to shore up Android’s shaky patent situation, that comes as little surprise — though the striking similarity in some of the messaging suggests that Mountain View may have applied some pressure to show a unified front today. Regardless, the ball will be in Google’s court going forward to make sure that these guys aren’t put at a competitive disadvantage against Motorola — a move that could drive them away from Android altogether and into alternatives like Windows Phone, as Nokia’s statement seems to imply.

And what about the folks that really decide: investors?

Well, today GOOG closed down 1.16%, MSFT closed up 1.63% and AAPL closed up 1.70%.

Disclosure: I am long AAPL.

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Google’s crocodile tears

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Google’s chief legal officer posted a piece on the official Google blog, whining complaining that some of Google’s rivals were ganging up to file software patent lawsuits focused on Google’s Android operating system. He specifically claimed that Microsoft and Apple have gotten “into bed together” to harm Android and Google, by purchasing patents that could apply to Android.

This was probably another bad PR move on the part of Google.

For one thing, Google uses what are essentially monopoly profits in online search to fund Android, which it gives away free to all comers. Free Android is an attempt to replicate Google’s search monopoly online in the mobile space, and it is hardly a charitable activity for the good of users.

Second, there is a little firm up the coast from Google you might have heard about: Microsoft. Microsoft, of course, knows something about anti-competitive behavior.  In response to Google’s claim that others were ganging up against it, here is what Microsoft’s general counsel Brad Smith had to say reply:

Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no.

I might paraphrase by suggesting to Google that one shouldn’t bring a knife to a gunfight. TechCrunch posted an article characterizing the tit-for-tat between Google and Microsoft thusly:

Google threw a punch, Microsoft fires back with a missile.

That is the headline, but if you click through be sure to check out the full URL of the TechCrunch piece.

Anyway, the bottom line is that Google would be well advised not to play the pity card carelessly. And maybe they might think about not letting the chief legal officer post in the future without a very careful review by a knowledgeable PR-type. Although, truth be told, I don’t know that there is such a person at Google, a company with a long history of gaffes.  One of my personal favorites:

Last month, Schmidt, Google’s chief executive, suggested that anyone who didn’t like their house appearing in photographs on Google Street View could “just move”, while appearing on an American talk show.

The truth is that software patents can be misused as a type of shakedown scam targeting smaller tech firms with great ideas. However, Google is well-positioned to respond to any inappropriate claims by either Microsoft or Apple. They should not try to paint themselves as helpless in this fight.

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Don’t be evil?

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“Don’t be evil” is Google’s informal motto. Since the FTC is launching a major anti-trust probe of the company, according to the WSJ, we may find out how true it is.

The FTC’s preparations to subpoena Google are the first concrete signal that its commissioners have decided there is enough evidence to move forward with a formal investigation. The FTC’s probe is expected to take a year or more to unfold. Though the outcome is uncertain, the agency fought hard with the Justice Department to handle the case, said people familiar with the investigation, and so is thought to be unlikely to walk away without taking any action. The FTC and Justice Department share responsibility for enforcing federal antitrust laws.