Tag Archives: Google

Google stock downgrade

Posted on by

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

Posted on by

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.

Related articles

Google’s crocodile tears

Posted on by

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.

Related articles

Don’t be evil?

Posted on by

“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.

Android is open

Posted on by

And if you believe that, I have some land in Florida to sell you.

Skyhook is suing Google and had some interesting things to say about the “open” operating system.

Related articles

Facebook tries to smear Google

Posted on by

Facebook seems to have authorized an attempt to plant false stories about Google privacy issues in an attempt to smear their competitor. It all blew up.

For the past few days, a mystery has been unfolding in Silicon Valley. Somebody, it seems, hired Burson-Marsteller, a top public-relations firm, to pitch anti-Google stories to newspapers, urging them to investigate claims that Google was invading people’s privacy. Burson even offered to help an influential blogger write a Google-bashing op-ed, which it promised it could place in outlets like The Washington Post, Politico, and The Huffington Post.

The plot backfired when the blogger turned down Burson’s offer and posted the emails that Burson had sent him. It got worse when USA Today broke a story accusing Burson of spreading a “whisper campaign” about Google “on behalf of an unnamed client.”e in outlets like The Washington Post, Politico, and The Huffington Post.

But who was the mysterious unnamed client? While fingers pointed at Apple and Microsoft, The Daily Beast discovered that it’s a company nobody suspected—Facebook.

Confronted with evidence, a Facebook spokesman last night confirmed that Facebook hired Burson, citing two reasons: First, because it believes Google is doing some things in social networking that raise privacy concerns; second, and perhaps more important, because Facebook resents Google’s attempts to use Facebook data in its own social-networking service.

Amazing. And it confirms my reason for dropping Facebook like a bad habit a couple of years ago. They do not respect their members’ privacy and they try to hide the ball to lure users into opening up otherwise private data to be used profitably by Facebook. Not to put to fine a point on it, but Facebook is scum.

Related articles

It sucks to be RIM

Posted on by

Poor RIM.

Research In Motion Ltd. (RIMM), facing intensifying competition from Apple Inc. (AAPL) and Google Inc. (GOOG), plunged in late trading after cutting profit forecasts on slower-than-expected demand for BlackBerry smartphones.

Profit this quarter will be $1.30 to $1.37 a share, Waterloo, Ontario-based RIM said today in a statement. The company last month forecast profit of $1.47 to $1.55 a share. Sales in the quarter ending May 28 will be “slightly below” the $5.2 billion to $5.6 billion the company had forecast.

RIM said BlackBerry shipments will be at the lower end of the range of 13.5 million to 14.5 million it projected last month, and the mix of devices will shift toward cheaper models.

After hours today, RIMM ended down over 11%.

iPhone does not equal iOS

Posted on by

iOS is Apple’s mobile operating system. Applications from the iTunes app store will run on any iOS device. iOS devices are the iPhone, the iPad and iPod Touch.

If you are a software developer trying to decide between developing for Android or for Apple’s iOS, you would likely be interested in the total number of users of each. While Android proponents have lately claimed that Android has a larger share of the phone market than iOS, they are ignoring a huge portion of the iOS installed base.

Google Inc.’s Android might be the most popular smartphone platform, but if you add other mobile devices like tablets to the mix, Apple Inc.’s iOS beats Android in the U.S. by a wide margin — 59% to be exact.

That’s according to new data being released Tuesday by measurement firm comScore, which surveyed 30,000 users of mobile devices for the three months ending in February to arrive at its estimates.

The research found that Apple’s iOS platform — on iPhones, iPads and iPod Touches – reached 37.9 million people, while Android reached 23.8 million, on phones and tablets.

The other data point that such developers might wish to examine is the average amount spent on applications by iOS users and Android users. Again, iOS is much, much higher than Android.

The iPhone and iPad user is interested in buying content–that’s one of the reasons they bought the device. The Android buyer is different. It’s a great phone–make no mistake about it. But if you really want first rate digital content on a device, your first look will probably be an iPhone. And on the tablet, an iPad.

So, which platform would you choose for your development efforts?

Disclosure: I own Apple stock.

 

Related articles

The new (closed) Android (updated)

Posted on by

As I have written previously, “closed” is the new “open” in Android city. And now it is becoming even more closed, according to Bloomberg Business Week.

Playtime is over in Android Land. Over the last couple of months Google (GOOG) has reached out to the major carriers and device makers backing its mobile operating system with a message: There will be no more willy-nilly tweaks to the software. No more partnerships formed outside of Google’s purview. From now on, companies hoping to receive early access to Google’s most up-to-date software will need approval of their plans. And they will seek that approval from Andy Rubin, the head of Google’s Android group.

This is the new reality described by about a dozen executives working at key companies in the Android ecosystem. Some of those affected include LG, Toshiba, Samsung, and even Facebook, which has been trying to develop an Android device. There have been enough run-ins to trigger complaints with the Justice Dept., according to a person familiar with the matter. The Google that once welcomed all comers to help get its mobile software off the ground has become far more discriminating—especially for companies that want to include Google services such as search and maps on their hardware. Google also gives chip and device makers that abide by its rules a head start in bringing Android products to market, according to the executives.

You can’t really blame Google for taking back such control and it is likely actually in the interest of consumers.

The key to success in the consumer tech market is to deliver the best possible experience for users. The telecom carriers are a huge barrier to delivering a service that pleases the consumer, because the carriers are trying to maximize revenue and minimize actual service. The carriers are neither able to tweak Android (or any software designs) to please customers nor interested in doing so. Do you remember the nature of software on telephones prior to the launch of the iPhone.  Features were allowed or blocked at the whim of the carriers.  Interfaces were ugly and unintuitive.  Crapware was everywhere on the devices.  And filling a mobile phone with mandatory carrier crapware is not the road to success. And, even worse, the carriers have been largely incapable of pushing out significant Android software updates to their customers.

However, while Google may be doing the right thing, their continued claims of “openness” increasingly ring hollow.

Disclosure: I own Apple stock.

Update: Be sure to check out John Gruber’s take on this as well.

So here’s the Android bait-and-switch laid bare. Android was “open” only until it became popular and handset makers dependent upon it. Now that Google has the handset makers by the balls, Android is no longer open and Google starts asserting control.

Related articles

So much for open (updated)

Posted on by

I thought that the secret strength of Android was that it was open source, and not a “walled garden” like iOS.

So much for that.

Perhaps the competition from Apple is becoming too much.

Disclosure: I own Apple stock.

Update: More from The Register.

In October, when Steve Jobs publicly called Google’s claims of openness “disingenuous”, Android chief Andy Rubin responded with the first tweet of his life:

the definition of open: “mkdir android ; cd android ; repo init -u git://android.git.kernel.org/platform/manifest.git ; repo sync ; make”

In others words, Rubin says open means that you can use a command line to create a directory, download the Android source code, and build your own OS.

By that definition, Honeycomb is not open. Sometimes, Steve Jobs is exactly right.

 

Related articles

Closed v. open (updated)

Posted on by

One of the selling points of Android devices is that they are open. Anyone can sell any app for the devices, and rooting the devices is easy.

On the other hand, there are closed devices, like the iPhone and iPad. In these devices, while you can hack your way in to install unauthorized apps, the normal user must buy apps from the Apple app store.

Which is better? It is a personal opinion, but here is something to consider: more than 50 Android apps have been found infected with malware.

For portable devices, aimed directly at consumers and used primarily for media consumption,  the safety of a well-stocked and curated apps marketplace handily beats an fully open platform for most users.

Update: Jason Kincaid has more.

Google has now confirmed that 58 malicious applications were uploaded to Android Market, and that they were downloaded onto around 260,000 devices before Google removed the apps Tuesday evening. That number sounds alarmingly high, but Google believes that only device-specific information, namely the phone’s IMEI number, was compromised — and that no personal data or account information was ever transferred. Given that these apps were getting root access, this could have been a lot worse. Now the cleanup begins.

Beginning tonight, Google is going to invoke a special ‘remote kill’ function that allows it to remove these malicious applications from any affected Android devices with no action required from the user. Google will also be issuing a fully automated Android Market security update to infected devices that should remove the rootkit (again, no user action will be required). All affected users will be receiving email notifications about the situation as well.

Unfortunately, while Google can remotely fix affected devices, it can’t automatically patch the security hole that made the exploit possible in the first place. That’s because the hole exists on the system level, so it requires a system upgrade to resolve — and it’s up to the carriers and hardware manufacturers to deploy the fix. Google is issuing a patch and informing its partners that it is urgent, but who knows how long it will take the carriers to push it to users.

This just reinforces the risks of “open” systems on phones. Who needs the increased risk of losing info or even the use of your phone like this?

 

Related articles

Tech quote of the day

Posted on by

“Hey, we tried to get [Microsoft] to do a tablet OS (operating system) for a long time. Us, and others like Dell.”

– Tom Kilroy, senior vice president and general manager of Intel’s Sales and Marketing Group, blaming Microsoft for the lack of a credible Windows-based tablet to challenge the iPad.  I fear that the famous Windows/Intel partnership is fraying rather rapidly under continuing pressure from Apple and Google.  You can reach chapter and verse on this result from Horace Dediu at asymco:

At this year’s CES two unthinkable things happened:

  1. The abandonment of Windows exclusivity by practically all of Microsoft’s OEM customers.
  2. The abandonment of Intel exclusivity by Microsoft for the next generation of Windows.