Posts Tagged ‘Google’

First and foremost Apple sells a polished user experience. Apple sweats the details. From the moment you walk into the store the experience is polished and first rate. Unboxing your purchase continues the experience. Even Apple’s service group, AppleCare, is different. You get lots of attention from people who know what they are doing. Apple hardware has a lot of refinement. The OS feel is consistent and people consistently talk about Apple products as intuitive and easy to use.

I have written about convergence and transparency. These two trends play right into Apple’s strengths. Apple is selling more and more laptops because people have purchased iPhones. People who have purchased iPads are now buying iPhones. The release of OSX Lion moves the laptop closer to iOS. The iPhone and the iPad use the same OS. This means transparency of use. But, for the first time, I see Apple moving backwards. Their new policy requires that Apple receive 30% of any in-app purchase. I can see how Apple reached this point. Games would be offered for free in the Apple App Store. Once you started playing the game, you found out you had to do an in-app purchase to go beyond level 3. Apple saw this as a direct end run around their app store policies in order to avoid paying Apple their cut. Admittedly, at 30% that cut is big and hence companies, especially small ones, are highly motivated to avoid this form of app store “tax.” None of this is a big problem as long as we are talking about games. Things are different when it comes to magazines and books.

So far the best example of the move towards transparency has been the Kindle ecosystem. There are Kindle apps for just about every device. There are apps for Android, iPhone, iPad, Mac, and Windows. If you buy a book through any one app it is available on all of the others. Bookmarks are shared. You can read on your tablet, pick up on your phone and finish up on your laptop. In every case, when you move to a new device, the app knows where you left off on the old one. This is transparency of use in action. Now Apple is working to hinder that transparency.

Reading books is still a transparent experience. However, buying them now involves exiting the Kindle program and using a web browser to go to Amazon.com. You can’t even click a button in the Kindle app and have it open Safari using the appropriate URL. You can in the Mac Kindle app. What should really happen is that the Kindle store should be built into the Kindle app. I suspect it eventually will be on Android. It will never be on iOS devices. Apple’s 30% cut would change a money maker into a loss leader product. Not only is 30% too high, I see no reason Apple should get anything. The books aren’t being bought through Apple’s online store. Besides, it is anticompetitive. It gives Apple’s own iBooks a competitive pricing advantage. The problem is, iBooks isn’t as universal as Kindle. This small chink in Apple’s image is becoming a growing crack. Online forums have end users griping about it. This is a chance for Google to press Apple and change the image of Android vs. iOS.

Until now, Android has been an interesting phone OS beloved by techies for its openness and many features. Most consumers have viewed, and in fact still are viewing, Apple’s iOS as the more polished and bug free operating system for phones and tablets. Apple’s greed could change that. Android gets more and more polished day by day. If in app purchases become the norm for Android and the exception for iOS then consumers will see Android as the easier and more transparent operating system. Imagine the difference is Amazon makes Kindle apps have smooth integration with the Kindle store except for Kindle on Apple devices. As more people buy and read ebooks, this will push them towards Android instead of iOS. All you have to do is read this to see how Apple may be inadvertently causing apps to be less friendly. Android versions of the apps won’t be so limited.

Right now Apple’s new policy has done little other than make Apple richer and tick off some app writers. However, as Android keeps getting stronger, this policy might come to threaten Apple when consumers begin to find buying and reading ebooks and ezines easier and more transparent on Android than iOS.

Moogle Update

Posted: August 24, 2011 in Google, Motorola
Tags: , ,

Despite all of the niceties said by Samsung and others we now see the truth. Samsung doesn’t like Google becoming a competitor. The result is that Samsung is now supporting a Korean effort to develop their own phone OS. Check it out here. My advice to Google still stands. The should sell off Motorola Mobile’s cell phone business.

By now most readers will be aware that Google is buying Motorola Mobility. I started to write about this when I first heard the news but I wanted to think about it and explore the implications and potential reasons. Time is up. Here are my thoughts.

The most straight forward reason is patent defense. When Google lost out to Microsoft and Apple in the bidding for the Nortel patent portfolio it left Google in a very bad position. Android violates several of the Nortel patents. Google launched an offensive claiming Apple and Microsoft were using patents, as opposed to compelling solutions, as a way to attack Google. We must remember that Google also bid for these patents and, had they won, would have probably used them against Microsoft and Apple. Furthermore, an offer to join with Microsoft and Apple in acquiring the patents was rebuked by Google. If the purchase of Motorola Mobility is indeed a defensive play then this is nothing more than another round of that old patent game “I’ll cross license mine if you will cross license yours.” Considering the large amounts of cash Google is sitting on, this might be a very sensible move.

Could there be more to the acquisition than patents? Google has made cell phones in the past when it was jump-starting Android. But, should they be a cell phone producer? In the PC space Apple has been a small closed ecosystem compared to the loose and very diversified Microsoft ecosystem. The result was a larger, cheaper and more diversified hardware and software ecosystem for Windows (Microsoft) compared to OSX (Apple). Recall that, at one time (Apple II), Apple dominated the desktop space. The diversity of the Microsoft based environment resulted in Apple becoming a niche player. Today, despite Apple’s early lead, there is a strong possibility that Android will be the Windows of the smartphone and tablet space. I see no reason for Google to try to “out Apple” Apple. Think of the strange relationship that is going to exist with companies like HTC and Samsung. In the recent past, market pressure pushed those companies towards Google. Apple was closed to them. Microsoft Windows Phone 7 was open but Nokia was clearly customer number one and in a special, preferred customer, position. Now Google is not just a supplier but a competitor. I think Microsoft is secretly happy about all of this. It makes their relationship with Nokia look tame by comparison.

Could this be herd instinct? Apple makes the iPhone. HP bought Palm. Microsoft is in bed with Nokia. RIM makes Blackberry. Perhaps Google fell victim to the “everyone else is doing it” syndrome. Somehow I doubt it. The people at Google are nothing if not sharp. Still, it has happened at this level before.

One possible reason for the acquisition might be to push NFC. NFC requires that very specific hardware be placed inside smartphones. The Motorola Mobility arm of Google could push this. However, I think NFC can be effectively pushed without making the phones themselves. I don’t buy this as a reason for the acquisition.

That brings me to one final reason for the purchase – set top boxes. I have discussed how the real goal is a very broad and unified ecosystem. The TV is a big part of that. Google could merge GoogleTV into the Motorola Mobility set top box units. As a competitor in the set top box space they might be in a good position to drive their ecosystem. I have argued before that consumers don’t like extra boxes and hence AppleTV and even external game boxes (PS3, Wii, Xbox) are interim solutions. The one external box that has some life left is the cable box.  Google could merge the cable box, GoogleTV and Android games into one piece of hardware. Moving between cable product, internet streams and applications could be made very unified and essentially transparent to the consumer.

Summary: This acquisition is all about the patent portfolio and using it as a counter to Apple and Microsoft. However, Google is left with a hardware business that competes with key customers.

My recommendation: If I was willing to tell Apple what to do then why not another multibillion dollar company that is highly profitable? So Google, here is what you should do. Sell off the mobile device arm of Motorola Mobility but keep set top boxes. Keep all of the patents and just license them to the entity acquiring the cell phone business. Finally, merge GoogleTV into the cable box and make GoogleTV fully compatible with Android games. Use your new found cable box presence to drive a broader ecosystem that is more unified than what consumers have now.

I thought about making the title of this post “I’m Right – They’re Wrong.” While I like the cloud for data everywhere and for syncing of data, I don’t believe in data ONLY in the cloud. There has been a lot of press around putting everything in the cloud. The Chromebook is one attempt at this. On the surface, my techie side gets excited. I hear cheap, long battery life, one data set and a unified experience across devices. The major thing I hear is low upkeep. Someone else does most of the application updates and makes sure things work. This last part, however, sounded hauntingly familiar. Then it hit me. This was the promise of thin clients. A long time ago in a different computing world, thin clients were going to save companies lots of money. The clients themselves would be cheaper. Falling PC prices killed that as a major selling point. The second thing was ease and consistency of software maintenance. The problem was that the world went mobile. People couldn’t afford to lose software access when they weren’t on the corporate network. In the end thin clients failed. Fast forward to today. The same issues apply to the Chromebook. Why get a Chromebook when a netbook can do so much more? Then there is the issue of connectivity. What happens when there isn’t a WiFi hotspot around? Are you thinking 3/4G? Think again. Look at today’s data plans and their capped data. Most people can’t afford to have everything they type, every song they play, every picture they look at and every video clip they show go over the network. Local storage can solve some of this but then you have independent data and the programs to access that data on the local machine. In other words you are back to managing a PC again.

Currently I am visiting my sister in Mobile, AL. I realized I needed to freshen up my blog and waiting till I got back home would be too long. No problem I thought. I have my iPad with me and it will be a chance to learn the basics of Blogsy. That’s what I’m doing now but it has been an enlightening experience and is the genesis of this post. What you need to know is that my sister’s house lacks WiFi. Since she and her husband spend a lot of time traveling in their RV, they use a Verizon 4G modem plugged into their laptop. That works for them but it doesn’t help me unless I go sit on my brother-in-law’s laptop. Of course there’s no need for that since my iPad has 3G. Oops! One big problem – the connection is unreliable. Here I am in Mobile, AL, a few miles from their regional airport and I can’t get a reliable data connection. I could launch into an AT&T tirade but that would miss the bigger picture. Mobile, AL is a major city. If I have problems here then what about more remote places? What about other countries? What if I were using a Chromebook? Right now I am writing this post. I will upload it when I have a better connection. I just can’t see buying into a usage model that demands 24/7 connectivity. For that reason I have no desire for a Chromebook. The Chromebook will fail.

Transparency of use is still coming but it will happen in a way that takes into account the issues I have just raised. Apple’s iCloud will sync data and leave a copy on each device. Microsoft Mesh does the same. I still believe that a modified version of this together with the Chromebook approach will win in the end. The difference will be that the modified Chromebook (phonebook?, Plattbook?, iBook?) won’t connect to the internet directly but will be a peripheral device for the phone. Your phone will be your wallet and as such always with you. It will also be your primary data device. It will sync with other devices through the cloud and be backed up to the cloud but interactive data access will be to the phone.

I mentioned that Mango showed that Microsoft could come on strong once they recognized they were behind. I saw a few unexpected features in Mango and it gave me hope that Microsoft was still in the game if very far behind. However, with the release of more information about Windows 8, I am truly surprised. Microsoft really gets it. They see the need for a unified OS across platforms and for a transparent user experience. Furthermore, Microsoft is using its strength on the desktop to leverage itself into the tablet and phone space. This isn’t my pick for the easiest path in general but it is the easiest and best way for Microsoft. More than other releases, Windows 8 will be about an aggressive business strategy. I love it when business, the consumer, and engineering mesh at such an intimate level.

Windows 8 is important on several levels. First, let’s start with the fact that it will not only run on X86 CPU’s but on ARM. Wow! Let that sink in. This means Windows on a CPU that isn’t compatible with the Intel X86 architecture. There will be no emulation layer so current X86 apps won’t run on ARM based hardware. However, this is important in and of itself. Microsoft will be encouraging developers writing lighter apps to write in Java and HTML5 so the apps will be independent of the CPU used. Add this to Apple toying with the idea of an ARM based MacBook Air and you know why Intel is nervous.

The next surprise is the breadth of Windows 8. It is really a tablet  OS where the mouse and keyboard can substitute for touch. You read that correctly. The OS is, in many ways, a tablet OS first and a desktop OS second. This doesn’t mean a compromised desktop OS. What it does mean is an OS with touch infused throughout.  The same OS will run on tablets, laptops and desktops.

They say a picture is worth a thousand words and the next surprise is best illustrated with a couple of pictures. Here is one of Windows 8 on a PC:

Next I have a picture of the home screen from a phone running Windows Phone.

Do you see what I am excited about? Just like Apple, Microsoft is making the desktop OS look and feel like the phone OS. Do you believe me now when I talk about the push for transparency of the computing experience? Now go back to the comment above about Microsoft pushing for apps written in HTML5 and Java. Those will be easy to port to Windows Phone and vice versa. Microsoft may be late but they are coming on strong.

What does this mean on the business side? Obviously the push onto ARM is a threat to Intel and AMD. In terms of the other hardware and software players here is how I see it. RIM is in an increasingly bad position. They have zero desktop presence and Microsoft is stronger in the corporate world than RIM. Windows 8 might seem independent of RIM’s Blackberry world but, in actuality, it has the potential to do great damage. HP may take a hit too. They are betting a lot on WebOS. I don’t see what the value add is for WebOS. Call this one more wait and see but be skeptical. HP could quickly shift to being Windows 8 centric if need be. Heck, they are Windows centric today.  Apple probably fairs OK in the near term. Longer term they might lose some of their momentum. However, I see Apple as the best positioned against Windows 8 if they can continue to move towards merging iOS and OSX. I’m still very strong on Apple. Next up for Apple is iOS 5 and iCloud which will be announced next week. Windows 8 could be problematic for Google. I have trouble believing in Chrome as a desktop OS. Google will still be ahead in the TV space but compared to Microsoft and Apple they lack the desktop. Android is the largest selling smartphone OS and we are about to be inundated with Android tablets including some excellent ones such as the Samsung 10.1. I still see Microsoft being behind Google but it is a lot more interesting than it was a day ago. Apple just made iWork available on the iPhone in addition to the iPad and OSX devices. Microsoft will have Office running across all devices. Will people buy into Google’s idea that web based solutions are the best answer for their productivity apps? People may but only if Microsoft screws things up. Then again, Microsoft mucked things up in the past with poorly conceived products like Works.

I have mentioned PayPal in not one, not two but three different posts. Yesterday PayPal got upset and filed a suit against Google. It’s the usual stuff about stealing employees and with them intellectual property. What it is really about is Google daring to attack PayPal and PayPal getting scared. I suspect this is a pointless battle. Lawyers will make money but otherwise progress will march on. The system will get more streamlined and efficient. PayPal will ultimately disappear or get merged in with an electronic wallet system. It’s not like this is the only attack on PayPal. The credit card companies are also starting to offer PayPal type services.

Google just finished announcing Google Wallet. This is their NFC based payment system. In reality it is a lot more. You can read the details here. I have talked about this before. I don’t want to regurgitate details already covered but I do want to cover a few obvious items and some not so obvious one. The first involves why Google is doing this in the first place. In the near term (more about this later) they are making nothing on the transactions run through Google Wallet. The seeming financial beneficiaries are the store involved, the credit card company and the clearing house. We must ask our selves what Google’s business model is. It’s advertising. Targeted advertising is more valuable and hence able to fetch a higher price than random advertising. In the near term this is all about knowing who you are, where you are, and how you spend your money. If you are getting a little edgy about your privacy there’s a reason. You won’t have any. Google already knows more about you than the government does and that knowledge base is growing. Google Wallet extends that knowledge base. You do get benefits in return. For giving up your privacy you will gain ease of use and discounts on your purchases.

Watching the players in this was interesting. Each took their assigned segment. Google proclaimed they were the altruistic software provider that happened to make money on advertising but nothing else. Sprint  was happy to be the carrier placing the services on the phone. Citi wants to be the bank involved, Mastercard the credit card company and lesser known First Data the clearing house. Then there was the lineup of retailers happy that it would be easier to part you from your money. In many ways, players like Mastercard, First Data and Citi have little choice. This is going to happen with or without them. All of these players will be near term winners. I wonder, however, if any of them have a little fear about the long term future. The immediate losers are companies like Groupon. The retail coupon business is slipping into a Google business unit. Groupon isn’t a very large outfit nor are the others like it. I doubt many will see this as a big deal. A bigger potential loser is PayPal. Not mentioned was the fact that Google Wallet will quickly pick up the capability of PayPal. All of this is relatively near term. What happens later as mighty Google and it’s rivals Apple and Microsoft seek new avenues for increasing revenues? Google, with the world’s most powerful computer network, will have to ask itself why so much of this process, including the profits, goes to others. Perhaps they will decide to become the clearing house and edge out First Data. After that perhaps Mastercard will be a target. I doubt they will want to be your bank but who knows. Some of those faces that were smiling today might be wearing frowns in ten or fifteen years.

For the consumer, Google Wallet and related moves will mean a further increase in retail efficiency. Generally this is a good thing. Purchasing will get easier and tracking purchase will get easier too. Lost receipt issues will go away. Coupons will be easy to use and not a low paying paper cutting  job as it sometimes seems. While privacy will diminish, it will mean advertising that is relevant and generally useful.

I’m a semiconductor guy. What does this mean for the chip business? It means volume in everything related to this process. It means smartphone sales, and the chips inside them, will increase. It means lots of readers being deployed so stores can accept Google Wallet. The reach doesn’t stop there. Behind all of this will be massive data centers and a lot of network bandwidth. That means all of the chips that support these areas have a bright future.