Supercharging Android: Google to Acquire Motorola Mobility ;).

Since its launch in November 2007, Android has not only dramatically increased consumer choice but also improved the entire mobile experience for users. Today, more than 150 million Android devices have been activated worldwide—with over 550,000 devices now lit up every day—through a network of about 39 manufacturers and 231 carriers in 123 countries. Given Android’s phenomenal success, we are always looking for new ways to supercharge the Android ecosystem. That is why I am so excited today to announce that we have agreed to acquire Motorola. 

Motorola has a history of over 80 years of innovation in communications technology and products, and in the development of intellectual property, which have helped drive the remarkable revolution in mobile computing we are all enjoying today. Its many industry milestones include the introduction of the world’s first portable cell phone nearly 30 years ago, and the StarTAC—the smallest and lightest phone on earth at time of launch. In 2007, Motorola was a founding member of the Open Handset Alliance that worked to make Android the first truly open and comprehensive platform for mobile devices. I have loved my Motorola phones from the StarTAC era up to the current DROIDs.

In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we’re thrilled at the success they’ve achieved so far. We believe that their mobile business is on an upward trajectory and poised for explosive growth.

Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.

Motorola’s total commitment to Android in mobile devices is one of many reasons that there is a natural fit between our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere.

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

The combination of Google and Motorola will not only supercharge Android, but will also enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences. I am confident that these great experiences will create huge value for shareholders.

I look forward to welcoming Motorolans to our family of Googlers.

Posted by Larry Page, CEO

Who said? Larry Page said ;).

Wi-Fi cars hitting the information superhighway ;).

More cars are hitting the information superhighway thanks to new automotive Wi-Fi technology that allows vehicles to become rolling “hot spots.”

Analysts say consumers are warming to the notion of more connectivity in their cars, with “apps” for information and entertainment just as they have with their smartphones or tablet computers.

“Initially, putting Internet access in the car sounds like a distraction and frivolous but as time passes it will become a part of our lives and we will feel uncomfortable not having access,” said Jeff Kagan, an independent telecoms analyst.

“I think this is going to grow into a vibrant sector.”

Market research firm iSuppli said it expects a surge in worldwide shipments of car Wi-Fi systems to 7.2 million units by 2017, from just 174,000 in 2010.

Wi-Fi has been around for several years as an aftermarket accessory but many major manufacturers now offer some form of Wi-Fi or are developing it.

Ford has been offering Wi-Fi in selected models since 2010 and some form of Internet access is also offered by many other major automakers including General Motors, BMW, Audi, Saab and Chrysler.

In mid-March, Finnish telecom giant Nokia announced the launch of a Car Connectivity Consortium of 11 companies with common technical standards, including vehicle manufacturers Daimler, General Motors, Honda, Hyundai, Toyota, and Volkswagen.

Autonet Mobile, a California-based firm that touts itself as the “first Internet-based telematics and applications service platform” for the auto market, has over 10,000 US customers using its CarFi service at $29 a month, said chief executive Sterling Pratz.

The group recently signed agreements with General Motors and Subaru.

Pratz told AFP that consumers are looking for better entertainment options for passengers in their vehicles and use Wi-Fi for videos, gaming and social networking.

“They feel there is a better way to stay entertained in the car compared with the DVD player. They lead a connected lifestyle and when they get in the car they feel disconnected,” he said.

A next step, Pratz said, is other types of applications that can allow parents to monitor speeds of their teen drivers and to find their car if it is stolen.

Autonet, which started in 2005 and has funding from venture capital firms, only operates in the US market but Pratz says he plans talks with European carmakers and is considering Asia as well.

In Europe, Audi is using a system from Marvell Technology and Harman Automotive to create a factory-installed mobile hotspot, allowing up to eight devices to be connected.

“I believe today’s consumers want the convenience of seamless connectivity and live content whenever and wherever they choose — whether in the home, office, classroom or automobile,” said Weili Dai, Marvell’s co-founder and vice president in announcing the system.

“Finally, the car is connected to the rest of our lives.”

Saab meanwhile has announced its own system based on Google’s Android operating system, dubbed IQon, touted as “a completely new car infotainment user experience.”

The Swedish automaker will allow third-party developers to develop “apps” by accessing 500 signals from different sensors in the vehicle.

“With Saab IQon, there are no limits to the potential for innovation,” said Saab’s Johan Formgren. “We will be inviting the global Android developer community to use their imagination and ingenuity.”

Analysts say the market is likely to grow as more applications become available — for entertainment, navigation or even for diagnostics of the automobile.

Yet a key question for developers of the technology is whether to offer Wi-Fi as a separate data system or allow consumers to bring their own.

Ford’s Wi-Fi system called MyFord Touch, which is added to its SYNC connectivity for mobile phones and music players, offers no separate data plan but instead allows consumers to plug in their own devices — smartphones, tablet computers or wireless cards.

This not only allows consumers to avoid a new data fee but enables easier adaption of a rapidly changing market for wireless devices, said Ford spokesman Alan Hall.

“We created the ability for a customer to bring in their 3G and 4G devices, and the car can take that signal and turn it into a Wi-Fi signal for four or five passengers in the car,” Hall told AFP.

Ford expects to have this Wi-Fi system on 80 percent of its cars sold in North America within four years, Hall said, and is also launching the system globally next year.

Doug Newcomb of the auto research firm Edmunds.com said the Ford strategy appears to make more sense rather than asking customers to pay an additional monthly data subscription.

“Several years ago before smartphones and the iPad, (a separate Wi-Fi system) might have made more sense,” Newcomb said.

“Now, people are saying, ‘If I have an iPad with 3G why would I need this in the car, why should I pay for another data plan?’… I think the focus now will be how to incorporate the smartphone into the vehicle.”

Who said? Rob Lever said ;).

China’s WoPhone to compete with iOS and Android OS ;).

China Unicom, one of China’s three largest wireless operators, plans to introduce its own mobile operating system to compete head-to-head with Apple’s iPhone and Google’s Android OS in China.

The Wall Street Journal reported on Monday that the wireless operator, which is building a third-generation wireless network that competes with China Mobile and China Telecom, is developing a new mobile OS brand known as WoPhone.

The new operating system is based on Linux, and it’s geared toward mobile handsets and tablets. Companies that plan to build devices using the new OS include China’s ZTE, Huawei Technologies and TCL. South Korea’s Samsung Electronics, US-based Motorola, and Taiwan’s HTC are also building devices using the new OS, China Unicom’s parent company, China United Network Communications Group, said in a statement on Monday.

For more on this story, read China Unicom to take on Apple, Google with OS on CNET News

Who said? Marguerite Reardon said ;).

Smart Phone OS Breakdown: Pretty Colors Edition ;).

Now this is how you make a chart. Cold hard facts and figures are already irresistible, but Nielsen has done one better by organizing data about  US smart phone subscribers into attractive, colorful infographics. The chart shows the distribution of mobile operating systems by manufacturer, which gives Apple and RIM some nice big bars for their respective platforms. With their iPhone and Blackberry products, each company controls 27% of the US smartphone market. HTC is the next most successful manufacturer, with a 12% market share for its Android devices and 7% for its Windows Phone 7 handsets.

When considering OS penetration, Android managed to squeak past the iPhone and Blackberry marketshare with a leading 29% cut. Windows Phone 7 isn’t doing too badly for itself–10% seems like a decent portion of the market for such a young OS. A second chart, posted below, demonstrates the smart phone breakdown by age.

These results are remarkably even–while Windows Phone 7, webOS and Symbian obviously post smaller numbers, almost every bar shows a pretty consistent distribution of phones among age groups. Android has a 2% advantage in the 18-24 range, while RIM has a modest 1% edge among 45-54-year-olds.

Who said? Wesley Fenlon said ;).

Report: Google, Facebook consider buying Twitter ;).

NEW YORK – Google Inc. and Facebook Inc. have both held low-level talks with Twitter Inc. about purchasing the privately held social networking service, according to a report published Thursday.

The talks have valued Twitter at $8 billion to $10 billion, The Wall Street Journal said, citing unnamed people familiar with the matter. The Journal said the company had 2010 revenue of $45 million but lost money as it hired and invested in data centers.

Investors have shown keen interest in social networking services in recent months. Last month, daily coupon website Groupon raised $950 million in financing after reportedly turning down Google’s offer to purchase it for $6 billion. Facebook, which is privately held, is also said to have received $500 million in new funding last month, including $450 million from wealthy Goldman Sachs clients living outside the U.S., and $50 million from a Russian investor.

Also last month, LinkedIn, a social networking site geared toward professionals, filed to go public in an initial public offering worth up to $175 million.

Twitter and Facebook declined to comment. Google did not immediately respond to a message seeking comment.

Google’s stock fell $3.08 to $613.42 in afternoon trading.

Who said? AFP said ;).

Yahoo Decides to Friend Facebook ;).

Yahoo Inc. watched as social-networking website Facebook Inc. stole the attention of users and grabbed a major share of the online-advertising market.

Now the Internet pioneer is following an old mantra: If you can’t beat ’em, join ’em.

After struggling for years to develop services that compete with the social network, Yahoo in recent months has installed tools such as Facebook’s “Like” and “Share” buttons on its news and sports websites in order to help Yahoo users share articles with their contacts on Facebook, among other things.

Yahoo, like other content providers, is seeking to leverage Facebook’s huge user base to draw more traffic back to Yahoo after readers click on the sharing buttons. The moves also are aimed at ensuring that links to Yahoo content appear in the search feature on Facebook’s site. Yahoo is using similar approaches with Twitter Inc., the Internet messaging service, and Zynga Game Network Inc., which offers online social games.

Yahoo hopes the moves will solve one of its biggest problems—a 10% slide in the time users collectively spent per month on Yahoo sites last year, according to research firm comScore. Yahoo’s internal research shows the main culprit for the slide is Facebook, people familiar with the matter said.

 

“‘Frenemy’—part friend, part enemy—is where Yahoo finds itself with Facebook,” said David Karnstedt, a former senior vice president of North American sales at Yahoo and currently chief executive of online marketing firm Efficient Frontier.

The enemy part, Mr. Karnstedt said, is that Facebook’s ad business is big and growing fast, sometimes at Yahoo’s expense. “The friend part is that Yahoo has stopped trying to get people not to go to Facebook and decided it was better off enabling that, largely because it didn’t have a real choice,” he added.

“I think ‘frenemy’ is not the right word. That implies more enemy than friend,” said Dan Rose, Facebook’s vice president of partnerships and platform marketing.

Yahoo Chief Executive Carol Bartz recently called Facebook her company’s top competitor. That is certainly true in U.S. display ads, a market that reached nearly $9 billion in 2010. Yahoo was No. 1 with 16.2% of the market, down from 16.5% in 2009, according to research firm eMarketer. Second-place Facebook saw its market share rise to 13.6% from 7.3% the prior year, eMarketer said.

“They’re a hot site, but there’s room for more than one of anything,” Ms. Bartz said at an event in December.

Some others at Yahoo stress recent collaboration with Facebook. “They’re a partner, and a good one at that,” said Mike Kerns, Yahoo’s vice president of social, games and personalization, in an interview. “We view them and their platform as a great opportunity to both distribute Yahoo and its partners’ content” and “to enhance user experience” on Yahoo.

Mr. Rose, Facebook’s vice president of partnerships, said the company doesn’t think of Yahoo as a competitor. “We’ve had a strong partnership in place with Yahoo for over a year, and we anticipate partnering with them even more deeply in the future,” he said. “Our interests are aligned to help people connect and share content with their friends from wherever they are on the web.”

By contrast, search giant Google Inc., which rose past Yahoo in the Web-search market during the last decade, has recently invested in developing a social-networking-type experience that could rival Facebook’s, people familiar with the matter have said.

So far, Yahoo’s partnership with Facebook hasn’t reversed negative trends. Last year it began letting users of its email service to access Facebook without leaving Yahoo, hoping to keep users there longer. Blake Irving, Yahoo’s chief product officer, said in an interview late last year that the feature “has not been seeing mind-blowing use.”

But he added that social networking is “an open playing field” and the company was developing new ways to help users stay connected with the “small groups of people that actually matter to you,” rather than a vast network of hundreds of people—including work colleagues and casual acquaintances—that many people now include as “friends” on Facebook.

As Facebook becomes a key place where people discover content such as news articles, Yahoo also sees an opening to provide technology to online content providers such as newspapers so they can better control of how users find and interact with their content, rather than leaving it up to Facebook and others.

For example, last week Yahoo made a public pitch to magazines and newspapers to use its software to reach users of tablets such as Apple Inc.’s iPad with features such as flashy, interactive graphics and photos. Yahoo didn’t name any partners.

Shifting Course

Yahoo launched or bought several social-networking-type services before ultimately forging partnerships with Facebook:

YEAR	EVENTS
2005	Launches Yahoo 360 social network; buys Flickr photo-sharing site
2006	Tries to buy Facebook; deal falls apart
2007	Stops developing Yahoo 360; starts Yahoo Mash
2008	Yahoo Mash abandoned; launches Yahoo Updates
2009	Talks to Facebook about possible partnerships
2010	Lets users access Facebook and Twitter content while on Yahoo; adds Facebook “Like” and “Share” buttons to more pages; launches Yahoo Pulse
2011	Allows users to “log in” to Yahoo using Facebook, Google credentials.

Source: The company; WSJ research

Who said? Amir Efrati said ;).

Facebook’s Web of Frenemies ;).

Facebook Inc.’s growing ambitions are redrawing battle lines in Silicon Valley.

As the seven-year-old company ramps up its hiring and adds new features to its social network, it is disrupting the businesses of established companies like Yahoo Inc. and Google Inc. and putting even more Internet firms on notice.

Facebook, which has more than 600 million users and was valued at $50 billion in a recent funding round, is grabbing online-advertising from Yahoo, Myspace and others. The social network is a potential rival in electronic payments to eBay Inc.’s PayPal, while partnerships Facebook is cementing with smartphone makers set the stage for competition with Apple Inc. and Google in mobile services.

Meanwhile, Facebook is tussling with Google and Microsoft Corp. for top engineers.

As a result, many Silicon Valley companies increasingly have to decide whether to treat Facebook like a friend whose reach and user data can help propel their own growth, or a foe that can become a destructive force.

“Facebook is both a great competitor and a benefactor here in Silicon Valley,” said David Cowan, a venture capitalist at Bessemer Venture Partners in Menlo Park, Calif. “Anyone who’s trying to get the attention of the young Internet user now has to compete with the dominant position that Facebook has there. On the other hand, they have opened up a lot of opportunities.”

Facebook executives aren’t shy about their aspirations. “We think every industry is going to be rebuilt around social engagement,” Chief Operating Officer Sheryl Sandberg said.

Facebook already helped spur a new crop of videogame companies designed around interacting with friends, Ms. Sandberg said, adding, “News, health, finance, shopping and commerce—we think similarly, all of these things will be rebuilt by companies that work with us to put social at the core.”

So far, Facebook’s key battleground has been in online marketing.

In just two years, Facebook’s share of online display ads has surged to 13.6% from 2.9% of the U.S. market, which reached $8.88 billion in 2010, according to research firm eMarketer.

Facebook’s growth comes at the expense of companies such as Yahoo and AOL Inc., and the site is also likely taking ad money away from traditional media like newspapers and TV.

Yahoo has stopped trying to compete directly with the social network and instead integrated Facebook features into its sites, hoping to halt a slide in the time its users spend on Yahoo each month.

Myspace, which like Yahoo has struck some partnerships with Facebook, declined to comment. Myspace and The Wall Street Journal are owned by News Corp.

Jeff Levick, the president of AOL advertising, said he viewed the rise of Facebook as “complementary” because the companies are “running two very very different businesses.”

AOL, he said, focuses on monetizing the content that Facebook users share. “The more high quality content we produce and is shared, the traffic comes back to us,” Mr. Levick said. The top advertisers who are working with both companies are spending more with AOL each quarter, he said.

Facebook likely had revenue of $1.9 billion to $2 billion last year, mostly in advertising, one person familiar with the company has said.

Facebook has recently introduced ad formats that incorporate users’ networks of friends—even their names, photos and postings—into the ads.

And Facebook has also turned its attention to the local advertising market, launching its own location check-in and deals services that bring together elements of sites such as coupon site Groupon Inc. and business reviews service Yelp Inc.

Groupon and Yelp declined to comment.

Facebook is likely to tread on more toes as it builds out what’s known as a platform for the Internet, which other websites, cellphones and now even cars can use to build their own offerings to allow people to take their friends and preferences with them.

Some 2.5 million websites have so far tapped the platform, which lets them populate blog posts, news articles, product listings and other pages with Facebook’s “Like” button.

With its platform play, Facebook is positioning itself as a partner to other tech companies—even Google, which allows YouTube users to share videos with their Facebook friends.

“The foundation of a platform is one where people want to build on top because there is equal value exchange,” said Dan Rose, Facebook’s vice president of partnerships and platform marketing.

Still, Mr. Rose said Facebook intends to participate in new businesses that emerge from the use of its platform.

One case in point: Game developers such as Zynga Game Network Inc., among the first to find massive growth on Facebook’s platform, now have to pay a kind of tax.

Last month, Facebook said it would require all game developers on its platform to use its in-house Credits, a virtual currency for buying things in games. Facebook takes a 30% cut from all Credit sales. Zynga declined to comment.

Facebook could later extend its Credits system to other areas of commerce, including physical goods, potentially making it a competitor to PayPal and Amazon.com Inc.

Mr. Rose didn’t rule that out, but said the company had no current plans to do so and was focused on virtual goods for now.

PayPal President Scott Thompson plays down any rivalry with Facebook.

He said his company partners with Facebook, which lets people pay for Facebook Credits with PayPal. Even if Facebook gets deeper into payments, he said PayPal will be well-protected. “Payments is really, really hard to do,” he said.

Yet many Silicon Valley firms are wary of Facebook’s control over its platform and have turned elsewhere.

Online-dating service Zoosk Inc. launched in 2007 as an application on Facebook, where it experienced fast user growth. But in mid-2008, co-founder Shayan Zadeh decided Zoosk needed to expand to other platforms such as Myspace and its own website. It began to ask its Facebook users for their real email addresses, instead of just relying on Facebook as a means of communication.

Mr. Zadeh said he was concerned that some shift in Facebook’s business model or platform strategy could destabilize Zoosk. “If you want to be a long-term established business, you have to establish a direct communication line,” he said. Today, Zoosk has about 15 million to 20 million active monthly users; only about 20% of new users come through Facebook.

Facebook executives also have their sights set on smartphones, where they hope to become more integrated in the software on the handsets. Last week, INQ Mobile, owned by Hutchison Whampoa Ltd., unveiled a handset for the U.K. that prominently features contacts, photos and other data from users’ Facebook accounts. More such arrangements are expected soon.

Such activity increasingly puts Facebook on a collision course with Google, Apple and others in mobile advertising. Mr. Rose said Facebook could eventually make money off its mobile efforts through ads and Credits, but doesn’t have any plans for it at the moment.

Google declined to comment on Facebook, but in an interview last, year Chief Executive Eric Schmidt said the two companies compete for talent but not for ad dollars and that Facebook users use more Google services than any other users. He also said that “you’re assuming that if they do well we do poorly,” but “winners tend to all do well.”

Who said? Geoffrey A. Fowler said ;).

10 Ways Google is the New Microsoft ;).

February 11, 2011

Google (GOOG) is the new Microsoft (MSFT). Something tells me you’ve heard that one before. By my count, people have been saying that since 2005. But the question remains: Is it really a fair comparison?

Slideshow: 10 Cool Things You Didn’t Know About Google

Microsoft dominated the desktop computer industry for the past 15 years with purported ruthlessness and cunning business savvy. These days? Don’t look now, but the role of the tech industry’s biggest bully and most dominant force is increasingly played by Google.

If you compete with Google, you’d better be looking over your shoulder. Its search engine algorithm alone can make or break a business.

From privacy issues to market dominance to passion among fans and detractors to government scrutiny, Google and Microsoft share more similarities than you may realize.

In 2005, Microsoft cofounder and CEO Bill Gates had this to say about Google: “They are more like us than anyone else we have ever competed with.” Far be it from me to argue with Bill Gates. Let’s take a look at just how similar these two technology megacompanies are.

1. Core Dominance

The most obvious similarity between Microsoft and Google involves each company’s ability to dominate its core industry. Microsoft has had well over 90 percent of the desktop operating system market since the days of Windows 95 and Windows XP. There are signs that Microsoft’s dominance may drop significantly in the next few years due to the proliferation of devices running mobile operating systems, but Windows is still the king of the desktop.

Google doesn’t have more than 90 percent of the search market, but there’s no question that the company rules the search world. Google had nearly 67 percent of the search market in December, according to Comscore; the closest competitor was Yahoo (YHOO), at just 16 percent of U.S. searches.

The biggest source of Google’s online dominance is Web-based advertising. Google owned 83 percent of the highly lucrative online search advertising market worldwide in 2010 and 81 percent in 2009, according to metrics firm IHS Screen Digest. The search giant is making big gains in other areas of digital advertising, too: Google grabbed 59 percent of the U.S. mobile advertising market in 2010, up from 48.6 percent the previous year, according to IDC. (PCWorld and IDC are both owned by International Data Group.) That’s a rise of nearly 11 percent in just 12 months. Google’s acquisition of mobile ad network AdMob in May contributed to the company’s massive leap in mobile advertising.

2. Monopoly Mania

The downside of dominating an industry is that you’re an immediate target for antitrust allegations. Microsoft experienced this during the late 90s and early 2000s, with accusations of unfair business practices against competitors such as IBM (IBM), Real Networks, Gateway, Netscape, and Apple (AAPL).

(See: “Microsoft Declared a Monopoly“)

Google’s antitrust headaches have just started, with European legislators looking into how it treats itssearch and online ad competitors. The company is also meeting fierce opposition from the online travel industry following its announcement of its intention to buy ITA Software, a flight-data aggregation company.

3. It’s the Platform, Stupid

The core strategy for both Microsoft and Google has been to create a platform that keeps the user in each company’s ecosystem. Microsoft led the way in the 1990s by distributing the most popular desktop operating system ever and offering tools that played nice with Windows, such as Microsoft Office, Internet Explorer, and early online “cloud-based” services like Hotmail.

Google has tried to emulate that success by building an array of Web-based tools that encourage users to stay in the Googleverse, such as Gmail, Google Docs, Google search, and Google Maps.

In addition, it’s making a big push to popularize Web apps through its Chrome Web store and the forthcoming Web-focused Google Chrome OS. Google also recently stepped up its game in encouraging third-party development for its Android mobile operating system, with new features such as a Web-based store for browsing apps and an in-app payment system.

Microsoft faced little challenge to its ecosystem in the 1990s, while Google faces formidable challenges from Apple’s iOS platform for mobile devices and Facebook’s continuing push to become the dominant platform on the Web.

4. Apple Rivalry

Microsoft is the new IBM, Google is the new Microsoft, and Apple is the new…Apple?

After the release of Windows 95, Microsoft ate away at Apple’s business, driving the Macintosh maker into a niche market. Microsoft’s strategy of distributing Windows on as many platforms as possible was a huge success, a contrast to Apple’s distributing of the Mac OS only on its own computers.

Fast-forward to 2011, and Google is trying to beat Apple’s iPhone and iPad using a similar strategy: Although you will find iOS only on the iPhone and iPad, Android is on pretty much everything else, including devices from HTC, Motorola (MOT), Samsung, and Sony. Android’s smartphone market share is steadily overtaking that of iOS.

The most recent numbers from Nielsen say that new smartphone users are choosing Android devices over iPhones by nearly 15 percentage points, while the iPhone platform maintains an overall lead of about 3 percent. It hasn’t happened yet, but Android is threatening to push iOS devices into a niche market much as Microsoft shoved aside Apple’s Macintosh.

5. From Rebel to Lumbering Giant

Microsoft started out as the plucky disruptor that popularized the PC graphical user interface through wide distribution and lower pricing compared with Apple’s Macintosh OS. In a similar vein, Google was able to dominate search thanks to its amazingly relevant search results and its bare-bones homepage that featured the search box and nothing else.

Google’s uncluttered front door and its eerie ability to deliver highly relevant results distinguished it from competitors such as Ask, MSN, and Yahoo, all of which sported incredibly busy home pages, provided less-relevant results, and failed to make a clear distinction between sponsored ads and regular search results.

But as each company has dominated its respective industry, each has had to deal with the transition from fast-moving startup to technology behemoth.

Microsoft was supposed to produce a slew of updates to its Windows Phone 7 devices in early 2011, but at the time of this writing it had yet to release even one update since introducing Windows Phone 7 in October. Google is trying to escape Microsoft’s fate by reinjecting a startup mentality into the company. Many observers believe that this is part of the reason Google is shaking up its management structure by removing Eric Schmidt as CEO in favor of Google cofounder Larry Page.

6. Trust Us

Believe it or not, Microsoft, not Google, was once seen as the big, scary technology company trying to steal your data. In 1999, Microsoft had to address suspicions that the National Security Agency had a backdoor into Windows that allowed the NSA to peek at users’ encrypted data. Then, in 2001, Microsoft revealed a big plan for its Passport universal sign-in feature, which would store each user’s name, password, address, e-mail address, and credit card credentials online to encourage people to shop on the Web. The Passport plan was met with fierce opposition, however, because no one wanted to trust Microsoft with their data.

Today, Google is dealing with all kinds of privacy concerns over Google Street View‘s taking pictures of people’s homes, Google’s recent Wi-Fi sniffing snafu, the company’s saving of search histories, theGoogle Buzz privacy breach, and on and on. And, oh yeah: Google has also had its fair share ofaccusations about dealings with the NSA.

7. Hooked on Googlesoft

Want to get people to use your stuff and forget about going with the competition? Just pile some basic tools into your platform that are handy and free. Microsoft first bundled Internet Explorer with Windows to battle Netscape. Other tools packed into Windows include MSN Messenger, WordPad, and integration with Hotmail–and who can forget MSN Explorer for that AOL-like experience? Google has taken Microsoft’s free-software strategy to the extreme with Google Docs, Gmail, Google Translate, Google Voice, Calendar, and Google Maps turn-by-turn navigation in Android. Google has also been accused of favoring its own products–such as Google Maps and YouTube–in its search results.

8. Competition Crusher

A tweak in Google’s algorithm can send online businesses reeling from a significant drop in Web traffic. This is part of the reason the European Commission is looking into Google’s search practices following antitrust complaints from sites such as price-comparison service Foundem and French law-related search tool eJustice. Microsoft’s tactics, in its heyday, were far more aggressive: For example, the software giant was accused by RealNetworks of pressuring PC makers not to install RealNetworks software on Windows PCs by default. And IBM said Microsoft pressured manufacturers not to offer computers running IBM’s OS/2 system.

9. Me-Too Products

Despite each company’s dominance, both Microsoft and Google have tried to insert themselves into business areas that have never quite worked out for them. After TiVo was introduced, Microsoft attempted to break into the DVR market with its own version called Ultimate TV. Microsoft’s Virtual Earth mapping program followed Google Earth, and the Zune MP3 player followed Apple’s iPod.

Google, meanwhile, has been desperate to get into the social networking game, with products such as Orkut and Google Buzz. Both have managed to grab only a niche audience. Whether it can compete against Apple’s Apple TV or Roku’s set-top box with its own Google TV remains to be seen.

(See: “Top 10 Google Flubs, Flops, and Failures“)

10. Brain Drain

Once upon a time, every software engineer wanted a job at Microsoft. It was the “it” place to work, thanks to the company’s healthy compensation packages and exciting projects. Google eventually overtook Microsoft as a desirable place to work, offering perks such as free laundry rooms, dry cleaning, snacks galore, recreation rooms, bouncy balls for work stations instead of chairs, and the much-ballyhooed 20 percent time for working on experimental projects.

(See: “Visual Tour: Visiting the Googleplex“)

Change is in the air now, though, and Google is steadily losing employees to the new “it” place to work: Facebook. Google Wave creator Lars Rasumussen and former Google exec turned Facebook COO Sheryl Sandberg are just two high-profile examples of people leaving Google for Facebook. Things have reportedly become so bad that Google is trying to retain its employees with bonuses and pay raises.

The tide appears to be turning in favor of Facebook. And that prompts one question: If Google is the new Microsoft, is Facebook the new Google?

Who said? Ian Paul, PC World said ;).

RIM, Nokia, DoCoMo united against Google’s menace ;).

Google [1]’s growing influence in the mobile [2] industry is clearly proving worrisome to some established device makers and operators, a few of whom put up a united front against the search giant during a round table at Mobile World Congress in Barcelona on Wednesday.

Leaders of Research In Motion, Nokia, and NTT DoCoMo talked about their strategies for working together to face the threat.

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Nokia is aiming for “an environment where the relationship between the services providers, handset manufacturers, and operators are in an appropriate balance,” said Stephen Elop, Nokia’s CEO. “Our philosophy is to be the most operator friendly,” he said.

Google presents a conundrum for some of the established companies in the mobile industry. Its Android [4] software helped hardware makers such as Motorola turn around their fortunes and has helped operators sell more data contracts. But other phone makers, like Nokia, opted not to use Android [5] for fear that the platform would corner too much of the market and stifle innovation.

Google is also offering lots of services to mobile users that mobile operators would prefer to offer.

“What’s most important for the network operators is how to avoid being reduced to a dumb pipe,” said Ryuji Yamada, president and CEO of NTT DoCoMo. “We are susceptible more than ever to the risk of becoming a dump pipe … and we are determined to avoid that by all means.”

He said one way to avoid that fate is for operators to offer intelligent services from the cloud. But the example he gave is a DoCoMo service that translates languages, similar to one that Google demonstrated at this same conference last year, noted Ben Wood, an analyst with CCS Insight.

Yamada acknowledged that such services can be offered by third parties but didn’t say much about how the operator might beat out Google. “It’s a race between these two different camps,” he said. “Being the network operator, we are in the best position to know what the network is capable of.”

RIM [6] appears to be working hard to try to help operators ward off competition from the likes of Google and others. “There may have to be a Google translation service and a Nokia location service but at the end of the day it better be a DoCoMo service overarching [that directs customers] to their bill and branding and distribution or the alternative is a bit pipe with a programmable SIM,” RIM co-CEO Jim Balsillie said.

RIM this week rolled out some new capabilities aimed at helping operators hold on to their relationships with customers. For instance, it offers the capability for operators to let customers “gift” applications or airtime to others, with the charges showing up on their mobile bill. RIM also announced that Telefónica and Vodafone would start letting users pay for applications from the RIM application store on their regular bills.

Operators want to bill customers because they think it helps build a relationship with users and because it could allow for new sources of revenue. With Apple and Android, for instance, most end users pay for apps with their credit cards through the respective application stores and so the operator doesn’t get a share of the revenue from apps.

These days, any time a CEO from a company that provides services to end users meets with an operator, the operator is trying to size up the goals of that company, Balsillie said. The operators are wondering if they can trust the company and if its business model has a sustainable business structure for the operator, he said.

“The structure of the industry is very much in flux,” Balsillie said. He said the issue of what role the operator will play is the most relevant issue of the industry currently.

Who said? Nancy Gohring said ;).

2011 will be the year Android explodes ;).

Ever-improving networks and a big hardware announcement that will send handset prices plummeting both point to smartphone growth in 2011 that could totally eclipse anything we’ve seen before.

Smartphones have been growing at an unbelievable clip over the past year but they still account for only around a third of all phones in the US and an even smaller percentage internationally.  In developing countries, the price of smartphones, aside from some ‘quasi-smart’ Nokias (NOK) are out of reach for all but the elite. India and China each have billion plus populations and growing middle classes, but neither country is even at a 10% market penetration of smartphones.

Globally, market intelligence firm IDC counted 269.6 million smartphones sold this year, compared to the 173.5 million units shipped in 2009.

In 2011, we might see half a billion phones sold worldwide.  Smartphones will likely blow by traditional computers next year as the way most of the world gains access to the Internet.

Two major factors will drive this, in tandem: Wireless infrastructure is getting better every day, and hardware is getting cheaper.  Cheaper hardware will eliminate the need for subsidies and therefore will improve competition between carriers, and spur them to improve their networks.  Google (GOOG) Android head Andy Rubin calls this a ‘perfect storm‘ for smartphone adoption.

A closer look at price: In 2010, the cheapest mainstream Smartphone was just below $200(unsubsidized by a carrier contract– the way most of the world buys its phones). Some extremely cheap (but feature rich) Chinese brands have recently fallen to around $150. But based on the hardware announcements we’re seeing, including one big player in particular that price will be cut in half:

 

Broadcom (BRCM)  last week announced its BCM2157 – Mass-Market 3G HSDPA “Android” Baseband chipset.  The platform provides everything a modern smartphone builder needs: a dual core ARM processor, Bluetooth, GPS, support for up to a 5-megapixel camera, support for capacitive HVGA (320×480 like iPhone 3GS) or or WQVGA (~240×400) displays.  That’s pretty much your current baseline Android smartphone, like the Samsung Intercept.

The chipset will work on AT&T (T) and T-Mobile’s 3G networks in the US and on global GSM providers.

It is interesting to note that Broadcom is marketing this hardware specifically at Android OEMs, though theoretically any smartphone OS could be built on top of it.  Android is clearly the platform for growth on the low end.

I had a chance to speak with Jim Tran, VP/GM – Handset Line of Business for Broadcom, who was able to elaborate on the details of the new processor and what it meant for the industry.  Here are some of Broadcom’s bullet points:

• The BCM2157 baseband, since it combines many functions on one chip, is able to run more efficiently, meaning less battery power will be needed than on current basic handsets
• Low-cost, low-power, 65 nm digital CMOS process means the silicon will be cheap
• The dual-core processors will run at 500-800mhz.
• Supports portable Wifi hotspot and Android 2.2 and up

But the kicker is the price.  Tran says that phones made from the BCM2157 chipset will retail for under $100 and may dip as low as $75.  Those devices should debut in just 3-6 months (and we might hear about them next month at CES).

By this time next year, Broadcom says it will release a follow-up chip that will allow WVGA displays and as much power as today’s high-end Smartphones at the same $75-$100 prices.  That Nexus S that costs $530 now off contract will cost just a fraction of that in just one year.

Broadcom isn’t the only chipmaker taking aim at this new market.  There is another chipmaker out of China building the same type of chipset for 3G EVDO Rev. A, the type of network that Sprint and Verizon use.  They also say that they can get retail prices below $100.

To be clear, That sub $100 price is not the cost of materials, it is the suggested retail price after the manufacturers (and carriers) have taken their profits.

Those prices will have many feature phone users saddling up with smartphones. And they may open the emerging Asian markets, like India and China, to smartphone customers on a large scale, for the first time ever. That means many more smartphone users and many more Google and Android users, too.

How cheap smartphones change the American cell phone market

Perhaps more importantly, at $100, many first-world shoppers will forgo the subsidized two year contracts and instead choose month to month plans.  That price point takes the power away from the carriers.  If T-Mobile is having a special and I can just take my AT&T phone over without being hit with early termination fees, the carriers are much more likely to compete for customers.

That, in turn will likely push data prices down.  We are already starting to see this happen.  Virgin offers a $25/month unlimited data plan off contract.  T-Mobile offers a limited $10 date plan off contract.  AT&T has tiers that start very low.

Consumers used to feature phone monthly costs of $30/month may even opt to forgo wireless data altogether, instead choosing to use the smartphone’s built in Wifi radio to surf near-ubiquitous Wifi in homes, at work and about town.  To entice low end smartphone users away from just using Wifi, carriers will have to make affordable data plans.

Cheap smartphones could change the way carriers price contracts here in the U.S.

Whatever the case, if you thought Android going from 30,000 activations a day to 300,000 activations/day was impressive, 2011 might be an even bigger growth year for Android.

Growth targets are just starting to trickle out, but HTC, who make high end Android devices and a few Windows Phone 7 devices expect to triple their 2010 output in 2011. Yet if things play out the way Rubin, Google, Broadcom and HTC hope, even that may wind up being a conservative estimate for Android growth. What’s most interesting is that unless Apple (AAPL) has a plan to keep up, their iPhone, once one of the only usable smartphone games in town, may wind up back where most Apple products are slotted– at the top of the market, affordable only to those willing and able to pay a premium for Steve Jobs’ aesthetic sensibilities.

 

Who said? Seth Weintraub said ;).