Are we ready for IBM's Smarter Planet?
by John Webster
By now you've surely seen at least one of the IBM "Let's Build a Smarter Planet" TV ads. I like them. They talk about computing possibilities that are truly big-picture. I also believe in the message that IBM is fundamentally delivering in these ads: systems that harvest data from a variety of wired and wireless sources are capable of producing new types of information and solving some important problems. The technologies needed (RFID, pattern recognition, Complex Event Processing, etc.) to turn the vision into reality are here and now.
And while they may put a very new face on a venerable IBM, the ad campaign is very much in keeping with a marketing technique IBM has honed for decades. In the beginning IBM had computers but companies didn't know what to do with them. So IBM had to first show them how to compute. IBM had to sell computing first before it could sell computers. Over time, IBM lost sight of the need to sell computing, relied on just selling computers, and consequently lost its vision. Lou Gerstner brought IBM back to selling computing once again by creating IBM Global Services. Smarter Planet is yet another way to sell computing--one that encompasses a myriad of sensory devices and compute nodes all working within some big harmonious system. Indeed, IBM likes to use the word "orchestration" in this context and talks of systems of systems.
Recently, IBM reported to a gathering of analysts that the C-level people within enterprises worldwide were not only getting the Smarter Planet message, some were able to teach IBM a thing or two about smarter systems they had already built. On the other hand, IBM reported that it was also well aware of potential barriers like perceived cost, resistance to trying new things, and fear. Yes, fear.
Here's an experiment you can try. At your next cocktail party, talk to someone about a retail chain you had heard of that was testing the use of technical gadgetry to enhance customers' in-store shopping experience. Customers identify themselves to an in-store system upon entering the retail space that tracks their positions in the store, knows what they have selected as they move around the store, knows when they are physically close to a special promotion and alerts them to the promotion, and knows how much to charge their credit cards as they exit. There are a number of these but perhaps the one most well known is METRO's Future Store. After you've walked your conversation partner through the high-tech store experience, get a reaction. Is the technology helpful or intrusive? Comforting or in some ways frightening? I'd bet on at least a discomforted response.
In the aftermath of Northwest Flight 253, it is abundantly clear that we want systems that connect the dots when someone is threatening us. We want systems to sift though huge amounts of data that could well be 99.99999 percent noise but for the few data points that say "don't let this guy on the plane." But when systems are connecting our dots we sense that Big Brother is watching.
Personal privacy is more easily surrendered after trust is first established. IBM can only go so far in convincing people that Smarter Planet systems are not only beneficial but trustworthy. After that, we have to trust the people behind the systems. That's the hard part.
John, a senior partner at Evaluator Group, has 30 years of experience in enterprise IT storage, spanning mainframe and open systems environments. He has served as principal IT adviser at Illuminata and has held analyst positions at IDC and Yankee Group Research. He also co-authored the book "Inescapable Data Harnessing the Power of Convergence." John is a member of the CNET Blog Network and is not an employee of CNET.
Saturday, 9 January 2010
Friday, 8 January 2010
The Next Mobile Ad Merger
The Next Mobile Ad Merger
Elizabeth Woyke, 01.07.10, 06:00 PM EST
Google's AdMob purchase and Apple's Quattro deal will likely kick off a new wave of acquisitions.
First came Google, with its November acquisition of AdMob, then Apple with its recent purchase of Quattro Wireless. Now, a host of Internet firms, device makers and even wireless operators are expected to snap up their own mobile advertising networks in the coming months. The challenge? There are only a few--possibly just two--ad firms left that are widely viewed as attractive candidates.
A series of new deals would represent a second wave of merger and acquisition activity for the mobile ad market. The industry experienced an earlier burst of M&A in 2007, when Nokia ( NOK - news - people ) bought Enpocket, AOL acquired Third Screen Media and Microsoft ( MSFT - news - people ) absorbed ScreenTonic. Rajeev Chand, a managing director at Rutberg & Co., says there are three reasons for a resurgence of interest: the strategic growth of the mobile Internet, a renewed interest in making acquisitions as the economy improves, and a greater number of potential acquirers.
Article Controls
Google ( GOOG - news - people ), in particular, is driving the deal-making, says Karsten Weide, program director of digital media and entertainment at researcher IDC. He estimates Google and AdMob together would control 21% of the U.S. mobile ad market, a chunk large enough to give them a comfortable lead over competitors (one reason the U.S. Federal Trade Commission is investigating the purchase.) The disparity will force other tech companies with mobile advertising ambitions to follow suit, says Weide.
Apple ( AAPL - news - people ) was the first to counter Google, announcing its Quattro buyout Jan. 5. Insiders say Yahoo! ( YHOO - news - people ) and Microsoft are likely to be next. Yahoo!, which holds an estimated 10% of the mobile ad market, likely wants to increase its share--and has the cash on hand to make such an acquisition, says Weide. Microsoft, which IDC estimates has an 8% slice of the market, is probably interested due to its "laser-like focus on search," he adds.
Other potential buyers include handset makers, which increasingly view their devices as platforms for tapping into mobile Internet traffic; publishers investing in digital content; and carriers looking for a new way to generate revenue. "Publishers are very interested in the mobile device market," says Noah Elkin, a senior analyst at eMarketer. "The same logic that applies to Apple [buying a mobile ad firm] could apply to a Hearst as well."
AOL is not on most analysts' short lists. The media giant, which is focused on a turnaround, currently lacks the means and "attention span" required for such an acquisition, says Weide.
The choicest targets appear to be Millennial Media and Jumptap, two U.S.-based firms that operate their own mobile ad networks and each command at least 5% of the mobile ad market, according to IDC. Analysts say the companies are likely meeting with potential buyers, or will be soon. Yahoo!, in fact, held talks with Millennial back in 2007, but walked away because the firm wanted too much money, says one analyst. IDC estimates Millennial's 2009 mobile ad revenue at $35 million and Jumptap's at $18 million.
Millennial and Jumptap declined to comment on acquisition rumors, but acknowledged that the AdMob and Quattro acquisitions have spurred interest in their own firms. "For people who thought the AdMob deal was a fluke, the Quattro deal validated the huge opportunity for mobile advertising ... the opportunities are just starting," says Jumptap Chief Marketing Officer Paran Johar.
But will there be opportunities for firms besides Jumptap and Millennial? Other companies, such as Amobee and Greystripe, are small enough that analysts don't track them. "It's hard to know how well [some of these companies] are doing and how much traction they have," says Julie Ask, a vice president at Forrester Research.
Some smaller players contend they're a better value. Bob Walczak, chief executive of the mobile ad tech firm Ringleader Digital, notes that Millennial raised $16 million in new funding in November while Jumptap secured more than $26 million in its last round, in August 2008. "They've put themselves in a higher price category," he says. "They'll have to show a lot of value to warrant an exit to their [venture capitalist investors]."
Analyst Weide says if Millennial and Jumptap garner the same high multiple Google paid for AdMob, they could be acquired for about $600 million and $300 million, respectively.
Elizabeth Woyke, 01.07.10, 06:00 PM EST
Google's AdMob purchase and Apple's Quattro deal will likely kick off a new wave of acquisitions.
First came Google, with its November acquisition of AdMob, then Apple with its recent purchase of Quattro Wireless. Now, a host of Internet firms, device makers and even wireless operators are expected to snap up their own mobile advertising networks in the coming months. The challenge? There are only a few--possibly just two--ad firms left that are widely viewed as attractive candidates.
A series of new deals would represent a second wave of merger and acquisition activity for the mobile ad market. The industry experienced an earlier burst of M&A in 2007, when Nokia ( NOK - news - people ) bought Enpocket, AOL acquired Third Screen Media and Microsoft ( MSFT - news - people ) absorbed ScreenTonic. Rajeev Chand, a managing director at Rutberg & Co., says there are three reasons for a resurgence of interest: the strategic growth of the mobile Internet, a renewed interest in making acquisitions as the economy improves, and a greater number of potential acquirers.
Article Controls
Google ( GOOG - news - people ), in particular, is driving the deal-making, says Karsten Weide, program director of digital media and entertainment at researcher IDC. He estimates Google and AdMob together would control 21% of the U.S. mobile ad market, a chunk large enough to give them a comfortable lead over competitors (one reason the U.S. Federal Trade Commission is investigating the purchase.) The disparity will force other tech companies with mobile advertising ambitions to follow suit, says Weide.
Apple ( AAPL - news - people ) was the first to counter Google, announcing its Quattro buyout Jan. 5. Insiders say Yahoo! ( YHOO - news - people ) and Microsoft are likely to be next. Yahoo!, which holds an estimated 10% of the mobile ad market, likely wants to increase its share--and has the cash on hand to make such an acquisition, says Weide. Microsoft, which IDC estimates has an 8% slice of the market, is probably interested due to its "laser-like focus on search," he adds.
Other potential buyers include handset makers, which increasingly view their devices as platforms for tapping into mobile Internet traffic; publishers investing in digital content; and carriers looking for a new way to generate revenue. "Publishers are very interested in the mobile device market," says Noah Elkin, a senior analyst at eMarketer. "The same logic that applies to Apple [buying a mobile ad firm] could apply to a Hearst as well."
AOL is not on most analysts' short lists. The media giant, which is focused on a turnaround, currently lacks the means and "attention span" required for such an acquisition, says Weide.
The choicest targets appear to be Millennial Media and Jumptap, two U.S.-based firms that operate their own mobile ad networks and each command at least 5% of the mobile ad market, according to IDC. Analysts say the companies are likely meeting with potential buyers, or will be soon. Yahoo!, in fact, held talks with Millennial back in 2007, but walked away because the firm wanted too much money, says one analyst. IDC estimates Millennial's 2009 mobile ad revenue at $35 million and Jumptap's at $18 million.
Millennial and Jumptap declined to comment on acquisition rumors, but acknowledged that the AdMob and Quattro acquisitions have spurred interest in their own firms. "For people who thought the AdMob deal was a fluke, the Quattro deal validated the huge opportunity for mobile advertising ... the opportunities are just starting," says Jumptap Chief Marketing Officer Paran Johar.
But will there be opportunities for firms besides Jumptap and Millennial? Other companies, such as Amobee and Greystripe, are small enough that analysts don't track them. "It's hard to know how well [some of these companies] are doing and how much traction they have," says Julie Ask, a vice president at Forrester Research.
Some smaller players contend they're a better value. Bob Walczak, chief executive of the mobile ad tech firm Ringleader Digital, notes that Millennial raised $16 million in new funding in November while Jumptap secured more than $26 million in its last round, in August 2008. "They've put themselves in a higher price category," he says. "They'll have to show a lot of value to warrant an exit to their [venture capitalist investors]."
Analyst Weide says if Millennial and Jumptap garner the same high multiple Google paid for AdMob, they could be acquired for about $600 million and $300 million, respectively.
Thursday, 7 January 2010
Google Conquers Time
Google Conquers Time
Quentin Hardy, 12.07.09, 04:50 PM EST
Real-time search, translation, location--everywhere?
MOUNTAIN VIEW, Calif. -- Years ago, Google defined its mission as "organizing all the world's information," which seemed to many like a slightly pretentious way of talking about Internet search. On Monday the company introduced products for simultaneous translation, real-time Web information and location-based awareness--in other words, evidence Google was serious about its boast.
At a press briefing at the Googleplex, the company displayed features like instantaneous recognition of photos taken with a mobile phone, translation of spoken speech from one language to another (also via a mobile phone), improved voice-based search on phones, maps that show nearby locations of any location pressed on a touch screen, and real-time search results based on updates from sources like Twitter, Facebook and MySpace, in addition to traditional sources. Google ( GOOG - news - people ) said the real-time product is already crawling 1 billion objects a day.
Article Controls
The functions Google showed are all, of course, based on the Internet, and largely dependent on the millions of computers inside the "cloud" of Google's data centers. Yet the features increasingly attempt to draw the physical world into the Web. In another feature, Google teamed with Best Buy ( BBY - news - people ) to offer real-time inventory information about product availability at local stores.
Google likely assumes it can make a bundle from all this immediacy. For one thing, its utility means we will spend even more time on the Internet, searching for the most recent facts and looking at even more Google ads. In addition, it's likely that the information Google collects as it watches people search and navigate in all these systems will increase the value of the ads it auctions. Better understanding of behavior, after all, makes if more likely Google can offer the appropriate advertisement.
In one demonstration, Google vice president of engineering Vic Gundotra spoke the words "Pictures of Barack Obama with the French president at the G-8 Summit," and received the appropriate images. The service, already available in English and Mandarin, was announced for Japanese, and Gundotra said Google's aim is to offer it for all the world's major languages.
Real-Time Quotes
01/06/2010 5:34PM ET
Searching for images via phone pictures is still somewhat limited--a demo using a wine bottle label flopped, and Gundotra had to rely on taking a photo of an image on screen (doubtless, already inside Google's servers). The product is likely being released so Google can build up a database of images and behaviors, to improve quality.
Quentin Hardy, 12.07.09, 04:50 PM EST
Real-time search, translation, location--everywhere?
MOUNTAIN VIEW, Calif. -- Years ago, Google defined its mission as "organizing all the world's information," which seemed to many like a slightly pretentious way of talking about Internet search. On Monday the company introduced products for simultaneous translation, real-time Web information and location-based awareness--in other words, evidence Google was serious about its boast.
At a press briefing at the Googleplex, the company displayed features like instantaneous recognition of photos taken with a mobile phone, translation of spoken speech from one language to another (also via a mobile phone), improved voice-based search on phones, maps that show nearby locations of any location pressed on a touch screen, and real-time search results based on updates from sources like Twitter, Facebook and MySpace, in addition to traditional sources. Google ( GOOG - news - people ) said the real-time product is already crawling 1 billion objects a day.
Article Controls
The functions Google showed are all, of course, based on the Internet, and largely dependent on the millions of computers inside the "cloud" of Google's data centers. Yet the features increasingly attempt to draw the physical world into the Web. In another feature, Google teamed with Best Buy ( BBY - news - people ) to offer real-time inventory information about product availability at local stores.
Google likely assumes it can make a bundle from all this immediacy. For one thing, its utility means we will spend even more time on the Internet, searching for the most recent facts and looking at even more Google ads. In addition, it's likely that the information Google collects as it watches people search and navigate in all these systems will increase the value of the ads it auctions. Better understanding of behavior, after all, makes if more likely Google can offer the appropriate advertisement.
In one demonstration, Google vice president of engineering Vic Gundotra spoke the words "Pictures of Barack Obama with the French president at the G-8 Summit," and received the appropriate images. The service, already available in English and Mandarin, was announced for Japanese, and Gundotra said Google's aim is to offer it for all the world's major languages.
Real-Time Quotes
01/06/2010 5:34PM ET
Searching for images via phone pictures is still somewhat limited--a demo using a wine bottle label flopped, and Gundotra had to rely on taking a photo of an image on screen (doubtless, already inside Google's servers). The product is likely being released so Google can build up a database of images and behaviors, to improve quality.
Baidu launches (legal) online video company
Baidu launches (legal) online video company
Shades of Hulu
By Austin Modine • Get more from this author
Posted in Music and Media, 6th January 2010 22:47 GMT
A Hulu-esque online television channel is being created for internet users behind China's Great Firewall.
The country's top o' the heap search engine Baidu said Wednesday it plans to form a new online venture that will serve free (and legal) copyrighted video content to Chinese internet users.
Baidu will spin-out a new, yet-to-be-named independent company to provide the service, which will generate revenue through online advertising. The search firm said it intends to stream a variety licensed movies, TV series, sport events, animation, and other content on the service, but didn't provide any details on specific licensing deals or partnerships.
Baidu was not immediately available for comment.
The online video venture will be helmed by Yu Gong, formerly the chief executive of China Mobile's 12580 hotline logistics service.
"By establishing this new company, we will be able to better serve our users and customers with superior content and focused resources," said Xuyang Ren, Baidu's vice president of business development in its English-language statement.
Ren said Gong's "strong" industry experience would enable growth through product innovation and a network of partnerships with content providers."
Baidu hasn't always been terribly concerned with copyrights when serving content. In fact, the company owes much of its popularity to a "deep links" unlicensed MP3 music scheme The Reg described in detail a year ago.
More recently, however, China's government has taken a harder hand against its home-grown online music services.
It wasn't mentioned how Baidu's licensed online video foray will affect its investment in PPLive, a separate Chinese web site that streams licensed movies and shows gratis. ®
Shades of Hulu
By Austin Modine • Get more from this author
Posted in Music and Media, 6th January 2010 22:47 GMT
A Hulu-esque online television channel is being created for internet users behind China's Great Firewall.
The country's top o' the heap search engine Baidu said Wednesday it plans to form a new online venture that will serve free (and legal) copyrighted video content to Chinese internet users.
Baidu will spin-out a new, yet-to-be-named independent company to provide the service, which will generate revenue through online advertising. The search firm said it intends to stream a variety licensed movies, TV series, sport events, animation, and other content on the service, but didn't provide any details on specific licensing deals or partnerships.
Baidu was not immediately available for comment.
The online video venture will be helmed by Yu Gong, formerly the chief executive of China Mobile's 12580 hotline logistics service.
"By establishing this new company, we will be able to better serve our users and customers with superior content and focused resources," said Xuyang Ren, Baidu's vice president of business development in its English-language statement.
Ren said Gong's "strong" industry experience would enable growth through product innovation and a network of partnerships with content providers."
Baidu hasn't always been terribly concerned with copyrights when serving content. In fact, the company owes much of its popularity to a "deep links" unlicensed MP3 music scheme The Reg described in detail a year ago.
More recently, however, China's government has taken a harder hand against its home-grown online music services.
It wasn't mentioned how Baidu's licensed online video foray will affect its investment in PPLive, a separate Chinese web site that streams licensed movies and shows gratis. ®
How Google Could Have Changed the World With Nexus One — and Still Might
How Google Could Have Changed the World With Nexus One — and Still Might
If you thought that the world would change with the release of a Google-branded phone Tuesday, be assured that sadly it did not.
At least not yet. It just got one more cool phone.
You can buy the Google Android OS phone, dubbed Nexus One, unlocked directly from Google. But in the United States the only place you can really take it to is the country’s fourth largest carrier, T-Mobile. Or you can buy it through T-Mobile for a hair under $200 and pay about as much per month as a Palm Pre owner and about $20 a month less than an iPhone user.
What would something revolutionary have looked like?
How about a smartphone starter plan, deeply subsidized by ads, that offered a cheap data plan to entice the “I don’t need a smartphone” crowd into joining the revolution? Even better, would have been an order form where you could buy the Google phone and then choose from three or more carriers who are competing to provide you with a data and voice plan — just as you do when you buy a laptop. Instead, there’s just the one option — T-Mobile, which costs basically the same as all the other smart phones.
Google clearly wants the mobile-phone world to look different, it’s just not clear that this phone or its current manufacturing strategy will actually bring about the changes in the telecom world that Google is looking for.
Now, getting on par with Apple (and in some ways past it) is no small feat, especially when Google made this phone in partnership with HTC, a business model that rarely leads to the hardware that the design team really wants. Compare the Nexus One, for instance, to the first Apple phone, which the world has seemingly forgotten — the Motorola ROKR. That phone was limited to having 100 songs on it, couldn’t buy songs over the air and was full of compromises. With the Nexus One, Google managed to make a device that Wired magazine’s Steven Levy called “curvy,” “classy” and “impressive.”
And that’s important, because Google has recognized that mobile computing is a massive part of the net’s future — and thus its own.
With the recent $750 million purchase of mobile-ad provider AdMob and its reported overtures to buy the popular local-business–rating site Yelp, Google is showing it clearly thinks that mobile (and local) is the next place on the net to mine for riches. But what it doesn’t like is all the ways that users could get detoured, from the time they pull the phone out of the pocket until the time their search travels to a Google server.
Remember that the more people use the internet and the faster the internet works, the more Google makes money. Low-cost, uncontrolled devices with low-cost connections equals more people using Google software and seeing Google ads, even if that phone is made by Motorola, Nokia or even Apple.
That’s why it’s pushing hard to break down barriers between the average user and an online Google ad, by finishing the mobile-computing revolution that Apple started, but didn’t finish because of Steve Jobs’ fanatical need to control the iPhone.
Google’s created the mostly open source Android OS, which manufacturers can and are using for free. That’s pushing Microsoft out of the market, and keeping carriers from doing stupid things like forcing a user’s browser home page to divert to its software store in perpetuity, no matter how hard they try to change it. And third-party-app developers can write programs for Android devices without getting permission, a stark contrast to Apple, which must approve every iPhone app and controls the only way to add programs to the device.
Google bet more than $4 billion in an FCC wireless auction in 2008 just to make sure that openness rules would adhere to new spectrum, which led the eventual winner — Verizon — to sue the feds. Google’s won a battle in D.C. to make the wireless companies subject to the same FCC rules that force cable and DSL companies to treat all online content similarly.
In short, Google wants to transform the phone market with its complicated charges, long contracts, bizarre fees and bundling of devices with service plans and make it more like how you buy a television or a computer: Buy the device. Then find the service. That’s even as cable and satellite providers look at the wireless companies and decide those contracts look like a mighty good way to keep customers.
But the question becomes how far does Google have to push, how much capital must it invest, how many devices must it design and regulators must it convince, before it can back out of the mobile hardware business and simply focus on software and advertising?
Here’s the scenario that might get us there: Google convinces HTC that it’s not suicide to create a phone that can be used on any U.S. 3G network (maybe two phones — one for GSM and one for CDMA) and then sells it unlocked. It’s a great phone, and lots of people want it, and there are lots of great apps that run on it.
Users then could then take it to whichever carrier they like, and get a data plan a la carte. The carriers will hate this, perhaps create unfairly high prices and very annoying “device registration fees” — trying to protect the money they make offering phones at an initial discount in exchange for a two-year contract.
But the FCC will have passed a rule forcing carriers to accept any device that doesn’t hurt their network — much as Ma Bell was forced to open its lines after 1968 — and Google, regulators and consumers will break down those barriers. Or the market could simply take care of it, with a desperate Sprint breaking ranks with the other large U.S. telecoms and accepting a Nexus or any other device with no registration fee and a fair price for users.
And that’s when Google will stop making phones, and you’ll know that the Nexus One actually meant something.
Photo: Google employee Sara Rowghani looks over a jumbo model of the Nexus One phone at a demo in Mountain View, California, on Tuesday.
Jeff Chiu/AP
If you thought that the world would change with the release of a Google-branded phone Tuesday, be assured that sadly it did not.
At least not yet. It just got one more cool phone.
You can buy the Google Android OS phone, dubbed Nexus One, unlocked directly from Google. But in the United States the only place you can really take it to is the country’s fourth largest carrier, T-Mobile. Or you can buy it through T-Mobile for a hair under $200 and pay about as much per month as a Palm Pre owner and about $20 a month less than an iPhone user.
What would something revolutionary have looked like?
How about a smartphone starter plan, deeply subsidized by ads, that offered a cheap data plan to entice the “I don’t need a smartphone” crowd into joining the revolution? Even better, would have been an order form where you could buy the Google phone and then choose from three or more carriers who are competing to provide you with a data and voice plan — just as you do when you buy a laptop. Instead, there’s just the one option — T-Mobile, which costs basically the same as all the other smart phones.
Google clearly wants the mobile-phone world to look different, it’s just not clear that this phone or its current manufacturing strategy will actually bring about the changes in the telecom world that Google is looking for.
Now, getting on par with Apple (and in some ways past it) is no small feat, especially when Google made this phone in partnership with HTC, a business model that rarely leads to the hardware that the design team really wants. Compare the Nexus One, for instance, to the first Apple phone, which the world has seemingly forgotten — the Motorola ROKR. That phone was limited to having 100 songs on it, couldn’t buy songs over the air and was full of compromises. With the Nexus One, Google managed to make a device that Wired magazine’s Steven Levy called “curvy,” “classy” and “impressive.”
And that’s important, because Google has recognized that mobile computing is a massive part of the net’s future — and thus its own.
With the recent $750 million purchase of mobile-ad provider AdMob and its reported overtures to buy the popular local-business–rating site Yelp, Google is showing it clearly thinks that mobile (and local) is the next place on the net to mine for riches. But what it doesn’t like is all the ways that users could get detoured, from the time they pull the phone out of the pocket until the time their search travels to a Google server.
Remember that the more people use the internet and the faster the internet works, the more Google makes money. Low-cost, uncontrolled devices with low-cost connections equals more people using Google software and seeing Google ads, even if that phone is made by Motorola, Nokia or even Apple.
That’s why it’s pushing hard to break down barriers between the average user and an online Google ad, by finishing the mobile-computing revolution that Apple started, but didn’t finish because of Steve Jobs’ fanatical need to control the iPhone.
Google’s created the mostly open source Android OS, which manufacturers can and are using for free. That’s pushing Microsoft out of the market, and keeping carriers from doing stupid things like forcing a user’s browser home page to divert to its software store in perpetuity, no matter how hard they try to change it. And third-party-app developers can write programs for Android devices without getting permission, a stark contrast to Apple, which must approve every iPhone app and controls the only way to add programs to the device.
Google bet more than $4 billion in an FCC wireless auction in 2008 just to make sure that openness rules would adhere to new spectrum, which led the eventual winner — Verizon — to sue the feds. Google’s won a battle in D.C. to make the wireless companies subject to the same FCC rules that force cable and DSL companies to treat all online content similarly.
In short, Google wants to transform the phone market with its complicated charges, long contracts, bizarre fees and bundling of devices with service plans and make it more like how you buy a television or a computer: Buy the device. Then find the service. That’s even as cable and satellite providers look at the wireless companies and decide those contracts look like a mighty good way to keep customers.
But the question becomes how far does Google have to push, how much capital must it invest, how many devices must it design and regulators must it convince, before it can back out of the mobile hardware business and simply focus on software and advertising?
Here’s the scenario that might get us there: Google convinces HTC that it’s not suicide to create a phone that can be used on any U.S. 3G network (maybe two phones — one for GSM and one for CDMA) and then sells it unlocked. It’s a great phone, and lots of people want it, and there are lots of great apps that run on it.
Users then could then take it to whichever carrier they like, and get a data plan a la carte. The carriers will hate this, perhaps create unfairly high prices and very annoying “device registration fees” — trying to protect the money they make offering phones at an initial discount in exchange for a two-year contract.
But the FCC will have passed a rule forcing carriers to accept any device that doesn’t hurt their network — much as Ma Bell was forced to open its lines after 1968 — and Google, regulators and consumers will break down those barriers. Or the market could simply take care of it, with a desperate Sprint breaking ranks with the other large U.S. telecoms and accepting a Nexus or any other device with no registration fee and a fair price for users.
And that’s when Google will stop making phones, and you’ll know that the Nexus One actually meant something.
Photo: Google employee Sara Rowghani looks over a jumbo model of the Nexus One phone at a demo in Mountain View, California, on Tuesday.
Jeff Chiu/AP
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