Google to mobile industry: ‘F*ck you very much!’
Winners and losers from the great Nexus shafting
It is characteristic of Google’s approach to relationships, one senior phone exec told me this week: "They don’t know what hurt they’re doing, and they don’t care."
It’s nothing personal, guys. Today, some of the biggest tech companies in the world, who thought they were Google’s closest partners, will begin to understand how, say, copyright holders have felt for some time now. For the first time, I suspect, they’ll be enjoying that recurring tingle of amazement and disbelief that (as Chris Castle explained here), Google would even try and pull off such a stunt. It took EMI Publishing six months to realise that Google had claimed digital rights to its songs, for example. But even if the decision to shaft its closest Android partners and biggest customers is an aberration, a one-off, a fling that Google will later regret - then the size of the parties involved means it’s going to have lasting repercussions.
Even before Google started competing with it head on this week, the mobile industry was already wary of the Mountain View Chocolate Factory, and its inclination to hoover up every morsel of service revenue. Now complaining about that may be a bit hypocritical, you might think, if you look at how much of a transaction operators such as Docomo have traditionally retained, and how much they want to keep now. But look at the alternative, Google told the networks and device makers. That Mr Jobs doesn’t leave anything on the table. And besides, we Do No Evil.
Wakey wakey, networks
If you’re scratching your head wondering what the big deal is, then I suggest you do a quick news search on the number of stories containing the phrase ‘Google superphone’. Imagine how this looks to a punter. There are over a dozen Google phones. Only one is a real Google phone. Only one is a Google superphone. And you can only get that from Google. Won’t Sony Ericsson, Motorola, Acer and Samsung be feeling pleased today? Sony Ericsson’s X10 has a fairly identical spec (plus Sony branding) or better – but it’s not a ‘superphone’. And not the ‘real thing’.
If you thought there was a level playing field, you’ve been mugged. If you’re looking for a differentiator, similarly, you’ve been mugged.
As we discussed earlier, there may be some semantic wiggle room for Google – but it’s a Bill Clinton defence. Andy Rubin not only questioned the definition of sexual relations but also what ‘make our own hardware’ means (phnarr!). Maybe even what ‘is’ is. So despite nods and winks to the contrary, Google is now selling a Google-branded ‘superphone’, alongside its Google ad programs and Google-created software platform.
This is no surprise.
If networks are surprised that Google can turn around and shaft them – then they can’t have been paying close attention to company strategy in recent times. They certainly weren’t reading El Reg, where we’ve been joining the dots for you for years. The evidence was already abundant that Google envisaged a value chain without operators or ISPs. In Google’s vision of the future, there are no $80bn-a-year turnover giants like Vodafone. Instead, masts are merely a dumb transmission network, most likely operated by a monopoly incumbent (such as Arqiva for UK TV and radio), which must be regulated (out of necessity) by an equally dumb transmission network regulator.
With the value of copyright also reduced to zero, (the other arm of Google’s mighty lobbying effort is to kneecap creators and rightsholders,) then the only internet company that could possibly make money would be Google - since it would be the only internet company.
Good, honest lobbying
Google has lobbied for this for years now; it's also why Google has its own private internet. Googlenet already carries 10 per cent of the net’s traffic internally, and this is a testbed for replacements for the open protocols we use today such as http and dns. And it sure as hell isn’t neutral. Google has no obligation to open this to anybody else. The huge data centres are simply the physical manifestation of the private internet – like the vast ventilation towers at each end of the Holland or
Rotherhithe Blackwall Tunnels.
So Google stoked the bogus ‘net neutrality’ scare (directly writing legislation for the European Parliament, in one instance) which handicapped the network operators' ability to monetize their network fairly (by say launching a VoD service) ensuring that Google’s own private network (exempt from neutrality rules) becomes more valuable. Neutrality was the Global Warming scare of network world. ManBearPig may not exist, but it's amazing what you can get legislated if enough people think it does.
Google has ceaselessly lobbied for spectrum reform, too. In both cases it’s used sockpuppet groups such as ‘FreePress’ and PublicKnowledge, and its hand-picked academic network, typically legal departments with large debts to the Chocolate Factory.
When you went into partnership with the Loompas – were you feeling lucky?
Winners and Losers
In terms of who loses and benefits I offer this short list to get you started - you can complete the rest. The first couple are easy to fill in. The first comes from the executive who offered me the autism perspective. He also reminded me that it’s less than two weeks since 'the sermon' by Jonathan Rosenberg. Remind me, what’s open about Google now?
Another casualty for the same reasons, is surely the Open Handset Alliance itself. It’s odd to read how:
Each member of the Open Handset Alliance is strongly committed to greater openness in the mobile ecosystem. Increased openness will enable everyone in our industry to innovate more rapidly and respond better to consumers' demands.
‘Innovating in the open’ now means ‘getting ready to shaft you behind closed doors’.
As for the winners, Apple suddenly doesn’t look so bad. Operators hate being told what kind of subsidy they may offer, and chafe at the control freakery. But at least the iPhone is a surefire hit, it drags in the punters. None of Google’s models – either demiphones or Superphones – have shown they can. And Apple’s terms are much less onerous than a year ago.
Nokia and Symbian should be beneficiaries, but for operators Symbian is too much of Nokia’s pet project. Handset manufacturers have spent a decade getting out of Symbian projects and for many this is the last time they’ll do so. Also thanks to Nokia’s neglect, nothing Symbian now has to offer is competitive with the iPhone. It isn’t up to date.
One of the most puzzling tech business stories of the last ten years is how Nokia surrendered its smartphone lead and reacted like a rabbit in the headlights when the game changed. Nokia talks about ‘democratising’ the smartphone, simply because it’s own models are cheaper and ship in higher volume than the market leaders, who pocket the profits. Well, the Trabant democratised travel in the GDR, providing mobility to non-party members. It’s not a good analogy to make.
I expect to see more interest in the operators’ own hobbyhorse, the Limo Foundation, which is a Linux stack backed by the big networks plus Samsung – although anybody can sign up to make a Limo phone. It was fear of Google that propelled Vodafone to use Limo for the 360 phone so heavily promoted over Xmas. And while Limo does not provide iPhone or Pre-quality slickness, networks may see it as a low risk investment. No danger of Nokia or Google pulling a fast one.
Right now only RIM and Apple are making money from this mobile data caper, and the operators delude themselves if they think they do more than come out evens. They’ll fancy their chances even less now that Nexus has reminded everybody that Google sees Networks and ODMs as a temporary (and disposable) part of the equation.®