August 15, 2011 6:36 AM
Posted by: Ron Miller
, cell phones
, Mergers and Acquisitions
Google announced this morning that it was buying Motorola Mobility, an Android partner for a staggering $12.5 billion. With this move, Google has firmly inserted itself as a competitor in the Android marketplace in a move that could undermine all of the work it has done to build an Android ecosystem of phone makers and developers.
What’s more, Google clearly overpaid by offering a 63 percent premium over Motorola’s closing price last Friday. The deal makes little sense to me on any level.
Google created Android and made it open source for a distinct reason. It wanted Android on as many phones as possible as quickly as possible. In the process, it could provide wider access to Google services and ultimately make more money by putting more eyeballs on Google ads, which is the chief source of its revenue.
The strategy has worked amazingly well to this point.
But as of today, Google is competing with other handset makers in the marketplace. From Google’s perspective, it’s a way to take control of the Android ecosystem, In statement released on the deal, Google CEO Larry Page was quoted as saying, “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers.”
But I’m seeing it a little differently. If I’m HTC or Samsung or one of the myriad of other handset makers that has happily incorporated Android onto its phones, I’m suddenly wondering about Google’s motives in all this. When Google is itself a handset-making competitor, can others trust that they will be getting the same access to Android technology as Google will give itself?
Even if Google maintains an even playing field, there will always be questions now about whether that’s truly the case. How can you run an open source operating system, while competing with others within the open source system?
And that’s just competitors. Google has been the subject of a lot of anti-competitive scrutiny in the United States and Europe for the last several years. You have to wonder if a deal like this, which puts Google in charge of manufacturing the handset as well as the OS, will fly with regulators, especially in the EU.
Google has spent years building up good will with handset makers to get Android on as many devices as it can. It has astonishing penetration across the world, especially in some Asian markets. I’m wondering why they would risk this success by becoming a direct competitor.
Let’s not forget that Google tried selling a phone before when it marketed the Nexus One in 2009, a move that went badly for them, but instead of learning from that experience, they invest a whopping $12.5 billion to force their way into the phone market in an even bigger way.
I’m trying to understand Google’s motivation in this deal, but I truly don’t get it. Android is the company’s golden goose. To sabotage its incredibly successful approach to marketing and distributing Android with this purchase just doesn’t make sense to me.
Time will tell if this was a good deal or not for Google, but I think history will show Google just handed Apple, RIM and Microsoft a huge opening when it could have controlled the cell phone OS market for years to come.
Update: Google in a conference call announcing the deal indicated this was a play for Motorola’s broad patent portfolio. Could Google’s effort to defend itself against patents end up damaging Android? It would be ironic if that turns out to be the case.
Photo by brionv on Flickr. Used under Creative Commons License.
August 11, 2011 9:04 AM
Posted by: Ron Miller
, Browser v. Apps
Yesterday, Venture Beat reported that Chris Webber, who is the North American president of Nokia suggested that the Android-iPhone app-centric view of the world was “outdated.” While that might have been wishful thinking on Webber’s part, it seems he wasn’t alone in wondering about the long-term viability of apps, as there were articles and discussions galore yesterday.
But the fact is that apps provide information in a convenient mobile package and for that reason I don’t believe they’re going anywhere any time soon.
That’s because sometimes an app just works better than a browser. For example, I own an iPhone and I have I have a free app from AT&T that gives me a consolidated view of my family’s data and phone usage during the month, my current bill, the ability to turn services on and off and other features. Yes, I can get the same information from the AT&T web site in a browser, but because AT&T hasn’t tuned its web site for a mobile experience, it’s an exercise in frustration with lots of pinching and scrolling to see the same information I can see so easily in the app.
Yet the browser still has a key role in the mobile experience as the new Amazon Kindle Cloud Reader app clearly illustrates. In this case, Apple put up several obstacles for Amazon in its quest to place the Kindle app in the Apple App Store. So what did Amazon do? In a brilliant move, it did an end-around and found a way to display the contents of your Kindle account in a browser.
While some people, such as Tim Camody on Wired, were critical of the app, others such as Richard MacManus on ReadWriteWeb saw this as the beginning of a weakening of Apple’s walled garden and the ascendancy of HTML5.
A discussion on Google+ started by Steve Rubel had a variety of opinions on the apps-browser argument, but as one writer indicated, sometimes because of connectivity issues, it’s easier to access information in an app — not to mention that you can access some content offline in an app and you couldn’t do that in most cases in a browser.
Further, while it’s all well and good to find a way to bypass the App store as Amazon did, you have to wonder, considering the popularity of the app metaphor, if it’s a wise move from a business perspective, at least in the short-term.
These are all open questions, but for now I don’t see apps going anywhere. Perhaps the browser will eventually become the predominant way we access web sites and services as HTML5 matures, just as it always has been on the desktop, but I believe apps and the browser will live side by side for some time into the future because they each have a key role in the mobile experience.
Photo by Ed Yourdon on Flickr. Used under Creative Commons license.
August 9, 2011 2:04 PM
Posted by: Ron Miller
Amazon Web Services
, Cloud computing
It finally happened. We had a fairly significant cloud outage the other day and we didn’t have a lot of hand-wringing about the perils of cloud computing. Could it be that we have finally reached a point where we don’t have to defend the future of cloud computing each time a data center has problems, or is it just that everyone is on vacation in August and nobody was paying attention?
In this case, the data centers in Dublin run by Amazon and Microsoft got hit by lightning the other day causing them to go down. These things happen and it’s best if everyone stays calm when they do. Amazon certainly stayed calm as they stated the nature of the problem on the company web site — lightning struck the transformer next to the data center — and they even recommended a work-around while they fixed the problem, which was to launch another instance on a zone that was working. Not ideal, but it keeps you going right?
Microsoft similarly took it in stride and returned to normal operation later in the day. Not so bad right? It’s worth noting that Amazon did continue to have some problem due to a reported problem in its EBS (Elastic Block Storage) software.
The Microsoft outage affected a portion of the Business Productivity Online suite (BPOS). Business users were probably inconvenienced by the outage, but as I’ve written before, enterprise software goes down all the time and it’s just the way it is. Whether it’s cloud or on-premise, stuff like a lightning strike is going to happen and it’s really beyond anyone’s control.
Interestingly, some of the companies affected by the Amazon outage included high profile services Netflix and foursquare. I don’t want to minimize the effect any outage has on users because it can have a tremendous impact, but you also have to understand that one of the ways these services are even in business is by using cheap cloud computing power supplied by services like Amazon’s.
If foursquare and Netflix had to build their own data centers, it would have required a tremendous investment that might have been so prohibitive, these companies probably wouldn’t even exist without this ability to buy cheap server and storage space as a service.
If you do a quick perusal of the stories on Google News on the matter, there are couple with a sensational bent, but most of them are just straight news stories reporting on the nature of the problem. This is in stark contrast to previous outages where we have had reports of the end of cloud computing, harsh scolding of the companies involved and cries of general outrage.
Even a quick Google blog search, where you would expect more attitude and perhaps a dash of outrage is pretty tame.
So what does it all mean? It could mean we have reached a level of maturity I’ve been clamoring for. Or it could simply be that the dog days of August are upon us when fewer people are around to pay attention, and those that are, are too busy sweating in the heat to care about one outage in Ireland.
Either way, you can be sure there will be more outages, and at some point in the not-too-distant future, I’m hoping it won’t even be worth blogging about because it will be part of doing business in the cloud (just as it’s part of doing business on-site). That’s the day I’m still waiting for.
Photo by mikebaird on Flickr. Used under Creative Commons License.
August 4, 2011 12:06 PM
Posted by: Ron Miller
, smart phones
When you look at the smart phone market today, the easiest way to analyze it is to find which OS has the most market penetration and call it the winner. When you look at it that way, Android clearly has the lion’s share, but is it really accurate?
I have a couple of problems with a pure numbers-driven approach. First of all, Android is a free operating system, that means that Google is giving it away as a means of promoting use of its other services with the ultimate goal of putting eyeballs on its ads where it makes the bulk of its money.
As a free OS, anyone can take it and put on a phone, customize it and deliver it to the market. It’s fair enough, but since there is really no pure Android OS option, is it really fair to say that it’s all a single OS? Further, if you look at the numbers in the graph in this piece on Search Engine Land by by analyst Greg Sterling, you’ll see results from a Nielsen study that the shows most popular Android phones by manufacturer in the US.
Looking at this measurement, the most popular Android phones from HTC have half the marketshare of Apple with 14 percent for HTC compared to 28 percent for Apple
But that doesn’t tell the story either because a study by Canalys found amazing worldwide growth for Android phones with ridiculous penetration of 83 percent in South Korea and 71 percent in Taiwan. Those numbers are impossible to ignore
Yet because Android is a free OS, it doesn’t really make any money for Google. So is it really the most successful phone? If you think of phone sales in terms of profits, it’s certainly not. In that case, Apple is the clear winner and even Windows Phone 7, which is still selling modestly throughout the world comes out on top of Android.
So there are lots of ways to parse these numbers. Any way you slice it, however, Android is a tremendously successful phone across a variety of markets and price points. iPhone is also tremendously successful for Apple, generating huge sales and profits.
It seems like the two companies have distinctly different market approaches, so maybe it doesn’t even make sense to compare them, but the tendency is to see everything from politics to phone sales as a horse race. It’s a simple way to break it down and the simplest way to do that, is to look at pure percentages, but remember it’s not always as clear as it might seem and success is in the eyes of the beholder. And how you choose to break down the numbers.
Photo by tim geers on Flickr. Used under Creative Commons License.
August 2, 2011 10:33 AM
Posted by: Ron Miller
, Cloud computing
, Data Centers
When you think of cloud computing, especially large public cloud vendors such as Google, Yahoo! and Amazon, you probably picture massive data centers, sucking resources as they use tons of electricity to power their server farms and even more air conditioning systems to keep these monsters from overheating.
But a recent article in the New York Times suggests that this picture might not be completely accurate. In fact, due to a number of factors, data centers are using less power than they were projected to back in 2007 in spite of predictions at the time to the contrary.
This information comes from a report by Jonathan G. Koomey, a consulting professor in the civil and environmental engineering department at Stanford University. The report was commissioned by the New York Times.
Koomey found that the world financial crisis in 2008 decreased demand for cloud services, which meant fewer data centers and that technological innovation produced systems that used less power.
“Mostly because of the recession, but also because of a few changes in the way these facilities are designed and operated, data center electricity consumption is clearly much lower than what was expected, and that’s really the big story,” said Mr. Koomey in the New York Times article.
Koomey was comparing the results of his study to a 2007 Environmental Protection Agency report which predicted the situation would be much worse at this point than it actually is.
Whether a data center is efficient, however, has to do with a lot of factors including where it’s located. A data center in Germany that is powered by a near-by wind farm is going to have a much smaller environmental impact, then one located in Ohio near a plant that burns coal to generate electricity.
Over the last several years, companies like Amazon, Google and Yahoo! have been working hard to generate greener data centers, and it’s probably not because these companies are concerned about the environment (although they may very well be), but more because the cost of generating electricity at these data centers is in fact, a substantial part of their cost of doing business.
If these companies can find ways to generate electricity and cool these centers more efficiently, it’s not only going to help keep the environment cleaner, it’s going to have a positive impact on their bottom line.
Even though this report paints a rosier picture than believed, the amount of consumption is bound to go up, and over the next several years, these companies and many others are going to be looking for other ways to innovate — whether it’s through greener energy production, more efficient chip technologies that use less electricity or innovative cooling techniques — because as more companies shift to the cloud, finding ways to run data centers more efficiently is going to be increasingly necessary.
Companies that can come up with ways to help achieve this will be helping maintain a cleaner planet for future generations, while providing the cloud services we demand.
Photo by nortinirt on Flickr. Used under the Creative Commons License.
July 27, 2011 3:39 AM
Posted by: Ron Miller
, Stephen Elop
As though Nokia needed any more bad news, its latest quarterly figures reveal that it has lost substantial market share in China, a market it has dominated over the years.
In fact, it was reported that Android passed Nokia’s Symbian OS for the first time, and Reuters was quoting a Gartner analyst who was predicting that Android would control 50 percent of the Asian market by 2015.
If that weren’t enough, Apple passed Nokia in worldwide market share for the first time. It’s all part of a continuing decline for a mobile phone maker that once controlled the market, particularly in areas like China where its lower end phones sold extremely well.
But as you are no doubt aware, Nokia made the decision earlier this year to abandon the Symbian and MeeGo phone operating systems in favor of a Windows Phone 7 strategy. The announcement came long before any Nokia phone running Windows was close to ready. leaving the company effectively in limbo.
The results have been exceedingly ugly as Nokia has jettisoned market share in huge numbers, even in markets like China in which it was traditionally strong. In fact, Bloomberg reported that Nokia’s sales in China dropped a whopping 41 percent from last year, while European sales dropped by 30 percent.
Meanwhile Nokia reported selling 16.7 million phones in the most recent quarter compared with over 20 million iPhones That’s astonishing really when you consider there are many, many Nokia phones across a range of price points, while Apple just has just a few iPhones, all sold at a much higher price that probably won’t do as well in Asia.
It’s easy to criticize CEO Stephen Elop’s strategy, but the fact is that Nokia was stuck with an old OS nobody really wanted anymore, and while MeeGo looked promising, as Sarah Perez pointed out on ReadWriteWeb, it would not likely have been enough to be competitive with Android and Apple.
This leaves Nokia in the unenviable position of trying to find a way to sustain its market presence in the midst of transitioning to an entirely new line of phones running Windows..
It seems clear at this point that Android and iOS will control the top two spots moving forward, and the remaining battle will be for third place. Microsoft is betting that by affiliating itself with Nokia, it can help cement that third place position, while Nokia is hoping that Windows can revive its flagging phone sales
It still remains to be seen if this approach can work for either company, but it is clear that in the short term, Nokia continues to take it on the chin in China, as well in other markets it once dominated, and it has to hang on until those Windows phones are ready and see where the chips fall.
July 18, 2011 12:39 PM
Posted by: Ron Miller
It’s not exactly a secret that RIM has been losing North American market share in bunches over the last couple of years, but in environments where security is paramount, RIM still has a strong case to make.
As the consumerization trend has swept the enterprise, IT has been reduced to overseers, rather than dictators of technology choices. And users don’t want Blackberries. They want Apple and Android phones, But in highly secure environments, total freedom to choose your cell phone just isn’t practical and IT must maintain control.
Take the government for instance. My sister-in-law works for the Australian government and she has been issued a Blackberry for government business. When I asked her why, she indicated because communication was forced through a secure server helping ensure that the messages she exchanged with politicians and colleagues remained confidential.
The implication was clear, the other choices while more fun to use were not nearly as secure and that could be the focus of RIM’s strategy moving forward.
I also noticed that when I was in Germany last year for the CeBIT conference, the organizers were also issued Blackberries. Security was tightly controlled and German users were not even allowed to download Blackberry-approved apps. Perhaps RIM can use this conservative approach to IT to its advantage in overseas markets.
At one time, as recently as Fall, 2009, RIM was the most dominant cell phone maker in North America with 40 percent of market share. Today that’s all changed and with each passing quarter, RIM loses more and more of this market. In fact, the April Comscore market share statistics have RIM in third place with 25.7 percent down 4.7 points from the previous quarter.
What’s worse, it feels like a company in disarray. As its market share numbers slip, the strategy has been to release a the Blackberry PlayBook tablet, which by all reports was an admirable try, but one which was clearly released too soon — and RIM is not a company that can afford at this point to make many missteps. Meanwhile, its two-headed CEO approach seems like a strange idea at best, and one that shows a clear lack of leadership at worst.
But RIM has always been the enterprise choice for cell phones. As Apple and Android have developed far more sexy choices, and users have grown tired of carrying two phones–one for work and one for themselves, Blackberry’s domination has disappeared. Yet RIM remains a secure choice in environments whose work demands it, as my sister-in-law’s case clearly shows.
What’s not clear, however, is if in most enterprises, IT has lost control of these choices. And if that’s the case, RIM’s road is going to continue to be rough. Unless the upcoming series of phones provides both the sex appeal users want and the security IT requires (at least in some cases), as we’ve written here before, RIM could be in serious trouble.
If, however, it can use its security to its advantage, especially in overseas markets, it could continue to do reasonably well outside of North America, and that might be enough to keep it going, or at least make it a reasonable take-over target for another company.
July 6, 2011 9:16 AM
Posted by: Ron Miller
, Cloud computing
With all of the high profile hacks lately, conventional wisdom suggests that it might be bad for cloud computing, but as hackers like Anonymous and LulzSec have proven, nobody is really safe from a hacker hell bent on getting inside your systems.
While it’s frightening, it doesn’t really damn cloud computing any more than the private data center. When these hackers can go after companies, law enforcement even the CIA, for goodness sakes, if you’re sitting there thinking you’re somehow more secure because you control the data center, you are sadly mistaken.
The fact is it’s a systemic problem to which nobody is immune, regardless of where you store your data or who you are. It’s clear that the people charged with architecting the Internet have to take a long look at what they’ve been doing because it’s clearly no longer working, not when these hackers can take down sites or get inside systems with impunity virtually at will.
It’s easy to point to cloud computing in times like these and suggest that these companies are somehow more vulnerable than a private data center, but as these hackers have shown, they are equal opportunity disruptors and until we find a way to secure the internet, these guys are going to continue to attack simply because they can.
If the Internet establishment needed a bigger wake up call, I’m not sure what its. Companies like Google, Facebook, Microsoft, Amazon, Apple and so forth should be working together to create a more secure environment. In the current atmosphere, everyone loses, and it gives more credence to the purveyors of good old-fashion cloud FUD (fear, uncertainty and doubt).
Chances are, when you sit in a conference, you’ll hear the anti-cloud arguments and the anti-cloud crowd almost always plays the security card. They won’t come out and just say it of course, but they’ll hint at a lack of security and suggest that on-premises software might be (in hushed tone) “the safer choice.”
But the fact is that unless you want to shut down the Internet and have no contact whatsoever with the outside world–and even then I’m not sure you’re safe–you are going to have to live with the possibility of being hacked along with every other organization on the planet.
This is by no means an ideal situation, but it absolutely is a level playing field. If a hacker can penetrate the CIA with all of the security fail-safes I’m imagining it must have in place, it tells you that the system as currently constructed needs a complete overhaul.
So if we are going to have a conversation about the issues we are having these days, let’s agree that whether you’re a cloud vendor or the CIA doesn’t really matter. What we need to do is find a solution to the larger security problem affecting everyone instead of creating a false argument that one approach is safer. The fact is that your data is probably vulnerable no matter where it is, and until we address that issue, we are going to continue to have these problems.
Photo by gwire on Flickr. Used under Creative Commons License.
July 4, 2011 5:15 AM
Posted by: Ron Miller
, smart phones
It hasn’t been a great time for RIM. Just last week an anonymous executive published a letter of complaint about the inner turmoil at the company, embarrassing the organization and forcing it to write a response on the company blog. Meanwhile, developers are reportedly abandoning Blackberry support and that could be the most devastating blow of all.
The letter outlined a series of problems inside the company including management and organizational problems that in the writer’s opinion were holding the company back. In the company’s response, it complained about the difficulty in responding to anonymous attacks, but acknowledged there were problems and they were taking steps to address them.
The response also indicated that RIM has a road map for a way back and is simply in an awkward space between its old systems and its upcoming one. Sounds like the same position Nokia finds itself in.
Fair enough, they are working to resolve the problem, even while they continue to lose market share in bunches. But what’s most troubling is a story last week on IT World that RIM is starting to experience developer defections. That means that companies that develop phone apps are beginning to conclude that it’s not worth the development resources to continue to develop apps for RIM phones.
And one thing is crystal clear into today’s mobile marketplace, companies will live and die by the success of the apps that each phone supports.
But is the story as bleak as it appears? RIM will you tell you it’s not. They have $3 billion in cash after all, and even though the Blackberry sales continue to be in free fall in North America, the company claims that it is selling phones in overseas markets.
This seems to me puts it in a better short-term position than Nokia, which needs to wait for Windows Phone 7 phones later this year before it can go anywhere. RIM is also waiting for phones running its next generation OS, but it’s not living in limbo in the same way Nokia has been.
And in that same response post, RIM pointed out it made $695 million in net income last quarter. This is in stark contrast to Nokia, which recently reported, it went from a projected $6 billion quarter to what they called “breaking even.”
Even though RIM is probably in far better shape, what was once, *the* choice for corporate phones is being replaced by iOS and Android alternatives. Much like Nokia, it feels like a company that has at best one more chance to find its way back before it gets sold and folded into another manufacturer’s portfolio.
While the anonymous letter might have been a wake-up call, RIM had to know where it stood before that, and that the stakes are extremely high. Whether it succeeds or fails won’t hinge on one embarrassing open letter. It will come down to product and marketing execution. And it had better make this one count.
Photo by quinn.anya on Flickr. Used under Creative Commons License.