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Google Vs. Apple: Clash Of The Titans In Wireless

Google will buy Motorola’s cell phone division to take on Apple. We’ll look at the clash of titans in wireless.

Google is buying cell phone maker Motorola Mobility for $12.5 billion in cash Monday, Aug. 15, 2011, in what is by far the company's biggest acquisition to date.  (AP)

Google is buying cell phone maker Motorola Mobility for $12.5 billion in cash Monday, Aug. 15, 2011, in what is by far the company's biggest acquisition to date. (AP)

Search giant Google is big and has made plenty of big acquisitions. But early yesterday, Google announced its biggest acquisition ever, by a long shot. $12.5 billion for Motorola Mobility, Motorola’s wireless operations — the company that made the first commercial cell phone.

It’s a huge rock in the wireless pond. A play for Motorola’s treasure chest of patents, Google said. To clear the path for Google’s Android smart phone operating system. There’s a giant battle underway for the future of wireless.

This hour On Point: the future of smart phones, and the clash of titans –- Google, Apple and Microsoft.

-Tom Ashbrook

Guests

Scott Steinberg, head of the technology consulting firm Tech Savvy Global and acclaimed gadget expert and high-tech entrepreneur.

Ken Auletta, has written the “Annals of Communications” column for The New Yorker since 1992; author of eleven books including Googled: The End of the World As We Know It.

Steven Levy, Wired senior writer; previously chief technology writer and a senior editor for Newsweek, author In The Plex: How Google Thinks, Works, and Shapes Our Lives and The Perfect Thing: How the iPod Shuffles Commerce, Culture, and Coolness.

From Tom’s Reading List

Ars Technica “Google announced plans to acquire Motorola Mobility this morning for $12.5 billion in cash. One of Google’s biggest motivations for the purchase is to bolster its patent profile, which has been under relentless attack by companies including Microsoft and Apple. With the purchase, Google will gain control of more than 17,000 mobile-related patents worldwide, with 7,000 more Motorola patent applications in the pipeline.”

International Business Times
“One reason why Google said it will acquire Motorola Mobility for $12.5 billion is to increase traditional search traffic. The other is to bash rival Apple in the swelling market for smartphones and tablets, where more search is more likely to reach more people quickly.”

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  • http://www.richardsnotes.org Richard

    Excellent panel of guests. This should be a great show.

    I hope people don’t frame this as an all or nothing competition; it certainly is not. Steven Levy should know as a long time Macintosh journalist that Apple not only survived but did quite well with a small market share in the personal computer space for most of its life. Never write off a consumer electronics company that makes more profit than Exxon.

    Google acquiring Motorola’s cellular business, Apple and Microsoft buying up Nortel’s cellar patents are part of the rip tide of consolidation and companies with a lot of money playing chess with one another. It’s fascinating to watch but I doubt either Google or Apple is going out of business any time soon.

  • Anonymous

    You know what gets me. All of these corporations have done so much to innovate and yet the price of using a wireless does not come down.
    Verizon gouges it’s customers with all sorts of fees and does not allow minutes to be used from one month to the next. AT&T which partners with Apple and now Verizon is worse and has lousy customer service.

    In my view, better technology should be bringing the price of using a cellphone down, not up. However this seems not to be the case.
     

    • Jasoturner

      People need to get rich.  Think of cable TV – what do you think it costs them to pipe electrons into you house each month?  Practically printing money.

      The dead giveaway on the phones is the ridiculous real estate that they rent to sell their products.  Clearly they are making a killing.

      If engineers ran these companies, I think you WOULD see lower rates, although they would still compensate themselves handsomely.  Unfortunately, they are run by MBAs who will die on the sword of “stockholder value”.  Nuff said.

      • Anonymous

        1.  Verizon reported $24.2 million in pre-tax income for 2009 and 2010, yet paid $0 in federal income tax.

        2. In addition, Verizon actually claimed a refund of $1.3 billion, earning it a place on what the Washington Times calls the “Tax Evaders’ Wall of Shame”

        3.  What’s really incredible is that Verizon’s actions are perfectly legal.  The company is exploiting tax loopholes to get the maximum reward.

  • Michael

    Both have a few things in common, both work with the chinese government to suppress people one way or another for profit

    Google-works with the Chinese government to Suppress free speech
    Apple- works with the Chinese government to exploit slave labor .

    How much of there success comes from exploiting the poor in other countries? Along with government subsidy backed outsourcing?

  • Anonymous

    I am very concerned about this. PBS aired a program last week about how cheap and plentiful wireless access is in Europe compared to what we are getting, and for a fraction of the price.
    The bigger these companies get, the more of a stranglehold they seem to have on us as consumers: http://michaelmaczesty.blogspot.com/2011/06/is-google-stacking-deck-of-results.html

    • Brian

      I agree we need less expensive access to wireless plans but to me the threat to that is the ATT/T-Mobile merger.  If that is allowed we are back to the big 2 providers and will get price gouged even worse.

      • TFRX

        Yup. I’d rather an admitted monopoly regulated as such rather than a defacto cartel.

    • Anonymous

      Exactly.We are being gouged by the new robber barons of the 21st century. They monopolize the market and control almost every aspect. One should add Verizon, AT&T and other phone/tech companies to the list as the way the infrastructure
      is done in this country is really not working.

      If you look at the Dutch model all the entire country is going to have high-speed access and private companies are doing this. They look at as an investment.Here, it’s only profits and gouging customers that is the order of the day.

  • Yar

    I see this as a Google response to the S&P downgrade.  Take the money out of treasuries and buy something that won’t deflate.  One thing to point out though is that patents don’t have much value after a revolution.  Maybe a few of these companies will get the message that a no new taxes pledge leads to a lost investment. 

  • Nkurinsky

    The android operating system, being linux based, is a much more flexible platform due to the fact that it is open source, and therefore android products are much more versatile than apple products, as apple doesn’t release source code and keeps everything in house, even filtering potential apple apps, whereas the droid market is much more open. Google’s new aquisition will help bring the android platform into its prime.

    • Jasoturner

      Problem is, Android has resulted in little more than copies of Apple’s products.  I remember people being blown away when the iPhone first came out, it was so different and surprising.  If Android enables a similar paradigm shift, I’ll be impressed.  Until then, there is little difference between the products or their functionality.  As for Linux, well, it works, but it really doesn’t deliver a lot more functionality than Windows or OS X [w/ Unix kernel, I might point out.]

      • Craftuser

        As someone who uses Linux on a daily basis (including in the workplace), I would have to say I notice a severe lack of the functionality in the platforms you mention. There is a lack of flexibility due to the licensing restrictions they impose, if nothing else.

        • Jasoturner

          What flexibility do you refer to?  What can you do in Linux that is so special?  I too used to use Linux on a daily basis.  It did nothing that particularly distinguished it from the other OSs out there.  As for licensing restrictions, the fact that I can’t make copies of Word or Excel or XCode does nothing to constrain the work products I am free to create.

  • Michael

    Stop the patent madness!

    They do serve a purpose, but the original idea for patents/copyrights have bin so perverted from the original idea. I will never dare to create a company in todays patent environment!

    Wanna create a climate for work? FIX THE PATENT SYSTEM!

    • Jasoturner

      The lawyers are going to track you down and punish you for this blasphemy.  Watch your back.

  • Fred in CT

    As a “legacy” Palm user, who actually developed the “smart phone” process, I can see both Apple and Google perspective in profitability, quality and longevity as an ongoing business…..

    Palm, oh yeah, they’re now owned by HP……

  • Fred in CT

    Beieve the stronger base is gateway…..since you will become the holder of the best “mined data”…….ads? …. analytics? … “Big Brother” information……how ironic…. 1984 commercial….LOL

  • Tlyell

    shouldn’t any conversation about apple include the issue of steve jobs and his refusal to work with adobe?? I didn’t realize what a problem it would be to not be able to run flash but wonder why it doesn’t push consumers to look, hard, at other mobile phones/ tablets?

  • Saul

    It’s the patents, stupid.

    This deal is all about the patents.

    Google lost the auction for the Nortel patents, placing them in a strategically weak position.

    That’s when the discussions with Motorola began. Meanwhile, Motorola, quite cleverly, starting talking about its patent portfolio and how other Android handset makers might be the target of Motorola of patent litigation.

    Google had to buy Motorola for the patents, and had to pay a premium, it’s an act of desperation.

    Everything else, everything you’re talking about on this program, they haven’t even begun to figure out. Because it was all about the patents.

    (which, for the record, I’m opposed to.Software and business practice patents should be largely abolished)

  • Anonymous

    The PBS Need To Know segment that I mentioned earlier. Very interesting and pertinent to the conversation: http://www.pbs.org/wnet/need-to-know/culture/video-high-fiber/

  • Robert

    Yes, does Google or a search engine make money when you type your site into address bar?

  • BHA in Vermont

    The money is not in the hardware, it is in the contracts. Razors and razor blades. Sell them a phone or give it away, it is the 70+ a month contract that adds up. We don’t use our phones that much and use TracFone. $100/year and more minutes than WE need. Of course a lot of people use more minutes in a month than we get for the year.

  • jcomb

    Thanks for finally mentioning the broken patent system on-air. Looking at the record of patent litigation by the mobile companies against eachother for the last several years, Google’s action seems pretty clearly aimed at defending its hardware partners (Samsung, HTC, etc) from abusive bullying at the hands of Apple and Microsoft.

  • Kwren

    Kathi Wren It bears mentioning that google isn’t exactly minding the
    store (search capability) adequately. Today, I searched (google) for
    USHOTELS, and NONE of the hits that came up on the whole first page of
    the results was USHOTELS.com! They were all ghost-sites, with names
    kind of like UShotels. Now, that’s a broken search function.

  • Kwren

    I take exception to Ken Auletta’s “well, of there’s competition, it’s always good for the consumer.”  What Kool-Aid is he drinking?  This whole situation is about firms trying to dominate the market and thereby decrease competition.  So, it’s good for the consumer…..until it’s not.

  • Gehre

    Listening to this broadcast, I kept wondering about the use of Linux code in Android. Linux is copyrighted. Developers of Android have to abide by these agreements. How exactly does one use copyrighted source code that is open-source in a new brand of phone that is supposedly going to control a vertical market ie both the software and hardware while honoring the copyright? Is this legal?

    • Quadraticus

      Google (or Bing!) for “AOSP”.

    • Brennan511

      So “horizontal market” is only hardware or only software , and “vertical market” is both; {and that would be either specialized or omnipresent?} thanks for the clarification info presentation/definition, Gehre.

  • Hasiticninja

    I am extremely saddened by how the commentators had so little insight into how android an it’s community work. Google would be shooting itself in the leg if they didn’t leave the OS open. This is all about patent wars. 

  • Pan_nikdo

    The price of mobile devices is not coming down for the demand for more capability is going up. If we were still buying the Nokias of the late 90s the price would certainly be lower, but who wants one?

  • Chris Selwyn

    I love my DroidX by Motorola, I think the difference is like Windows PC and Mac. The Android phones are more user friendly and customizable with user rated apps.

  • Kwren

    Here’s an academic paper on “black-hat SEOs” (companies that “game” the Search Engine Optimization function of Google).  They found that google searches are riddled with manipulated results.
    http://www.usenix.org/events/sec11/tech/full_papers/John.pdf

  • Brennan511

     Well the information within Google [provides] is limitless,
     but the raw materials of Apple’s prestige [pragmatic] are quite limited. The question or search is whether the information substrate is ecologically “good” is quality and not just quantity -equating quantification on the base-is of solution …vitreol?or VITRO… vs vynal.
    Russia voluntarily adopted ultra?pragmatic socialism, and that capital[Moscow] actually cultivated such visions, but Chernoble is very far from Silicon Valley’s germination, that the Atlantic world often fears.

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