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A recent leak of internal Google documents reveals that Google's dominant Android mobile OS isn't "open" or "open source," as the company claims. Indeed, licensing Android comes with a complex web of requirements that binds the hardware maker's devices to Google's extensive collection of online services and forces them to use Google apps as the default.
Put simply, Google is engaging in exactly the same product-bundling practices that got Microsoft in antitrust trouble around the world. But it is doing so with a far more invasive suite of services.
"In order to obtain key mobile apps, including Google's own Search, Maps, and YouTube, manufacturers must agree to install all the apps Google specifies, with the prominence Google requires, including setting these apps as default where Google instructs," Harvard University professor Ben Edelman writes in a blog post explaining Google's practices. "It's a classic tie and an instance of full line forcing: If a phone manufacturer wants any of the apps Google offers, it must take the others also."
The timing of this revelation is interesting, as European Union (EU) antitrust officials, having accepted a settlement of Google's sweeping antitrust charges related to search, are now investigating Android. I've alleged that Google has effectively "dumped" Android in the market—selling or licensing the mobile OS below cost, or at no cost, in order to quickly gain market share and illegally harm competition—but these documents reveal a new layer of wrongdoing: Google's agreements with hardware makers also come with important and potentially illegal strings attached.
With an ever-rising 80 percent market share in smartphones and 62 percent in tablets, Google is the dominant mobile computing platform and the obvious heir apparent to Windows, which still dominates the PC world. But there are many questions swirling around Android, including multiple accusations of intellectual property and design theft. Many believe that Android's dominance has come both unfairly and illegally.
The leaked documents hint at how Google monetizes something that is ostensibly free (not to mention "open," which it is not): Google requires hardware makers to agree to a Mobile Application Distribution Agreement, previously undisclosed publicly, that numerous Google mobile apps must be preinstalled on devices, that Google Search must be set as the default search provider, and that Search and Play Store icons must appear "immediately adjacent" to the home screen, with the other Google apps appearing no more than one screen swipe away. Because search is the main conduit for Google's only actual source of revenues—advertising—much of an Android user's daily activities feeds the Google financial engine.
In case it's not obvious, an intentional side effect of these requirements is that it places Google competitors, including Microsoft's Bing, at a disadvantage. And the only way to avoid the Mobile Application Distribution Agreement is to replace key Google services and create your own mobile app store—prospects that are obviously difficult and expensive, and beyond the capabilities of most companies. (Only Amazon has done so, and its store is a tiny fraction of the size of Google's.) Thus, Android licensees are locked into Google's web, as are Android users.
Professor Edelman ably explains how this practice harms everyone but Google: its partners, its competitors, and consumers. Even if a phone maker believes a competing mapping or search provider is better for consumers, they can't use it without losing access to all of the other Google services that make Android usable. This agreement "surpresses competition," he writes, because "alternative vendors of search, maps, location, email, and other apps cannot outcompete Google on merit even if a competitor offers an app that's better than Google's offering." And "consumers do not benefit when Google prevents phone manufacturers from installing apps in whatever combination consumers prefer."
Most chillingly, this product tying gives Google's weaker and otherwise uncompetitive services—Google Checkout, Google+, Google Shopping, Google Products, and so on—artificial prominence that could over time drive out the products and services that legally established themselves in their respective markets.
He cites Google Checkout as an example.
"Reaching users a decade after Paypal and competing with Paypal's huge user base, by ordinary measures Checkout should have been entirely stillborn," Edelman notes. "Indeed, Checkout's growth has been slow. But what would have happened if, rather than featuring a special logo only for AdWords advertisers who joined Checkout, Google had shown such logos for all popular payment intermediaries? Surely equal treatment of Checkout versus competitors would have reduced Checkout's adoption and harmed Checkout's relative prospects. Yet equal treatment would have provided consumers with timely and actionable information, and would have facilitated genuine competition on the merits."
That's Android, folks: everything that antitrust regulators complained about with Windows, but worse. And as a reminder, Microsoft was originally threatened with a breakup order in the United States for its own anticompetitive behavior. I'm curious to see what antitrust regulators think of this hairball. ###
ZTE, Huawei, Alcatel, and LG have all brought Firefox OS devices to this year's Mobile World Congress, with the latest generation of both software and hardware looking much more mature, complete, and potentially compelling. Whereas the very first Firefox OS phones had tiny screens with horrible displays and intolerable lag, the 2014 editions are much smoother in operation and more attractive in look and feel. Alcatel is leading the charge with three new handsets and a Fire 7 tablet, while ZTE is introducing the Open C and Open II phones.
Mozilla is aiming for a $25 smartphone
Handling the new devices with the latest version of the platform is like a night and day experience compared to prior Firefox OS smartphones. Apps open up much quicker, there is little to no input lag, and the browser is something that is actually usable for viewing websites on the go. Underpinning Firefox OS' on-device search is EverythingMe, which provides contextual results from the device and the web when you search for something like music.
The ZTE Open C's display is much larger and higher resolution than we've seen on Firefox OS phones before, and while it won't give a high-end Android phone anything to worry about, it does at least feel modern enough to be called a smartphone. Overall, the whole platform feels as if it's grown up a lot in the past year, and Firefox has addressed many of the performance complaints we had at its initial launch.
Apple and Google have reportedly asked a federal judge to dismiss all patent litigation between the two companies after four years of legal battles.
Reuters discovered filings posted on Friday in a Washington federal appeals court requesting an end to the patent war. The myriad of legal spats were consolidated into a single action back in 2012, and Friday's filing makes it clear that that battle is now over.
"Apple and Google have agreed to dismiss all the current lawsuits that exist directly between the two companies," the companies said in a joint statement.
"Apple and Google have also agreed to work together in some areas of patent reform. The agreement does not include a cross license."
Thus ends one of the most rancorous chapters in the patent wars currently being fought in courts around the world. Apple took on Motorola in 2010 as part of Steve Jobs' "thermonuclear war" against Android, with the Apple boss vowing to "spend my last dying breath if I need to."
A year later and he was gone, but Tim Cook and Apple's army of lawyers carried on the fight. Google bought Motorola in 2012, adding some much needed legal protection to the struggling smartphone vendor, and the Chocolate Factory and Apple have been duking it out in the courts ever since.
Judging from the carefully worded statement, this isn't the end of Apple's patent battles. It looks likely that Cupertino will carry on suing its competitors that use Google's operating system, unless some other deal can be struck with vendors such as Samsung.
That looks unlikely. Apple is currently beating Samsung like a red-headed stepchild in the courts, and secured a $120m judgment against the company earlier this month – although that is under appeal.
That sounds good, but the size of the settlement will barely cover Apple's legal bills in the case, and does nothing to stop Samsung from carrying on selling its Android-powered smartphones and fondleslabs.
It may be that Tim Cook, ever a man with an eye on the bottom line, has decided that going up against Google in court would be too expensive and show little financial benefit to Apple in the long term.
Those of you with seismology equipment may want to listen in California for the rumbling sound of Steve Jobs hitting 200rpm in his unmarked grave. ®
"The Samsung Z will no doubt help to boost the Tizen operating system though. Samsung already has Tizen-based devices in the market, after it used the operating system for its smartwatches — the Gear 2 and Gear 2 Neo – and just announced plans to introduce a Tizen-based SDK for smart TV products next month, but seeing it compete on smartphones will be a key test for the new operating system."
The Samsung Z is the world’s first Tizen smartphone, will go on sale in Russia in Q3 2014
Samsung has finally announced the world’s first Tizen smartphone, the Samsung Z. It will be available in Russia in the third quarter of this year, and Samsung says there are plans to expand it to other markets.
Other than being equipped with the new Linux-based mobile operating system, the Samsung Z comes with a 4.8-inch Super AMOLED display and is powered by a 2.3GHz quad-core processor and a 2600mAh battery. It also comes with a built-in fingerprint sensor, which Samsung first introduced in its Galaxy S5 flagship. The Samsung Z has an eight-megapixel rear camera and a 2.1-megapixel front-facing camera, while it also supports 2D and 3D graphics, and boasts a better scrolling experience and improved rendering performance for web browsing.
A widely expected deal that will see US operator Sprint acquire its competitor T-Mobile USA is nearing completion, according to a number of reports citing inside sources. News agency Bloomberg said that an agreement on the price, capital structure and termination fee is close and that the deal would value T-Mobile at $40/share, or roughly $31bn. At the time of writing T-Mobile USA was trading at $35.20. The agency suggested a deal could be announced in July.
Such a deal would create an operator with the same scale as market leaders Verizon Wireless and AT&T. A combined Sprint-T-Mobile would have 103.53 million customers according to the latest figures from Informa’s WCIS Plus.
In May it was reported by the Wall Street Journal that German incumbent and T-Mobile parent Deutsche Telekom (DT) was demanding a $1bn break-up fee be written into any deal with Sprint, which is majority owned by Japan’s Softbank. The payment, from Sprint to Deutsche Telekom, would be required should an agreed deal be derailed; perhaps blocked by regulatory or competition authorities.
DT’s enthusiasm for the pre-nup is based on rewarding experience. In 2011 it walked away from the collapsed $39bn takeover of T-Mobile USA by AT&T with $3bn in cash, substantial spectrum assets and a favourable roaming agreement. It was able to invest that sum into its network and has performed well in subscriber terms since.
And yet the firm’s financial performance has not reflected this trajectory. In Q1 this year, despite claiming to have taken “virtually all of the industry phone growth” in the period, T-Mobile USA posted a $154m loss, down from a $106m profit for the same period in 2013. The firm cited increased customer acquisition costs as having a significant impact on its bottom line.From June 2012 to March 2014 the operator increased its subscriber base by 48 per cent, from 33.17 million to 49.08 million, according to figures from Informa’s WCIS Plus. Over the same period Sprint’s subscriber base dropped by 2.8 per cent to 54.45 million, while AT&T’s grew 10.3 per cent to 116.04 million and Verizon Wireless’ by 9.8 per cent to 121.29 million. ###
Amazon CEO Jeff Bezos is rolling the dice once more with his riskiest wager yet.
When the Seattle e-commerce giant introduces its smartphone -- which is widely expected to happen at a company-hosted event on Wednesday -- it will be only Amazon's fourth device in the last seven years.
But where its first three products have skirted the edges of mainstream consumer electronic devices -- an e-reader, a budget-priced tablet, and a streaming Internet TV box -- Amazon is now jumping straight into the heart of an industry with the most personal and critical of tech gadgets. In doing so, Bezos is escalating Amazon's fight against Apple and Google for control of the hearts and minds of consumers by combining a branded smartphone with a set of services available through its Prime premium membership.
Amazon's anticipated foray into the smartphone world comes as its fellow tech titans have steadily expanded their own reach beyond devices such as PCs and smartphones, with Apple and Google -- as well as Microsoft and Samsung -- introducing an array of services. Their common goal: to power everything from thermostats to medical equipment to automobiles.
"The great ecosystem war has begun," said Ben Schacter, an analyst with Macquarie Research. "This is going to be a long, hard war with many battles."
For Amazon, it comes back to the smartphone, the one device many people won't leave home without, and its potential to be the remote control for all the other devices in our lives. The company likely sees it as the ultimate hook for its $99-a-year Prime service, which offers members two-day shipping, e-books, movie, and as of last week, a streaming music service. Bezos' bet is that Prime is more effective in keeping customers coming back to Amazon than any single device.
Here lies the company's main weapon. Bezos is more focused on making money off digital content and physical items shoppers buy through its hardware than actually making money off selling the devices.
Yet the e-commerce pioneer is treading into unfamiliar territory. The smartphone world is brutally competitive, with Samsung and Apple at the top of the market.
Amazon's phone is expected to feature 3D technology, enabled by four front-facing cameras, and to come with a service called Prime Data to encourage video and music streaming through the device. But it will take more than a gimmicky technology that hasn't worked in the past for other handset makers to win customers. In line with Amazon's usual hardware strategy, the phone is also expected to have a low price tag, which it needs to compete.
It will go up against the popular, and likely more expensive, Apple iPhone and Samsung Galaxy S franchises at the high end, and an increasing array of affordable, but high-quality smartphones including the Motorola Moto X and Google Nexus 5 for the more budget conscious.
The unique dynamics of the smartphone business will test the company's strategy of selling its products at cost to gain a price advantage.
Still, Amazon has as good a shot as any. The company has spent years turning its Kindle devices into a trusted brand, and it boasts the world's best digital storefront in the Amazon.com homepage.
The man behind the devices
Amazon's ability to break into the smartphone business comes down to Dave Limp, publicly named vice president of devices in April.
While Bezos spells out the vision for the company, Limp's job is to execute upon that vision.
"Every day, when I wake up, I read customer feedback," he told FastCompany, reciting a common mantra among Bezos' top employees. "Some days it's hundreds of emails; others, it's thousands. We get ideas from all of it. The feedback leads to rapid iteration."
A tech veteran who has worked on the Kindle business for the last four years, Limp joined Amazon in 2010 after serving as the chief operating officer of Limbo, a mobile entertainment company. He's worked with hardware before. Prior to Limbo, Limp was the chief strategy officer for Liberate Technologies, a pioneer of using TVs for additional services, like shopping or checking email, and even further back, he was chief strategy officer for Palm's PDA business.
Like Bezos, Limp has both technical expertise as well as business smarts. A graduate of Vanderbilt University and the Stanford University Graduate School of Business, Limp holds a B.S. degree in computer science and mathematics, and a masters in management.
During his time at Amazon, the company moved from e-readers to Kindle tablets and streaming TV boxes with this year's release of the Fire TV and, now, presumably, to smartphones.
"Our philosophy, which hasn't changed even as we add a third category of devices, is we try to effectively break even on our devices when we sell them," Limp told The Seattle Times at the launch of the Fire TV in April. "We want to make money when customers use the devices." All about Prime
Getting more customers to subscribe to Prime has been the primary reason behind Amazon's array of products. Amazon doesn't disclose how many Prime members it's garnered, saying only that the official tally of the service is in the "tens of millions."
The original Kindle e-reader drove e-book sales, and it has nearly dismantled the physical book retail industry. Amazon's line of Kindle Fire tablets, which run an altered, or "forked" version of Google's Android mobile operating system that omits key Google apps and services, presents Amazon services up front and even includes its own app store. The $99 Kindle Fire TV box also runs Amazon's variant of Android, and it's designed to take advantage of streaming video and downloaded media from Prime.
Amazon's smartphone is rumored to include a feature that displays images in 3D, which would make sense if the company views the device as an extension of its online store. 3D product images might entice more buyers to buy from their smartphone.
While Prime started as an option for fast, free shipping, Amazon has slowly layered more on top of the service, adding online movies, free e-books, and most recently a streaming music service, in a bid to secure the loyalty of its customer base. The company is highly motivated to sign up more Prime customers, who tend to shop more with the site.
"Every user that buys that device becomes your customer and then you own them," said Topeka Capital Markets analyst Victor Anthony. He estimates that of Amazon's 244 million active customers, roughly 25 million are Prime members.
Amazon's tactics in hardware show that Bezos is willing to bet big. While Apple boasts margins of more than 20 percent on its iPhone and iPad, and Google makes money from the advertising it delivers through its Android mobile OS, Amazon says it's happy to break even -- or even take a loss -- on its gadgets for the chance to win repeat customers who will keep coming back to the company's ecosystem and ultimately spend more money at its store.
Macquarie analyst Jeff Su called this the "Trojan Horse" approach to luring in customers.
Analysts say Bezos' strategy works. Kindle owners spend 30 percent more on Amazon than non-Kindle owners, according to a recent survey of 2,000 Amazon customers conducted by RBC Capital Markets. The results are even better for the company's main attraction: Amazon Prime members spend almost twice as much as non-Prime members.
Risks abound
A key dilemma for Amazon is what the company typically counts as an advantage: price.
Unlike other devices, smartphone pricing is skewed by the subsidies the devices enjoy. In exchange for a two-year contract with a carrier, what would be a $650 iPhone 5S ends up costing the consumer $200.
Even off-contract, there are a number of smartphones that offer plenty of bang for a reasonable buck. Both the Nexus 5 and the Moto X costs $349 unlocked. The Huawei Ascend Mate 2 phablet is available without a contract for $300 at GetHuawei.com.
The rumored Prime Data plan may offer customers an attractive way to save money in step with the growing popularity of streaming media, a service that increases the need for data. But it won't be easy.
Other non-telecom companies, such as ESPN and Disney, have released their own branded phones and services, but ultimately couldn't win enough customers to justify the devices or networks.
"There's a lot of corpses buried in the ground of companies who have tried and failed," said Julie Ask, an analyst with Forrester Research.
Still, there's room for growth in the smartphone market, and Amazon could capture some of the 70 percent of cell phone owners globally who haven't yet switched to a smartphone, according to Anthony, the Topeka Capital Markets analyst. In the US, however, that figure is less than half, with more people snapping up smartphones everyday.
Ultimately, it's not about selling more devices than Apple, or even getting Apple's customers to jump ship. It's about providing consumers with an affordable alternative, Anthony said.
And that goes back to Bezos' game plan: At the end of the day, Amazon doesn't care if it makes money off its devices as long as people shop more on its site.
"Amazon, no matter what ecosystem you use, they want you to buy their products," Anthony said. "Amazon wants you to shop no matter what device it is." ###
NEW YORK — The HTC One M8 that I reviewed when it appeared in March is one of the finest Android devices out there. It is a beautifully designed handset with a handsome curved all-metal unibody design. The 5-inch display is sweet to look at. The speakers are top notch.
