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Could Google Learn from App Store Business Model?

Scott Webster
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If you’re a prospective developer for Google’s Android platform and trying to figure out the best way to distribute your application, you might be intrigued by how Apple is handling their App Store. Announced last week with the Software Developer Kit (SDK), it offers a different approach to distribution. As a developer, you can pick your price and allow Apple to provide the one-stop shopping for iPhone and iPod Touch programs. The rub is that they take 30% off the top.

It works on one hand as consumers will know specifically where to go to look for new applications. There’s going to be a built-in audience chomping at the bit when the doors open. On the other hand, pretty much all applications available for other platforms (Windows Mobile, Symbian, etc) are readily available through many channels. You can get a program at the developer’s web page, Handango (or similar store), or even at physical stores. I’ve never heard one person complain to me “Gee, I wish there was one place I could go to get all the WinMo apps I want. There’s just too many choices out here.”

Perhaps Google could offer a trusted site where people can go to look for programs that have signed certificates. Doing this would put people at ease who are weary of quality control issues. Sure, you can still get an application at the developer’s personal blog or corporate website, but by being officially given the “all clear”, end users can be assure that there will no compatibility issues. Creating an online superstore where anyone can submit their offerings would also give the developer peace of mind knowing that there is definite exposure opportunity. Raise the bar just set by Apple (again) and allow the developers the right to take home 100% of the money.

It wouldn’t be the first time Google offered things for free.

Some Thoughts on Apple

Scott Webster
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First a little preface because I’ve got to give credit where it’s due. Steve Jobs and Apple have done a tremendous job of selling people over the last few years. Be it, the iPod, Macbook, or iPhone, somehow they always seem to get people to buy into their ideas and products no matter what. Even though the new Macbook Air has nowhere near the power or capability as other models in its price range, it’s still selling like hot cakes.

Adopting their own business model, Apple has pretty much done whatever they want. And for those partnered or associated with them? They either play ball or lose out. Much like Wal-Mart, if you don’t do what Apple asks, then you’re just skipped over and left behind. Ask yourself if you’d let them take the iPhone to the next carrier if you were AT&T. The problem that is arising from all of this is that Apple is getting to be a little bit too bossy. Let’s look at the situation with getting Flash on the iPhone and why it’s not likely to happen very soon.

Using the allegory of Goldilocks is the best way to equate what’s going on. The version of Flash that’s currently available is allegedly too weak to run well on the iPhone whereas the full-fledge version commonly used on PC’s and laptops supposedly uses too many resources. Steve and the other Apple cronies are essentially demanding that Adobe create a mama bear version for their device.

With the release of the iPhone SDK happening as I write this, it’s unlikely we’ll see any Flash apps or utilities coming soon. This raises another point – Apple has choked off development before it was even available to other companies. See, if you create an application for the iPhone, Apple gets to decide whether or not it will even make to iPhones or iPod Touches. Let’s just assume they give your program the okay though. The only place for people to access it is through iTunes. That’s right, you can’t pick your price or method of distribution. They’ve become the rude bouncer at your favorite night club. “You wanna get in? You’ll have to come through me.” Of course if you are a part of a larger company, you’ll stand a better chance.

And that is exactly where the freely available open-source developer kit for Google Android shines. The club’s open all night long and the drinks are free.

Open Handset Alliance Profile: HTC

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Open Handset Alliance Member Profiles (Week #9 – HTC Corporation)
For 34 weeks, each Tuesday, Jordan from fandroid.net will be joining us to offer a profile of each of the 34 members of the Open Handset Alliance.

Company Name: HTC Corporation

How the OHA site classifies them: Handset Manufacturer

What the OHA site says about them: Our mission is to organize all the world’s information and make it universally accessible and useful.

What they do: Build pretty badass handsets.

I have an HTC S621, which is basically the same as the T-Mobile Dash and the Excalibur. I really like it. It’s slim and good-looking. I think it’s the nicest full-QWERTY candy bar phone. The rubberized plastic makes it smooth to hold and reduces the plastic creaking sound. The keys are easy to use and typing with thumbs is simple despite their small size. It has a 200mhz processor, but it feels fast enough for most apps. I use it a lot for browsing, reading eBooks, listening to music and podcasts, checking emails, making lists, and more. I also make calls using both the regular cellular connection and VOIP over WiFi.

It’s not perfect. The JOGGR touchpad slidy thing is just silly. The battery life is not great, which is not helped by the Direct-Push email sucking juice. It doesn’t have a touchscreen, which I know is not the norm for this form factor but is still is on my wish list. The EDGE data connection is poky. The 1.3 megapixel camera gives a slightly purplish hue to everything. Oh, and there’s the Windows Mobile part… I’ll get into that in a bit.

In the end, I’m proud to lay this thing down along side my friend’s Motorola Q or the Blackberries that are so common in the corporate environment in which I swim daily. People admire it, ask to hold it, make nice comments. And then the inevitable comes out: Who is HTC? Never heard of ’em.

Unfortunately, in the electronics business the unheard-of brand carries a stigma, that of the cheap-knockoff, Made in China (which these days is actually a sign of quality), Radio-Shack no-name crap.

So who is HTC?

The High Tech Computer Corporation, established in 1997, initially focused on producing devices for other companies such as T-Mobile, Verizon, Dell, and HP. Many people I work with were unaware that HTC manufactured the Palm Treo 650s they were using until recently. There are rumors that Palm is returning to HTC for manufacturing, and reports suggest that the new Sony Ericsson XPERIA X1, which gained attention at the World Mobile Congress, is designed by HTC. HTC is a leading original design manufacturer (ODM).

It was the decision to produce HTC-branded Windows Mobile handsets, however, that brought the company out into the open. It was a smart choice for both Microsoft and HTC: HTC got Microsoft and the recognizable Windows brand behind them, and Microsoft got probably the best smartphone maker on the planet.

Truthfully, Windows Mobile sucks. In my experience, it’s buggy, ugly, and hard to get around in. At least once a week I have to do a hard reset on my phone ’cause something’s locked hard. There are a couple of good points…okay, not a couple, one: there are plenty of folks out there building apps for Windows Mobile, so its relatively easy to find programs to do almost anything I want (an SSH client, eBook reader, a better media player). But, basically, Windows Mobile is ass. Really.

It’s a good thing that the elegance of the HTC hardware is there to save the day.
To an unsuspecting public, however, the Windows name is a selling point, and that has served HTC well, to the tune of $3.7 billion in revenue in 2007. The HTC touch, which saw the company’s TouchFlo interface apply a serious coat of paint to the Windows-Mobile-interface-of-the-devil, has sold 2 million units, which ain’t too bad at all.

What they bring to OHA and Android: As I said above, these guys are likely the best makers of smartphones in the world. The problem is Windows Mobile. If we take WM out of the mix, and replace it with a sexy, open, LINUX-based mobile OS, the results just may be brilliant.

The buzz is that HTC will produce 2 or 3 Android phones in 2008. Let’s conjecture that we’ll see a candy bar full-QWERTY sans touchscreen (a la my S621), a primarily-touchscreen-interface job with a small form factor (like the Touch), and a slide-out or clamshell full-QWERTY + touchscreen ultra-handset (The Kaiser, the XPERIA X1).

Are you telling me that thought doesn’t get you excited?

Open Handset Alliance Profile: Google

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Open Handset Alliance Member Profiles (Week #8 – Google)
For 34 weeks, each Tuesday, Jordan from fandroid.net will be joining us to offer a profile of each of the 34 members of the Open Handset Alliance.

Company Name: Google

How the OHA site classifies them: Software Company.

What the OHA site says about them: Our mission is to organize all the world’s information and make it universally accessible and useful.

What they do: Cackle gleefully as the money comes rolling in. The Wikipedia entry doesn’t quite seem to do it justice:

Google is an American public corporation, earning revenue from online and mobile advertising related to its Internet search, web-based e-mail, online mapping, office productivity, social networking, and video sharing as well as selling advertising-free versions of the same technologies.

Kind of an inadequate description, because the thing about Google is this: it makes a sh!tton of money, and is worth an insane amount. Current Market Cap? According to Yahoo, $159 billion dollars. This site claims that $160 billion dollar bills stacked on top of one another would be 55,333,200 feet high, which wouldn’t quite get you to the moon or anything but is still a whole lot of one dollar bills.

Most of this money comes from ads attached to search results. Google does other things, some well, some not so well: Gmail, Google Reader, Google Docs, etc., etc. It’s the search stuff that made Google what it is, however 75% + market share worldwide, such a dominant position that were Microsoft to acquire Yahoo its combined market share wouldn’t even be a third of what Google has.

Everything else Google does can be seen as an attempt to add other profitable ad platforms to their core search functionality. Their in-browser email, document editing, RSS feed reader, chat, etc., are not only cool bits of cloud computing produced by an engineer-centric corporation, they also offer Google the opportunity to build a profile around you and more effectively target ads.
What they bring to OHA and Android: Well, they own the thing.

They bring clout, the will to innovate, and a suite of web-based apps that, in many cases, seem custom fit for the mobile platform.

The more interesting question is: why are they producing Android? The easy answer is: “For the potential ad-revenue, of course.” But they already have mobile apps that are widely used, why go to all the trouble of doing the actual OS, an area they have never attempted to infiltrate before?

Well, there is this concept that it gives them more hooks into the user. If they own the OS they can access the SMS subsystem, the GPS subsystem, the Contacts subsystem, and the Browser subsystem, so that when you text message a friend asking where the two of you should go for lunch they know that you have 5 pizza places in your contacts and are currently standing at the corner of 5th and 134th, so that when you go online to try and find a place to eat they can offer a custom answer — Pagliacci’s Pizza is two blocks away and a favourite of yours — and thereby get a few bucks from the Pizza Place owner for their trouble. Of course, the user can opt-out if they so choose; its an option Google must offer if they want to avoid doing evil.

Check out these quotes a USA Today article from a few weeks back, in which they interview Cole Brodman, T-Mobile’s chief development officer:

By combining “unique information about consumers from the Web,” he says, with “other information” from mobile devices, such as location, “Google believes search responses can be much more targeted for Google, and that the value they can bring back to advertisers can be quite a bit higher.” …Android won’t favor Google over Yahoo and other search-engine rivals. [Brodman] says consumers also can “opt out” of Google’s “cookies,” used to track their movements on the Web.

In my heart of hearts, however, I don’t really believe its all revenue motivated. Google is an engineer’s company. It’s a bunch of folks rather like me: coders, hackers; they’re just a lot smarter and a lot better paid. Google’s folks are, in the end, into cool-ass tech. The ad stuff is placed on top to keep the money flowing, but many of these guys come up with this stuff just ’cause its a cool idea. Android as we know it, the open source OS, running on Linux, rocking its own Java virtual machine, promising to free up phones everywhere, is the product of a bunch of Google geeks sharing the cool toy they built.

But then, I’m a Google apologist, which is why I write these articles. If you feel so inclined, just ignore my hippy-happy, love-and-clean-code, Richard-Stallman rantings, and go ahead persisting in the belief that it’s all motivated by money.

I feel sorry for you, you sad, cynical person.

Consumers Will Emerge Victorious in War of Providers

Scott Webster
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It’s been said before that 2008 will go down as the year of the mobile device. Cell phones are getting smarter every generation and the rate of adoption is skyrocketing. Many of the smart phone buyers will probably tell you that they never pictured themselves buying one. Why is this happening? What has spurred this trend? One can’t really point the finger at one particular reason as it’s a combination of many things happening in the industry.

Everyone knows that customer satisfaction is what drives people to buy or use certain products and services. Now, more than ever, these satisfaction rates are climbing. There are three things that have happened over the last year within the cellular industry that have started changing things forever. Commitment to being open, pro-rated early termination fees, and the price war of 2008 are going to be looked at as the events responsible for the sea-change.

Lately each company seems to be mimicking the next, afraid to get left behind. After all, if 3 out of 4 companies are providing something you’re not, then your customers will be looking to go elsewhere. Taking a look at what Sprint did two weeks ago with their announcement of the $119 unlimited plan. While I am not an expert in the field, I can still add a few things up. Sprint was essentially forced to do something dramatic to keep from hemorrhaging customers. Maybe by dropping their prices and offering something so unique, people will forget their less than stellar customer service.

Sadly, that idea will never come to fruition as Verizon, AT&T, and T-Mobile all announced similar, if not better deals within a week. My thought is that Verizon and AT&T made the plan announcements just because they’d rather not be beat at a game they are currently winning. T-Mobile is in no position to jump Sprint anytime soon if things continued at current pace so maybe that is why they were so aggressive in their plans to offer unlimited calling and texting for $99 a month.

How will Sprint combat these other plans? The latest rumor is that they are considering a $60 unlimited calling plan. This could not come at a better time as early termination fees are set to be prorated if they are not already. Customers will be able to switch carriers without that $200 hefty cancellation cost. The burden to retain customers gets heavier every day.

By offering an open network, users have the capability of switching to other carriers without being forced to buy a new phone. On top of that, they don’t have to wait until their 2 year contract is up. It’s not out of the realm of possibility that you could be switching providers every few months. That is at least, until the dust settles a little bit.

Balloons Full of Hydrogen and Possibility

Scott Webster
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When I first read the article on the Wall Street Journal yesterday afternoon I immediately thought to myself “Wow, this would totally make sense.” It’s a logical move that couldn’t come at a better time for the cellular industry. Google is on the verge of revolutionizing the cellular industry twice in the same year. First with Android and now with a potential contract with Space Data Corp.

This is one of those cases where it should have been thought of a long time ago. By putting up roughly 330 balloons a day, they could blanket the country with radio signal and provide users with coast to coast coverage. By beaming down from 20 miles up, the signal would be free from interruptions typically caused by mountains, trees, water, etc. Imagine being able to use a cell phone out on the ocean! If this deal goes through, you’ll not have to worry about the limitations caused by zoning restrictions.Depending on how the 700MHz auction falls out, there could be even more potential. Think along the lines of mobile television, gaming, Wi-Fi, and plenty of other cool scenarios. Google could find themselves partnering up with an actual carrier like Verizon to offer floating virtual cell towers. It could even end up being an Open Handset Alliance deal with Google sharing their radios with T-Mobile and Sprint users only.

Regardless of who wins the auction, nearly $5 billion is needed to come out of pocket before building tower number one. This is where Space Data Corp. is hoping to be called on. Whether the spectrum gets used to provide cellular network, television, or internet services, this is by far a much cheaper alternative to building up a traditional network. How much money and time do you think would be involved in erecting 22,000 towers? An average of 6 balloons per state seems much practical. Google could have these balloons in the air by the time the ink finishes drying on the contract. It should be fairly obvious by now, but I’m a big fan of this one.

Open Handset Alliance Profile: Esmertec

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Open Handset Alliance Member Profiles (Week #7 – Esmertec )
For 34 weeks, each Tuesday, Jordan from fandroid.net will be joining us to offer a profile of each of the 34 members of the Open Handset Alliance.

Company Name: Esmertec

How the OHA site classifies them: Software Company.

What the OHA site says about them: Esmertec is a leading provider of multi-media solutions and end-to-end integration services that accelerate time-to-market and reduce operational costs for OEMs and Operators.

What they do: We provide software platforms that enable the deployment of content and applications in devices and over servers. Our customers include mobile telecom operators and manufacturers of mobile handsets, set-top boxes and interactive televisions. Esmertec’s software and service capabilities excel with its reliability as well as fast and local execution.

Basically, they offer Java-based products for mobile and embedded systems. Their Jbed Java Virtual Machine (JVM) offerings come in a number of flavours, including a JVM and real-time operating system package that runs directly on the hardware, with no intervening bits. A focus of the Jbed system is to deliver powerful multimedia capabilities.

So, they’re another Java-on-handsets company. They breed like rabbits.

As owners of Cellicium, they also offer Unstructured Supplementary Service Data (USSD) services, the real-time messaging system for GSM phones that is commonly used to enable SMS and other real-time messaging.

What they bring to OHA and Android: They go into a bit of detail on this very question on their site.

Esmertec shares the Open Handset Alliance’s vision of enabling innovative and easy-to-use solutions for mobile end-users. We have actively contributed to this initiative with our OMA applications (MMS, WAP, DRM, SyncML, and IM).

The OMA offerings are Open Mobile Alliance standards Multimedia Messaging, Wireless Application Protocol, Digital Rights Management, Synchronization, and Instant Messaging. So, they have the basics covered.

In addition to Android’s open source, Esmertec’s leading edge Java Virtual Machine (JVM) platform can easily be made commercially available on customer demand for the Alliance ‘s mobile platform. This option offers immediate and seamless compatibility with the standard Java ME world, leveraging thousands of existing Java ME applications.

For those wondering what a company offering JVM products has to offer a system with its own virtual machine (Dalvik), here’s the answer. All those existing mobile Java apps out there don’t have to be ported; just slap Jbed on your Android-running handset and all’s happy in Java world.

Finally, Esmertec also offers a full range of integration and development services for the Android platform that will help current and future players in the mobile value chain to reduce integration time, ensure operator compliance, and deliver enhanced multimedia functionality for new handsets quickly and cost-effectively.

Here’s an interesting angle: Android consultants. No doubt there’s great value in this proposition. If I’m a company looking to bust into the Android world, here’s someone to hold my hand. Help with porting apps, integration with existing Android features, customizing Android to my needs – a general wheel-greasing.

Sounds like an attractive offer, and one that may make Esmertec a major back room player as Android usage ramps up.

Open Handset Alliance Profile: eBay

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Open Handset Alliance Member Profiles (Week #6 – eBay )
For 34 weeks, each Tuesday, Jordan from fandroid.net will be joining us to offer a profile of each of the 34 members of the Open Handset Alliance.

Company Name: eBay

How the OHA site classifies them: Software Company

What the OHA site says about them: Nothing. The name eBay kinda speaks for itself.

What they do: eBay is The World’s Online Marketplace, enabling trade on a local, national and international basis. With a diverse and passionate community of individuals and small businesses, eBay offers an online platform where millions of items are traded each day.

If you don’t already know what eBay is, you’re kinda beyond my help. They are, along with Amazon and Google, one of the pantheon of companies that have gone past web success story and deep into holy-sh*t-that’s-a-massive-company territory.

But they’re a company with spiritually uplifting goals, as well. Check out this bit: “Ultimately, eBay Inc. will raise the expectations and aspirations of people around the world as they seek to connect, discover and interact with each other. Man, that’s groovy. eBay seeks to raise the aspirations of people in regards to the profit that can be had from the crap in their attic or by fooling people into paying exorbitant sums for a picture of an Xbox (I know, I’m cynical).

The crown jewel of eBay’s empire is, of course, eBay.com and its many international variants, the online shopping and auction powerhouse that is the locus for tens of billions of dollars worth of transactions yearly. eBay as a concept was a game changer, redefining the commercial possibilities of the Internet and truly making it possible to buy anything online (and, moreover, making it possible to profit by selling anything online).

In 2002, eBay acquired PayPal, the leading online money transfer service. Then, in 2005, Skype was purchased for an astonishing $2.6 billion dollars, an amount that eBay has since admitted was probably too much.

What they bring to OHA and Android: They’re one of the largest players on the Internet. That alone should be good enough.

In the auction space, I can’t see eBay on a mobile handset to be a big draw. Aside from being able to monitor auctions down to the last minute from wherever you are, what’s the point? A killer app, this is not.

PayPal, on the other hand, now there’s a great mobile app. Real-time money transfers on a mobile phone? The ability to not only pay for goods and services with your handset, but also get your friend the five bucks you owe? Making Paypal truly mobile puts it in a league where it can start competing with Debit cards or even cash. And if I’m making POS purchases using my phone, and eBay and Google can tap into that demographic information, the targeted advertising possibilities are staggering (and more than a little scary).

Skype is the other killer app, for obvious reasons in a world with WiFi-enabled phones and pay-per-minute talk-time models. As the largest player in the market, Skype has the clear advantage over any competition. In the VOIP universe, the size of the subscriber base is directly related to the convenience of the service. Already Skype offers mobile clients, and most likely they would for Android as well, but what if that client was completely integrated? What if your handset automatically made use of the Skype network to make calls when WiFi was available, or when that call was long distance?

It’s in PayPal and Skype that eBay’s membership in the OHA becomes exciting.

Open Handset Alliance Profile: China Mobile

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Open Handset Alliance Member Profiles (Week #5 – China Mobile)
For 34 weeks, each Tuesday, Jordan from fandroid.net will be joining us to offer a profile of each of the 34 members of the Open Handset Alliance.

Company Name: China Mobile Communications Corporation

How the OHA site classifies them: Mobile Operator

What the OHA site says about them: Nothing. There’s no blurb. Might be a translation issue.

What they do: Provide mobile service to more people than any other carrier in the world.

They have somewhere around two-thirds of the Chinese mobile market, which, according to Wikipedia, gives them 350 million customers. That’s a lot. They also own Pakistan telecommunications company Paktel, which seems like an odd fit, but whatever. China Mobile is the largest company on the Hong Kong Stock Exchange.

They’re owned by the government of the People’s Republic of China, which may or may not be OK depending on how you feel about human rights and the decline of the West.

What they bring to OHA and Android: A massive subscriber base.

Just recently at the World Economic Forum, China Mobile scared the hell out of a bunch of people when their CEO Wang Jianzhou said in response to queries about what it does with users private information: “We can access the information and see where someone is, but we never give this information away … Only if the security authorities ask for it.” Owned by the Chinese Government + Only if the security authorities ask for it = someone’s Chinese ass in jail.

Google’s mantra is Don’t Be Evil. Now, I don’t really think that the Chinese Government is evil, nor is China Mobile; the world just isn’t black and white like that, and I have an aversion to ethnocentrism. But Don’t Be Evil is as much a PR slogan as anything else, and I would bet that a large majority of the public to whom that slogan is meant to appeal would not consider it an act of goodness to hand location information from a GPS-enabled handset over to the Chinese authorities, who are not well known for their respect for human rights. But, such is the reality of the World Economy that Google is in a consortium with a company that may or may not be doing something the public of the western world would find distasteful.

What do they really bring to the OHA? Moral ambiguity.

Open Handset Alliance Profile: Broadcom

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Open Handset Alliance Member Profiles (Week #4 – Broadcom )
For 34 weeks, each Tuesday, Jordan from fandroid.net will be joining us to offer a profile of each of the 34 members of the Open Handset Alliance.

Company Name: Broadcom Corporation

How the OHA site classifies them: Semiconductor Company

What the OHA site says about them: Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications, providing products that enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment.

What they do: They build chips.

Wikipedia proclaims them “…among the Worldwide Top 20 Semiconductor Sales Leaders.” Their site list their offerings as including Bluetooth products, network processing solutions, digital cable products, digital TV solutions, satellite devices, DSL chipsets, mobile multimedia processors, mobile phone solutions, networking components, security processors, I/O integrated circuits, storage solutions, VOIP solutions, WLAN solutions, and Ethernet solutions. They got solutions.

Broadcom is probably best known for their NICs. There’s a good chance that the network card in the PC you’re currently reading this article on was designed by Broadcom.

Of course, Broadcom doesn’t really build any of this. Rather, it employs Asian people to do the building for them.

Special Feature: What is up with the Broadcom vs. Qualcomm conflict?
It’s complicated, and probably less exciting than you’d think. Basically, these two seem to get off on suing each other, and have been doing so for a few years now.

The most recent and most interesting contest started back in May of 2005, when Broadcom went after Qualcomm with a lawsuit over 10 supposed patent infringements, as well as a complaint with the US International Trade Commission (ITC) alleging unfair trade practices by importing products that infringe Broadcom patents. Then, in July of the same year Broadcom launched a couple more lawsuits accusing Qualcomm of violating antitrust laws.

Then a bunch of legal stuff happened.

The ITC eventually blocked the import of new cellphone models based on infringing Qualcomm chips, a jury awarded Broadcom $19.6 billion dollars, and, most recently, a federal judge has ordered Qualcomm to stop selling the contested chips.

So, like, ouch for Qualcomm.

I’m no legal reporter. This stuff makes my molars ache. Basically, these two hate each other. It makes Thanksgiving at the OHA household a tense affair. Let’s leave it at that.
What they bring to OHA and Android: Semiconductors. And, given their history with Qualcomm, domestic violence.

Broadcom kinda has its fingers in everything, including LiMo, a partnership with Trolltech, and now Android. Whether this means they’ll have a meaningful contribution to make in the Linux handset space or that they’re just lurking to keep options open for the future remains to be seen.

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