The Very Googley Motorola X

I’ve spent the last week with the Motorola (a Google Company) X. As many who read my columns will know, I prefer iOS to Android and I make that clear. However, when it comes to Android devices I like the stock–Nexus–Android devices the best. Which means, I knew I would like the Motorola X when I first heard about it. However, my desire to experience the device was not because it is running stock Android. It was because I wanted to see if Motorola, the Google company, added any unique differentiators with the software. And they did.

Better Than Stock

What surprised me was that the version of Android on the Motorola X and their new Droid lineup is BETTER than stock Android. It looks and feels exactly like stock Android, but the additions the Motorola software team (I mean members of the ex-Android team) added are very good and feel like features that would come with stock Android on flagship Nexus devices. Yet that is not the case, they are coming on Motorola devices and no one else’s. Not even Nexus devices. At least I am assuming they are not. Time will tell if these great features make it back to the stock Android kernel. But I doubt it.

I kept saying to myself that many of the key new software features felt very Googley. In fact the whole device just felt very Googley. Which is a good thing. Unless you are a competing Android OEM.

So what features make me say this? There are a few. The first is called Motorola Assist. Motorola has had some of these features at a basic level before. But they have now all gotten much more Googley. Take a look at the screen shot below.


That is the screen for the Motorola Assist feature. It looks very Googley. There are many design similarities to Google Now which is a feature of the latest stock Android build. The features of Motorola assist are also pretty slick.

First, if enabled, when driving it will know you are driving and when a call or text message comes in it will alert you via a voice prompt and allow you to answer a call, deny a call and respond with text message, or offer to read you the text message that arrived. Very nice hands free feature while driving with some good contextual automation built in.

The other that was quite nice and worked much better than I thought was the avoid interruptions during meetings feature. When this feature is enabled the service will be aware of your calendar appointments and auto send text responses to anyone in listed in favorites and let them know you are busy and will get back to them. It also keeps your phone silent of all notifications during this time. My wife LOVED this feature since I tried it by blocking off time when we went to dinner on my calendar and our time remained interruption free. This is similar to the iOS Do Not Disturb feature but is automated based on your calendar appointments.

Information at a Tap

The other addition I liked was Active Display. On the stock Android devices, I am a fan of the lock screen widgets. I use this primarily for email. So I can quickly see if I have important messages that I need to respond to without unlocking the phone. Motorola has added some smarts at the hardware and software layers to add to this feature. The home screen on the Moto X will pulse off an on when you have a notification waiting for you. You can simply tap on the icon and get at a glance any recent emails, text message, or missed calls and then choose to ignore or swipe to unlock the device and respond. This is information at a tap rather than a glance but is very nicely done.

Screen Shot 2013-08-29 at 5.52.26 PM

The key to this is that Motorola specifically added some hardware and software features to make use of a low-power processor just dedicated to this feature. This way to look at these notifications on the home screen you can do it without waking the CPU or the whole screen. Since the information is just in black and white the screen and touch features can be used with just the additional low-power core.

The other thing the low-power core can do is look for movement of the device allowing me to just pull it out of my pocket and the screen is already on showing me the time and any notifications without me having to press a button. Very useful feature.

Always Listening and Touch-less Control

The last feature I will dive into is the always listening feature. Also using the low-power core is a feature where the device is always listening for the key word “OK Google Now.” When you say this phrase you can then automate any number of features. You can tell it to call someone, text someone, schedule a meeting, set an alarm, etc. You can do many of the same things you can do with Google Now on many stock Android devices as well as Siri. The difference is that you can initiate the whole process with your voice without having to press a button.

This is the feature that is of extreme interest to me. I’ve always wrestled with the question of what we can do with our devices when they can hear us. Meaning that we can interact with our devices without having to initiate the function physically but rather verbally. We are just scratching the surface in this thinking and when we can train our computers to understand us better and provide fully automated value for functions hands free via voice, I think we will be in some interesting territory.

Measuring Success

From my view as an analyst, I think about how we should measure success for Motorola with this product. We could focus on the hardware which is very good. Motorola has made the most usable 4.7″ screen for one hand operation I have used yet. Or we could focus on the customization trend. Which I think is very interesting and a compelling differentiator for the Moto X. We could also focus on their efforts to make this device locally. I applaud their efforts to build this device in the US and again feel that will have a certain appeal.

For me, however, the way I’ll measure success for Motorola is not in how many devices they sell this quarter or next. Or what market share they gain or don’t gain. For me I will measure success if these devices help establish credibility again for Motorola as a hardware company and specifically a smart phone brand. Brand is everything in my opinion. Motorola had a good one and they are an American success story. I sincerely hope they can re-establish themselves as an innovator, thought leader, and a credible brand. From what I have experienced wit the Moto X, I think they are on the right track.

Other Things I Liked Worth Mentioning

  1. Battery life was better than average. Motorola touts 24 hours and although I never tested that claim, I routinely used my phone from 6:30am and plugged it in around 10:30pm and the battery level never went below 30%
  2. Motorola Connect was a nifty feature where by installing a Chrome plug-in you could reply to text messages on the PC as well as choose to ignore a call and respond with a text message all on the PC through the browser plug in. Very clever Google.

Google, Motorola, and the Future of Android

To hear both Sundar Pinchai, head of Android and Chrome at Google, and Dennis Woodside, CEO of Motorola Mobility, tell it, Motorola is just another Android OEM despite being a wholly owned Google subsidiary. This may be technically true at the moment, but it cannot be true for the long run. And just what Google does with Motorola has huge implications for the future of Android.

Business realities alone say the current arrangement cannot last. Motorola is a hole of at least $10 billion (purchase price plus cumulative losses, less the gain from the sale of the set top box business) in Google’s balance sheet. Although there was speculation at the time of the acquisition that Google was really after Moto’s patents, the standards-essential patents ase subject to fair, reasonable, and non-discriminatory licensing worth much less than many believed. Sooner or later, Moto has to start paying its way.

Woodside himself suggested, perhaps without intending to, that the relationship has to change during an appearance at the D11 conference a couple of weeks ago. Competitors, he noted, are earning 50% margins on smartphones. ((Of course, the only profitable competitors are Apple and Samsung.)) “We don’t necessarily have the same constraints,” he said. “One of the areas that is open for Motorola is building high-quality low-cost devices. The price of a feature phone now is about $30 0n a worldwide basis. The price of a smartphone is about $650. That’s not going to persist.”

The difficulty is that Apple and Samsung, by virtue of their enormous volumes and tightly controlled supply chains, are already the low-cost producers. Motorola is not going to beat them on the cost side. So to underprice them, as Woodside is threatening to do, will require sacrificing gross margins, perhaps selling phones at a unit loss. For a business unit already losing money by the bucket, that would seem to be a suicidal course.

Unless, of course, someone is prepared to subsidize this raid on the business models of Apple and Samsung. And that someone would have to be Google, which certainly has the deep pockets needed for this fight. Taking on Apple, while difficult, doesn’t pose huge problems for Google. Over the past few years, the relationship of the companies has deteriorated from best buddies to frenemies to all-out competitors.

Samsung is a very different matter. The Korean giant is second only to Google itself in importance in the Android ecosystem. It is by far the largest seller of Android handsets, from the iPhone-challenging Galaxy S 4 to low-cost units for emerging markets. And it has to be watching the Google-Motorola relationship with an extremely wary eye.

For now, Google and Samsung are co-dependent. That fact is what lies behind Google’s much trumpeted arms-length relationship with Motorola. But the relationship will be severely tested if Motorola goes at the heart of Samsung’s Android business model. (Microsoft’s OEM partners were very unhappy when it went into hardware competition with the surface and surface Pro, but at least it did not try to undercut their pricing. And, for better or worse, poor Surface sales have largely spared it fallout from entering the competition.)

Samsung has options if it comes to view Google as a competitor in a way that makes the current Android arrangements untenable. It could fork Android, going forward with its own flavor of the operating system and its own services, home-grown or developed in partnership with other players,  in place of Google’s. It could accelerate the development of Tizen, the Linux-based mobile operating system it has sponsored along with Intel. Or, far less likely, it could  move to Windows Phone (unlikely, I believe, because while this might be the easiest course to execute, the fact that it is trading one gorilla dance partner for another will make it unattractive.)

The defection of Samsung from Android would put tremendous strain on Samsung, Google, and the Android world. Software has never been Samsung’s long suit. It can afford to buy a lot of talent, but changing a hardware company’s culture to support the software effort required is very difficult. Android would become largely a Google/Motorola business. The viability of all the profitless Android phone makers is dubious, let along their ability to provide leadership.

If all these hypothetical strategies succeed, we could see a very different phone market: Apple would continue to be Apple, mostly riding above the fray. Samsung  would be slugging it out with Googlerola. And Microsoft and BlackBerry would be trying to squeeze out some gains from the confusion.


How Google Should Fix Android

Android logoIt’s time for Google to step up and take charge of the Android platform it has created.

I know this sounds odd. By at least one standard, Android is a runaway success. It is by far the world’s most popular smartphone software standard and is likely to remain so for the foreseeable future. But in many other ways, the platform is a mess. If Apple’s iOS is the good child, a little too neat and a bit too tightly wound, Android is the child raised by wolves, undisciplined and unpredictable.

Android’s most fervent defenders, from whom I’m sure I will hear shortly, rather like things this way. The great variety of available hardware and the openness of the software to modification are among Android’s top attractions to folks who love tinkering with their devices. But at the same time, the fragmentation is keeping Android from reaching its full potential, both by denying many customers the latest software and by making life difficult for developers.

Ownership lacking. A big problem is that Google owns Android, but fails to take full ownership of it. The software is free for anyone who wants to use it. Authorized users who adhere to some fairly loose standards get important perks, including Google services, access to Google Play, and the use of Android branding. (I’m really not concerned here with other uses, such as the Amazon Kindle Fire and the Barnes & Noble Nook.) The freedom given to OEMs yields both innovation and chaos.

Manufacturers are free to choose from a wide variety of processor and graphics combinations, with systems from Qualcomm, NVIDIA, Texas Instruments, Samsung, and most recently Intel in use. The software must also support a wide variety of display types, sizes, and resolution. This prohibits the sort of very tight, super-efficient hardware-software integration that Apple achieves in iOS and that Microsoft, to a somewhat lesser degree, seems to be striving for in Windows Phone.

A bigger problem is the latitude OEMs have to modify the software. Almost all major Android OEMs have provided their own tweaks to the user experience, with only the Google-designated Nexus guaranteeing a “pure” Android experience.

Whether the software modifications required both to support a range of hardware choices and varied user experiences are good or bad, they have enormously complicated Google’s task in keeping the software platform unified. Operating system updates take many months to roll out and a lot of phones are never upgrades from the major OS version they shipped with. This by now familiar table tells the story.

Version Codename API Distribution
1.5 Cupcake 3   0.1%
1.6 Donut 4   0.4%
2.1 Eclair 7   3.4%
2.2 Froyo 8 12.9%
2.3 – 2.3.2 Gingerbread 9   0.3%
2.3.3 – 2.3.7 10 55.5%
3.1 Honeycomb 12   0.4%
3.2 13   1.5%
4.0.3 – 4.0.4 Ice Cream Sandwich 15 23.7%
4.1 Jelly Bean 16   1.8%
Data: Google, October 1, 2012


The Moto Mystery. At one point it looked like Google’s $12.5 billion acquisition of Motorola Mobility was a serious bid to take ownership of Android. In fact, there were widespread fears  that Moto’s position as Google’s “house” OEM would give it a tremendous advantage over competitors such as Samsung and HTC.

But far from using Moto to dominate the Android market, Google has not even used it to demonstrate leadership. It has just released new Droid models that run on the superseded Ice Cream Sandwich version of Android. And it committed the cardinal sin of declaring that purchasers of its Atrix phones would not receive a promised upgrade to Ice Cream Sandwich, leaving them stuck with the ancient Gingerbread.

Buyers of an iPhone or iPad know they will get the latest version of iOS and that it will be updated, up to the limits of the hardware, for at least three years (the one notable exception being the 2 ½-year-old original iPad, which was dropped from iOS 6.0.) Android buyers are likely to get a new device with software that is already obsolete, with possibly a promise of an upgrade that may or may not be honored.

Android’s biggest fans aren’t going to like this, but what Google should do is rein in Android’s freedom in the interests of a more unified platform. On the hardware side, Google doesn’t have to go as far as Apple and maybe not as far as Microsoft, which is limiting Windows Phone 8 OEMs to a single system-on-chip family and has imposed other significant design restrictions.

Google should also put much tighter limits on the ability of manufacturers to modify the basic Android software. It’s not clear that any of the modifications have improved the Android user experience significantly and very clear that they are a major impediment to timely upgrade of existing devices.

Finally, Google should require an enforceable pledge that manufacturers will supply timely operating system updates—say within three months of release—to all devices for a minimum of two years after sale.

The result of tighter limits on manufacturers would mean less choice for consumers. But there will be a payoff in remedying an environment that software developers find difficult, hostile, and a very tough place to make a living. Android today offers devices that are superior, at least in specifications, to the iPhone. But the app experience is definitely worse in terms of both comprehensiveness and quality. Reducing the fragmentation of the platform could alter the landscape for developers, making Android more attractive and improving the experience for users. That’s a tradeoff worth making.



Why Google Must Commit To Hardware

With the Nexus One and their recent purchase of Motorola, Google has more then signaled that they will soon be in the hardware business in a big way. And the recent rumors that they are building a 120,000 square foot consumer experience testing center on their campus suggest that they will test their own hardware along with partners products in order to create and deliver devices that are truly optimized for their Android and Chrome software.

This move is of course controversial since it means that they will be in direct competition with their customers and partners who back Android and Chrome. However, I don’t think Google has any choice but to go in this direction if they have any hope of gaining ground on Apple and try to stave off an imminent threat from Microsoft via their Windows 8 cross-device Metro strategy.

One of the facts that is becoming very clear to the industry at large is that Apple’s lead in hardware, software and services is a mammoth one. They are selling over 5 million Macs per quarter. The iPhone continues to be a hot product and while Android has gained much ground in units shipped against the iPhone, Apple is taking as much as 74% of all the profit in this space. And the iPad holds well over 80% of the tablet market share and this will be the case through this year too. And many of my research colleagues predict that even in 2015, Apple will have at least 60% of the tablet market.

But the key to Apple’s success is no secret. They are where they are because they own the hardware, software and services and combined they give Apple a significant advantage over their competitors. And while that too is no secret, what is not understood well by the outside world is that they architect their devices around their services. The best example of this is with the iPod. While the hardware itself is the profit center for Apple, it was the music service that was the critical component that made the iPod take off. From a hardware perspective, they architected it around the music service, which means they designed the iPod software, user interface and hardware dials so that they were optimized to deliver a great portable music experience.

The same goes for the iPhone and the iPad. It is the services that drive the final UI and hardware designs and since Apple controls the entire eco-system, they can be assured that they deliver to their customers a unified and easy to use experience with their products.

Now consider the plight of the middleware software vendors like Google and Microsoft. What they bring to the party is a critical component of any final product via the OS. But both companies architect from the inside out, or only at the software level and then hand this off to their vendor partners who must now design their hardware around the software and hope the design can be optimized for the OS they have been handed. And from Google and Microsoft’s standpoint, they can only influence and hope so much that their hardware vendors will get it right.

Historically speaking, Microsoft has done the best job of creating strict technical guidelines that hardware vendors can follow, but Google’s approach to Android design is pretty much a moving target. Vendors have told me of all kinds of problems they have had getting strict hardware guidelines from Google for building Android devices.

Microsoft’s model worked for PC’s. But I don’t think this model will continue to work with this new world of mobile devices. What seems to be happening now is that in both the Windows and Android camps, controlling how the hardware vendors use these operating systems is much more difficult as hardware vendors strive to try and differentiate themselves in the market place. In many cases that mean’s hardware and software UI tweaks that go beyond what these companies give them in the way of an OS which then potentially delivers various forms of fragmentation.

At some point, not controlling the entire hardware, software and services delivers diminishing returns to both of them and sooner or later they will find that the old PC model of creating an OS and giving it to vendors to propagate will not work. In fact, I am seeing that understanding starting to become clear to both Google and Microsoft as they stare up at Apple running away with all of the profits. Apple’s model works. Using the old PC model will not work in this new world of mobile devices.

This is why we are seeing so much hardware activity at Google and I expect to see similar branded hardware strategies evolve at Microsoft very soon. While they can hope that their partners can utilize their software to create great hardware and services, at some point they have to realize that putting their trust in their vendor partners to deliver their vision is a crapshoot.

Indeed, they may only have a real chance to catch Apple if they take control of the hardware, software and services and the sooner they realize this, the sooner they can control their individual destiny’s.

Motorola Droid Razr Maxx Commercial–Best Droid Marketing Yet

When I met with Motorola at CES and they showed me the Droid Maxx I suspected they were on to something. What is interesting to me as an analyst about this device is that it is not just another Android device that is thrown into the sea of sameness. Motorola took a great design like the Droid Razr, a product with terrible marketing in my opinion, and packed a 3300 mAh Li Ion battery to get roughly 21 hours of talk time. This is enough of a differentiator in my opinion to generate genuine consumer interest.

This product represents what I think the future of mobile hardware will look like. One where companies pick out segments of the market and design their hardware accordingly. In this case Motorola is specifically targeting those for whom battery life is a established problem.

You could argue that is true for every consumer but I would point out that there is a segment for whom it is a bigger problem than most. My wife for example has no problem going more than a day on her iPhone 4S on a single charge. She just isn’t a heavy user and has no perceived “battery life” problem. Many consumers are like her. My iPhone 4S, however, is below 10% by the end of the day–every day–and often doesn’t last until 9pm. Mainly because I use it extensively for my job. Battery life for me is a known issue I battle with every day. For me a device with longer battery life is an attractive feature.

When I first saw the Droid Razr Maxx commercial, my first thought was that it was the first Droid commercial I have ever seen that actually made me want the device. Most Droid marketing is trying to be overly cool or appeal to geeks and techies. Most Apple commercials appeal to the mass market because they point out features average consumers find valuable or can associate value with. This is the first Droid commercial that actually does this well.

By highlighting the shortcomings of most devices battery life, Motorola points out a problem that for many is close to heart. If you have issues with battery life you know. If you don’t have issues with battery life than this device isn’t for you–plain and simple.

That is the sign of good marketing. It is speaking to a segment. I applaud Motorola for taking this approach as the Droid Razr Maxx is the first device that I believe stands out in the sea of sameness. More importantly the commercial communicates features that a segment will associate as valuable. If a feature or feature set is valuable the product will sell itself. I wouldn’t be surprised if the Droid Razr Maxx is one of the more successful Android products.

If you haven’t seen the commercial here it is:

Google Officially Owns Motorola–Now What?

US Regulatory agencies along with the European Union approved Google’s acquisition of Motorola today. This acquisition, although initially positioned for Motorola’s patents, could very well cause quite a bit of change in the mobile landscape.

I wrote a column back in August on all the reasons why Google Should Buy Motorola. To my surprise five days later Google actually did buy Motorola Mobility, Inc. As a part of my work as an analyst we do future scenario planning and that column was a theoretical analysis of a scenario we could see playing out.

My main logic was around how difficult it is in mature consumer markets to be a hardware only company and thrive. I was convinced that over time Motorola would face financial struggles and would need to be bailed out or go out of business. Google was my logical choice to buy them in that scenario. The patents and other points were timely but icing on the cake.

There are some strategic elements of this deal that whether or not were clear to Google at the time could be very interesting. Assuming Google does not sell the hardware business at some point in time, which would be sealing Motorola’s fate, I see two directions Google can take with Motorola’s hardware business.

Attack the High End

Right now the point needs to be made that Motorola hardware is the ONLY hardware brand which is committed to Android only. Every other partner of Google with Android also ships or will ship Windows Phone and perhaps something else as well in the future. It is also no secret that the Android ecosystem is broken and fragmented and needs to be fixed. I went into depth on that last month in this column.

Because Motorola is the only handset and tablet brand that is Android only, Google could turn Motorola hardware into the flagship, premium, hardware and Android experience. Android devices need more differentiation in order to compete in the sea of sameness which is Android devices. Google could focus on heavily differentiating Motorola hardware and focus on the high-end, premium part of the market. Perhaps Motorola hardware could become the Nexus line of devices, and used as the flagship “hero” Android products.

Attack the Low End

The other thing Google can do with Motorola is attack the low-end part of the market and practically give Motorola hardware away for free. On this point it is key to note that Google is a services company. Any and all hardware that Google cares about exists only to give consumers access to Google’s services. Therefore, it is within Google’s strategic interests to get as many Android devices out there as possible. One way to do that is to give away, via heavy subsidization, handsets and tablets in order to make up lost revenue elsewhere.

As it stands today Android hardware is just one piece, and not even a big piece, of Google’s revenue stream. Google makes a lot more money elsewhere and does not necessarily need to make money on hardware. It is more important that they get that hardware to as many consumers as possible.

Motorola could become the entry-level brand with the Droid brand or some other “fighter” brand going after the lower end, entry-level, cost conscience part of the market.

Not Competing with Partners

The biggest concern many have with Google owning Motorola is that it sets Google up to compete directly with their partners. If they focus on either the high-end or the low-end, they could then focus on helping their customers compete on different playing fields.

This could perhaps work best if Google choose to go after the low-end for example. This would then give Google the ability to figure out how to help their Android partners better differentiate themselves from the sea of sameness and compete in the higher end of the market which allows for more favorable margins.

It will be fascinating to watch how this all plays out. We believe going vertical meaning single companies owning hardware, software, and services (like Apple does) is a disruptive trend. This is not easy but strategically could protect from market volatility. Now that this deal is official Google has a number of company defining decisions in front of them.

What Intel Must Demonstrate in Smartphones (and soon)

Intel made a big splash at CES 2012 with the announcement that Motorola and Lenovo committed to Intel’s Medfield clip_image002smartphone solution. This came on the heels of a disappointing break-up between Intel and Nokia as well as a lack of previous traction with LG. While Intel has come farther than they have ever come before with one of their X86 SOCs, they still have a long way to go to claim smartphone victory. Of course Intel knows this and is working diligently and sparing no expense. The biggest challenge Intel faces is attacking a market where the incumbent, ARM ecosystem partners Qualcomm, NVIDIA, and Texas Instruments have almost 100% market share. To start gaining share in smartphones, Intel must demonstrate many things in the near future.

More Design Wins with Key Players

The Motorola announcement was impressive in that Moto has a respected name in smartphones, but they won’t carry Intel that far alone. Lenovo is an even smaller player and while very successful in PCs, hasn’t been able to secure a lot of smartphone market share even in their home country, China. Intel knows they need a few more partners to start chipping away at market share and I expect them to announce at least one at this year’s Mobile World Congress.

One of the challenges is that many of the top players are already locked-in in one way or another, Intel has some negative history with, or has rapidly declining share. Apple already has their own A-Series SOC, Samsung has Exynos SOC, and Nokia rebuffed Intel last year and is clearly locked into ARM and Microsoft for the time being. RIM as a partner is a shaky proposition and HTC is an aggressive player but is recently dropping share. That leaves lower smartphone market share holders LG, Sony, Sharp, NEC and ZTE in the short term.

Longer term, I don’t expect Apple or Samsung to get out of the SOC business because they have been successful with their own strategies. I cannot see Nokia or Microsoft motivated to drive a change or provide dual support for X86 until Windows 9. RIM is in a free-fall with no bottom in sight. Intel is forced to take the long-term approach as they are with Lenovo by developing smaller smartphone players to become larger ones. ZTE certainly is a good long term prospect as is Huawei. If Intel can leverage their PC franchise with them I could see them being successful.

Relevant, Differentiated, and Demonstrable Usage Models

In fighting any incumbent, the new entrant must provide something well above and beyond what the incumbent offers to incent a change in behavior. I am assuming that Intel won’t lead in low price or lowest development cost, so they must offer handset makers or the carriers a way to make more money or get consumers to demand an Intel-based smartphone. Regardless of which variable Intel wants to push, they must devise relevant, differentiated and demonstrable usage models that ARM cannot.

By relevant I mean that it must be fixing a known pain point or creating a real “wow” feature consumers never asked for, but is so cool it cannot be passed up. One pain point example is battery life. Battery life is simply not good enough on smartphones when used many times daily. If this weren’t true, car chargers and battery backs wouldn’t be so popular. Wireless display is useful and cool but not differentiated in that Apple can enable this via AirPlay. Demonstrable means that it must be demonstrated at the store, an ad, or on-line on a web site. If something isn’t demonstrable then it may as well not exist.

I would like to see Intel invest heavily in modularity, or the ability to best turn the smartphone into a PC through wireless display and wireless input. Yes, this is dangerous short-term in that if Intel does a great job at it then they could eat into their PC processor franchise. But, this is the innovator’s dilemma, and a leader must sacrifice something today to get something tomorrow. I could envision an Intel-based emerging region smartphone that enables PC functionality. ARM cannot offer this well today but will be able to in the future with their A15 and beyond-based silicon. Intel should jump on the modularity opportunity while it lasts.

One other opportunity here is for Intel to leverage their end-to-end experience from the X86-based Intel smartphone to the X86-based data center. If Intel can demonstrate something incredible in the end-to-end experience with something like security or a super-fast virtualized desktop, this could be incredibly impactful. One thing that will be with us for at least another 5 years is bandwidth limitation.

Carrier Excitement

Outside of Apple, the carriers are the gatekeepers. Consumers must go through them to get the wireless plans, the phones, and most importantly, the wireless subsidy. Apple’s market entry strategy with AT&T on the iPhone was a strategic masterpiece in how to get into a market and change the rules over time. Apple drove so much consumer demand for iPhones that the carriers were begging Apple to carry the iPhone, the exact opposite of the previous decade.

Intel must get carriers excited in the new usage models, bring them a new stream of revenue they feel they are being cut out from, or lower their costs. Intel doesn’t bring them revenue from content side but could I can imagine Intel enabling telcos to get a piece of classic retailer’s PC action once “family plans” become a reality. While telco-distributed PCs weren’t a big success in the past, this was due primarily from the absence of family data plans. I can also imagine Intel helping telcos lower the costs of their massive data centers with Xeon-based servers. Finally, if Intel could shift traffic on the already oversold “wire” by shifting processing done in the cloud and onto their SOCs, this would be very good in a bandwidth-constrained environment.

Competitive Handset Power

At CES, Intel showed some very impressive battery life figures for Medfield handsets:

• 6 hour HD video playback

• 5 hours 3G browsing

• 45 hour audio playback

• 8 hour 3G talk time

• 14 day standby

This was measured on Intel’s own reference platform which is somewhat representative of how OEMs handsets will perform. What will be very telling will be how Medfield performs on a Tier 1 handset maker, Motorola when they launch in Q3 2012. There is no reason to think the Moto handset won’t get as impressive battery life figures, but Intel could gain even more credibility by releasing those figures as available.

When Will We Know When/If Intel’s Smartphone Effort is a Success?

Intel has slowly but surely made inroads into the smartphone market. Medfield is impressive but competing with and taking share from an incumbent with 99%+ market share is a daunting task. The easy answer to measure Intel progress is by market share alone but that’s lazy. I believe that Intel smartphone efforts should first be measured by handset carrier alliances, the number of handset wins, the handset quality and the new end usage models their SOCs and software can enable. As these efforts lead to potential share gain does it make sense to start measuring and scrutinizing share.

Why the PC Industry Cannot Ignore Smartphones

When HP abandoned their smartphone and tablet business and webOS last August, many in the industry were hp-veerdisappointed in the speed of the Palm acquisition and the quick dismantling of it. Some who consider themselves "business-savvy" said it was the wise approach as it wasn’t core to HP’s corporate mission. They said that smartphones were a distraction to competing with IBM and even Dell. We won’t know until 3-5 years from now whether it was a good decision or not.

I believe though, that just as PC companies fought to stay away from the sub-$1,000 PC market in the 90’s, PC makers who don’t embrace smartphones could be out of the client hardware business in 5 years.

Some Context

Over the last 20 years, PC hardware and software have done this little dance where one is ahead of the other. New software came out that required better hardware, then the new hardware outpaced the old software and the cycle continued. With the better hardware and software came new features and usage models like multimedia, desktop publishing, 3D games, DVD video, videoconferencing, digital photography, the visual internet, and video editing. Then Microsoft Vista was launched and it seemed no matter how much hardware users threw at it, issues still existed. Microsoft then spent the next few years fixing Vista and launched Windows 7 instead of developing environments for new rich client usage models. Windows 7 actually took less hardware resources than Vista, the first time a Microsoft OS could say this. Microsoft is even publicly communicating that Windows 8 will take less resources than Windows 7. So what happened? Did the industry run out of usage models to consume rich PC cycles? No, there are many usage models that need to be developed that use rich PC clients.

What happened was netbooks, smartphones and tablets. Netbooks threatened Microsoft and forced them to re-configure Windows XP for the the small, cheap laptops. This was in response to the first netbooks, loaded with Linux, getting shipped into Best Buy and direct on the internet. In retrospect this wasn’t a threat to Microsoft, as those netbooks had a reported 50%+ return rate. After netbooks came MIDs and after MIDs failed came touch smartphones and the iPad. Once the iPhone and iPad showed strong sales it was clear that the center of design was moving to mobility even though needs the rich client PC could solve didn’t just go away.

Windows 8 and Rich PC Clients

Windows 8 was clearly architected to provide a tablet alternative to the iPad and stem the flow from Windows to iOS and Android. Most of the work has been to provide a new user and development environment called Metro, WinRT and to enable ARM SOCs. None of these investments does a single thing to propel the traditional rich PC client forward, maybe with the exception of enabling touch on an all-in-one desktop. Without Microsoft making major investments to propel the rich client forward, it won’t move forward even to the dismay of Intel, AMD and Nvidia. I want to be clear that there are still problems that the rich client PC can solve but the software ecosystem and VC investment is enamored primarily with tablet, smartphones and the cloud. Without Microsoft’s investment in rich PC clients, thinner clients like phones and tablets will evolve at a much faster rate than rich PCs.

The Consequences of Not Investing in the Rich PC Client

With the software ecosystem driving "thin" clients at a much faster rate than "rich" clients, the consequences start to airplaytvemerge. We are seeing them around us every today. Users are spending more time with their tablets and smartphones than they are with their PCs. Savvy users are doing higher-order content creation like photo editing, video editing and even making music with GarageBand. That doesn’t mean that they don’t need their PCs today. They do, because neither smartphones nor tablets can do everything what a PC or Mac can do…. at least today. Display size, input method and lack of software modulraity are the biggest challenges today.

Enter Smartphone Modularity

Today, many users in traditional regions require at least a smartphone and a PC, and a tablet is an adder. Tomorrow, if users can easily attach a keyboard to a tablet via a convertible design, they may not need a PC as we know it today. It’s not a productive discussion if we debate if we call this a PC with a removable display or a tablet with a keyboard. What’s important is that some users won’t need three devices, they’ll just need two.

What about having just one compute device, a smartphone, and the rest of the devices are merely displays or shells? Sounds a bit aggressive but lets peel this back:

  • Apps: If you believe that the smartphone ecosystem and apps moves a lot faster than the rich client ecosystem, then that says that thin clients at some point will be able to run the same rich apps as a PC. Then the question becomes, "when".
  • OS/Dev Environment: iOS, Windows, and Android are all becoming modular, in that their goal is that you write once and deploy everywhere. Specifically, write once for a dev environment and deploy to a watch, phone, tablet, PC and TV or console.
  • Hardware: Fixed function blocks and programmable blocks on tablet and smartphone SOCs are taking over many of the laborious tasks general purpose CPUs once worked on. This is why many smartphones can display a beautiful 1080P video on an HDTV. This is true for video decode, video and photo cleanup, and natural user interfaces too. 3D graphics will continue to be an important subsystem in the SOC block.
  • Display: With WiDi, WiFi Direct, and WiFi AC on the mainstream horizon, there’s no reason to think that a user cannot beautifully display their apps from their 4" smartphone display to a 32" high resolution PC display. Today with my iPhone 4s airplay movieI can display 1024×768 via AirPlay mirroring with a little lag but that’s today via a router and WiFi network. I can connect today via hardwire and it looks really good. In the future, the image and fonts will scale resolutions to the display and the lag will disappear, meaning I won’t even need to physically dock my smartphone. It will all be done wirelessly.
  • Peripherals: Already today, depending on the OS, smartphones can accept keyboard, mouse and joystick via Bluetooth, WiFi or USB. The fact that an iPad cannot use a mouse is about marketing and not capability.

Smartphone Modularity a Sure Bet?

As in life, there are no sure things, but the smartphone and cloud ecosystem will be driving toward smartphone modularity to the point where they want you to forget about PCs. Apple, Microsoft, and Google are building scalable operating systems and development environments to support this. Why Microsoft? I believe they see that the future of the client is the smartphone and if they don’t win in smartphones, they could lose the future client. They can’t just abandon PCs today, so they are inching toward that with a scalable Metro-Desktop interface and dev environment. Metro for Windows 8 means for Metro apps not just for the PC, but for the tablet and the Windows smartphone. The big question is, if Microsoft sees the decline of the PC platform in favor of the smartphone, then why aren’t all the Windows PC OEMs seeing this too? One thing I am certain of- the PC industry cannot ignore the smartphone market or they won’t be in the client computing market in the long-term.



The Wall Street Journal: “More fizzle than pop.”

The Los Angeles Times: “An evolution, not a revolution.”

The Washington Post: “It wasn’t exactly blowing my mind.” “Lunch-bag letdown.”

Business Insider: “A huge disappointment, or just a regular sized disappointment?”

Analyst Roger Kay: “Underwhelming.”


People, please. There’s nothing wrong with evolution. Without evolution, we would still be apes. (Insert your own snide comment here.) Apple obviously thinks the new iPhone 4S is evolutionary. Otherwise Apple would have given it a new name, like, say, Shebang, or Razzmatazz, or maybe even Five.


But Apple’s new iPhone 4S is the same old iPhone 4 in the same way that a new Tesla Roadster is the same old Lotus Elise. Physically, they’re both sleek and sexy. Under the hood, though, the new model is revolutionary.

Not because of the dual-core processor. Other smartphones already have dual-core chips. Dual-band world phone? Faster upload and download speeds? Fancy camera and high-def video? Others have been there, done that.

No, the iPhone 4S is revolutionary because of Apple’s software, specifically iOS 5, iCloud, and Siri.

Disclaimer: I have not reviewed the iPhone 4S and have no idea if it works as advertised beyond the boundaries of Building 4 on Apple’s Cupertino campus. Apple stresses that the Siri personal assistant software is still in beta mode, even now, a week before the iPhone 4S goes on sale. But if the software does work in the real world, it’s a change as profound as replacing gasoline with electricity.

What is the future of the personal computer interface? Voice and gestures, not keyboards and mice.

Apple patented the capacitive multi-touch interface it introduced with the original iPhone. It included a gyroscope in the iPhone 4, transforming gameplay but also opening the way for new gesture controls. And now, with Siri (and backed by the new A5 and digital signal processors), Apple has added natural language voice control to the computer in your pocket.

Hello, Siri?

Remember the scene in one of the Star Trek movies where a bemused Scotty tries to control a 20th century computer by talking into a mouse? Seriously, does anyone doubt that our grandchildren will operate computers by voice?

Yes, Android phones introduced voice commands a while back. But from the day when Steve Jobs first walked through Xerox’s Palo Alto Research Center (PARC), Apple’s true genius has been to seize nascent technologies and make them so simple and elegant that they catch fire. Did Apple invent the MP3 player? No. Did Apple invent the mobile phone? No. Did it invent the portable game system? Negative. Did it invent the tablet computer? Nope. The music store? Uh-uh.

So, what are the best-selling MP3 players and game players and mobile phones and tablets and music stores in the world today? (SPOILER ALERT: iPod, iPod Touch, iPhone, iPad, iTunes Store.)

Did Apple invent the television? Wait, that’s likely to be the subject of a future column.

In my view, we’ve just seen a revolutionary shift from mobile phones to mobile personal assistants.

What’s on my calendar today? What’s the weather? What’s traffic like? How many calories in this bagel? Remind me to stop to buy coffee on the way home. Read me my mail. Send a message to Ben and Tim telling them I’ll be late to the office. Play this morning’s National Public Radio podcast. What’s the stock market doing now? Call my wife. Let me know when Steve gets to the office. Schedule a lunch with Dave and Kelley for tomorrow. When is Laura’s birthday?

The Siri software “understands” conversational language. It “understands” context. I am unaware of any other voice command system on any other smartphone that reaches this level of competence.

Add this to the intelligent ecosystem of iOS 5 and iCloud – comprising hundreds of new features, all of which make their debuts with the iPhone 4S – and it’s difficult to understand the griping and grousing that followed Apple’s announcement yesterday.

Was it also disappointing that Apple dropped the price of the original 8GB iPhone 4 to $99 (with the usual two-year mobile carrier contract)? Or that it dropped the price of the iPhone 3GS to free? Or that it priced the iPhone 4S at $199 and up? Those were evolutionary changes, too, but if I am Nokia, and my cheapest dumb phone is now the same price as Apple cheapest smartphone, my business plan just got sent back to the drawing board. Ditto Google-Motorola, now that the price bar for state-of-the-art smartphones has been set at $199.

The iPhone 4S is still the thinnest and snazziest smartphone in the world. Okay, so it doesn’t have a four-inch screen, and it’s not shaped like a tear-drop. (Darn, I was hoping I’d have to go buy all-new iPhone accessories.) It does not have built-in near-field radio communications, which prevents me from using it to pay my toll when I board the subway in Seoul, since that’s about the only place I’ve seen that accepts NFC payments. Has anyone seen NFC payment terminals here in the States?

And speaking of NFC, is your mobile phone carrier so trustworthy and transparent that you would trust it handling your daily purchases? Would you trust AT&T as your bank?

Which leaves me to conclude that the biggest cause for pundit, analyst and fanboy disappointment with the new phone is that your friends and co-workers won’t be able to tell that you have the new iPhone 4S just by looking at it, obviating its value as a status symbol. Here’s an idea for a cheap upgrade: Paint a big number “5” on your iPhone case, and they’ll never know the difference.

H-P’s Apotheker: We Want to Split H-P Into Two Companies

H-P CEO Leo Apotheker has a very different set of talking points this week than he did last week in a hastily called teleconference after a trading halt which announced the halt to WebOS investments and the spinoff of the $38 billion Personal Systems Division (PSD). Analysts and Wall Street immediately started picking likely buyers of H-P’s PC product line.

But Monday’s interview with the Wall Street Journal tells a different story with a decidedly different outcome for shareholders. Quoting Apotheker:

What we’re really doing is creating two companies: One focused on the enterprise, and one which will be a highly-effective, end-user device business. It will be much more than PCs.

These businesses are ticking at different speeds, need to have different structures, and make different investment decisions. The device business [is] a fast moving consumer business. If you want to compete in this business you have to be much faster than a conglomerate can move in most circumstances.

The other side of H-P, the enterprise side, that’s where we acquired Autonomy. We have some great ideas for how we can scale that business.

Our default option is to see if we can spin this business off to our shareholders. That’s not the only option that we’re looking at. The board and management have been working on this for quite some time. If we really want to take the necessary steps, you have to involve a lot of people and once you inform a lot of people you need to inform the market.

We said it would take anywhere from 12 to 18 months to complete the spin, and it’s obvious that the decision will happen much sooner. The board will want to make the best decision for shareholders and our current hypothesis is that is by spinning the business to shareholders.

This different story — or Friday’s story told better — is a lot less suicidal than throwing PSD off the bus to the highest rapacious bidder. Motorola did this last year, spinning the personal devices company off from radios and public sector. So there certainly is precedent.

But what do we make of “one which will be a highly-effective, end-user device business. It will be much more than PCs?” My reading is everything consumer including phones, PCs, and printers. If Leo really wants to focus on medium and large enterprises, he’ll throw in transactional servers, storage, and maybe even the entire small-medium business (SMB) organization.

If the spinoff to shareholders looks like my sketch above, it’s not a bad strategy. Makes H-P kinda look like Samsung, which makes smartphones and oil tankers through highly decentralized business units.

Here are the concerns H-P shareholders face in considering a deal, once announced:

  • It’s all about execution. Slamming together PCs and printers does not ensure success. And even enterprise company sales reps sell PCs, or used to. The devil is in the details.
  • The independent, entrepreneurial culture does not exist at H-P. Where does the PC Newco innovation DNA come from?
  • By over-spending in a $10 billion bid for Autonomy, H-P has only $3 billion in cash. Where does PC Newco get the billions it will need for R&D and cash flow? Underfunded, the effort will quickly disintegrate.
  • Did the premature and botched announcement of the spinoff last Friday freeze PSD staffers like deer in headlights? Will the human capital disappear before PC Newco really gets started? Didn’t $5 billion in Palm WebOS investment get vaporized?
  • Can any big PC company — with the glaring exception of Apple — do much better than 6% margins in a fast-churn product rat race?
  • How will consumers react to PC Newco branding (let alone products)? When IBM spun off PCs to Lenovo, the valued ThinkPad brand went to Lenovo. take away the H-P name and logo, and the products won’t sell as readily. And Pavilion as a brand does not come close to the value of ThinkPad.

We’ll leave how the rest of the PC ecosystem might react to the PC spinoff to another day.

via H-P CEO Apotheker Defends Strategy –


Google+Moto: “Like a Python That Swallowed a Minivan”

Michael Mace, who knows more about mobile computing than just about anyone around, is deeply skeptical about Google’s purchase of Motorola Mobility. “Either Google’s worldview will dominate and ruin Motorola, or worse yet the Motorola worldview will infect Google,” he writes in an insightful post on his MobileOpportunity blog. “Google with Motorola inside it is like a python that swallowed a minivan.”

Mace, now CEO of Cera Technologies, knows whereof he speaks, having held executive posts at Apple, Palm, and Palm’s ill-fated OS licensing spin-off, PalmSource.

One big problem he sees is Google’s lack of experience in  hardware: “Speaking as someone who worked at PalmSource for its whole independent history, an OS company always believes that it could do a better job of making hardware than its licensees.  It’s incredibly frustrating to have a vision for what people should do with your software, and then see them screw it up over and over.  The temptation is to build some hardware yourself, just to show those idiots how to do it right. I think maybe Google just gave in to that temptation.”

The full post is well worth reading.

Updated: Motogoo: The Damage to Google’s Bottom Line

Update 8/16: The market seemed distinctly cooler to the Google-Motorola Mobility deal the day after, with shares falling 3.27% to 539. And Standard & Poor’s downgraded GOOG from “buy” to “sell” on concerns about the impact of the Motorola deal. Here’s Peter Kafka’s take at All Things D.


Whatever benefit the acquisition of Motorola Mobility brings Google in the long run, it definitely would wreak havoc on the company’s financials in the short term.

Motogoo logoFor the year ended Dec. 10, 2010, Motorola Mobility (MMI) had gross revenues of $11,5 billion compared with $29.3 billion for Google. But MMI’s operating income was just $76 million or 0.7% of revenues, compared with $10.4 billion or 35.4% for Google. MMI ended the year with a net loss of $79 million, while Google has a net of $4.2 billion or 10.3%.

During the crudest sort of combination–real pro forma financials for the combined company will be much more complicated–absorbing MMI would have knocked 11 points off Google’s gross margin and 4.3 points off its net.

Financial markets don’t seem overly concerned about this. Google shares fell 6.54 or 1.16% today in a generally up market. Despite the damage to the income statement, the acquisition will have minimal impact on Google’s balance sheet. The company won’t have to take on any debt to pay for the deal and MMI, which was spun off from Motorola only a year ago, would bring no significant debt to the marriage.

Of course, if Google continues on its recent growth path, the financial impact of the acquisition won’t last long. The real challenge will be melding two companies with vastly different  cultures and histories.

Google: Set Top Box King?

Largely overlooked in the initial reaction to Google’s proposed $12.5 billion purchase of Motorola Mobility is the deal’s potential impact on the cable set top box business. When Motorola split the company in two, the decidedly un-mobile set top box group (formerly General Instrument) went to the Mobility unit. The U.S. market for set top boxes for cable and cable-like services, such as Verizon’s FiOS, is split between Motorola and Cisco (the former Atlanta Scientific.)

Motorola set top boxThe cable box has been a huge impediment to the development of really practical systems to get internet video onto living room TVs. Motorola and Cisco build the boxes their cable provider customers want and that means very limited integration with the internet. In the view of the cable companies, Facebook and Twitter are fine, but Netflix and Hulu most certainly are not. And while it is possible to build a CableCARD-equipped device that allows customers to receive both cable and internet TV on a third-party box, resistance by the cable companies and the failure of the Federal Communications commission to enforce its own rules has resulted in a minuscule market for these products.

Google TV is a great example of a product that was choked by the set top box monopoly. The closest Google could come to integrating cable into its supposedly comprehensive service was to use a ridiculous and antiquated device called an IR blaster to let the Google TV unit control the set top box. IR blaster-based products have been around for years, but have never won favor from consumers (for one thing, at least in my house, the little IR sending units keep falling off the cable box.)

So what would Google do with its new presence in the living room if this deal goes through. It could simply follow the Motorola course and go on making the set top boxes that cable operators want, but that seems profoundly un-Googley. Or it could strike a new course, offering the first mass-market home entertainment united that fully integrate cable and internet services. That could revolutionize the business–or drive all the cable operators to Cisco, which has never shown much inclination to rock this particular boat. My bet is that Google will at least try to build the product that Google TV should have been in the first place.

Why Google had to buy Motorola

At the end of the year, when I made my predictions for the New Year, I stated that I believed Google would buy Motorola Mobile. And last week, Ben wrote here in Tech.Pinions about why he thought Google should buy Motorola. We had no inside information on this. But as we have studied how a complete eco system of hardware, software and services are critical to the success of a company bringing out tablets and smart phones, it became pretty clear to us last year that Google, at some point, was going to have to buy a hand set maker if they really wanted to control their destiny and the destiny of Android.

With today’s acquisition of Motorola Mobility group by Google, Google has now closed the loop on building out and controlling an entire eco system of hardware, software and services. With it they can now drive Android in the direction they see fit and innovate in all three areas. Like Apple, they now own the hardware, software and services and can become an even greater force in the future of mobile products.

In his comments on the acquisition, Google CEO Larry Page stated that part of the reason they did the deal was to also gain access to Motorola’s patent pool.

This could have an impact on the suit against Motorola as a starter.
And depending on the patents, it could also help them in the multitude of legal suit against Android out there as well, although it is not clear how much Motorola Mobile has that would related directly to these other Android suits.

But as important as this is for Google and Motorola, it is highly problematic for Google’s partners. Now HTC, Samsung and other licensees will be competing directly with Google/Motorola. And this leaves a lot of big questions on the table. For example, Google uses a lead partner with major new versions of Android. We assume it will now always be Motorola? If so, how does that affect the other licensees?

And, although they claim Android will continue to be open, just how much of an inside position will Motorola Mobility have over the competitors? I have already fielded multiple calls from clients who license Android who are, how do I put this, “concerned” about this news.

I believe that the major fall out from this is that there is now room for a third mobile OS to come out that would give vendors a broad solution they can use without having to compete with Google/Motorola. If I were Microsoft I would be touting Windows Mobile as an alternative.

However, here is a more interesting suggestion. If I were HP and Todd Bradley, I would immediately license the Palm Web OS as an alterative. This is by far the best Mobile OS besides Apple’s IOS on the market and it could become of great interest to Android licensees who feel threatened by this move by Google.

There are still a lot of other questions about this deal, like how will they deal with two distinct cultures and who drives the future of Android given Motorola’s greater experience in mobile then Google has?

But no matter how this turns out, we will mark today as the day that the mobile world changed forever as Google has begun to rewrite their history again.

Further Reading:
Why Microsoft WILL Buy Nokia

Also Read:

Google: Set Top Box King?

Why Google Should Buy Motorola

Article Disclaimer: This is all theory and purely speculative. This is simply a thought exercise.

Motorola has been an interesting company to watch over the past 10 years. They have been a driving force in bringing the cellular industry into fruition and recently Motorola spun out their mobile business and created Motorola Mobility. I find an intruiguing scenario to play out to be one where Google buys Motorola Mobility.

One particular reason this is interetsing is because Motorola Mobility is deeply committed to Android. In fact as of now it appears that the company is solely basing its future on Android. Recent reports indicate an interest in Windows Phone 7 and possibly 8 by Motorola but it doesn’t appear actual product plans exist.

Motorola’s challenge is that they are attempting something that is becoming increasingly difficult in the industry today, namely to make money on hardware alone. To make matters even more challenging they have decided to bet their future on a company who is less interested in helping companies make money on hardware and more interested in free.

In fact I am convinced that Google and the Android team in particular would prefer that Android handsets cost less rather than more.

All of that leads to the first major reason I think Google would benefit greatly from buying Motorola Mobility.

Google Could Practically Give The Hardware Away
Google has already demonstrated an interesting model regarding Chrome that basically presents a hardware as a service model. In this model Google is offering Chrome OS hardware to the business and IT community for $28 a month and to educational institutions for $20 a month. There we have it, a hardware as a service model and Google is already going down this path.

So why not consider this same approach with Android handsets? This is not feasible currently because a company like Motorola needs to make money on the hardware since they don’t get to participate on the services financial upside like a carrier and Google. However if Google bought Motorola they could sell the hardware at a loss and make it up with their backend services.

A strategy very similar to what we think Amazon intends to do with their tablet.

Google needs as many Android devices on the market as possible. And yes they aren’t faring to poorly currently but if they subsidized the cost of the handset with their own longer term services revenue, which Google could do, I believe the market would accelerate even faster. Making the point again, Google cares about the services revenue not the hardware revenue. It behooves them to seed as much of the market with Android devices as possible.

Imagine if you could get one of the latest Android smart phones fully featured for less than $99. The price barrier to high end smart phones would be gone and Google would have even more demand for Android.

The second major reason is patents.

Google Needs Patents
Patent lawsuit frenzy is sweeping the technology industry. The media, analysts, pundits and more have now made it glaringly clear that Google is on the weaker end of the spectrum when it comes to patents.

It is for this reason they attempted to purchase the Nortel patents. Based on recent actions it can be concluded that Google knows they need to secure a more robust patent portfolio. More specifically they need a patent portfolio around mobile devices to help protect Android.

Motorola has an incredibly robust patent portfolio. In fact they have nearly three times as many patents as Nortel. Some have alluded that Motorola’s patent portfolio is possibly the strongest in the mobile field. It could be debated but its possible that Motorola has the best patent defense against Apple’s in this field.

One interesting point from Morgan Stanley analyst Ehud Gelblum who wrote in a research note last month:

“It is interesting to note that Motorola asserted 18 patents against Apple, and sued Apple first, whereas Apple has asserted just six patents against Motorola.”

Scott Moritz from the street remarks:

“Not only does Motorola have far more patents than its nearest competitors, it appears to have more of the key patents that may help the Android camp in a battle against Apple.”

The Big Picture
Although this is interesting to think about I doubt it will happen. A result of Google buying Motorola would be that their other partners like HTC, Samsung, LG and more would become competitors. I doubt Google’s partners would appreciate that and could potentially dump Android in the process. Also as far as I know Motorola Mobility is not for sale.

This patent issue however is a real one and one that if not dealt with tactfully by Google and the Android partners could prove fatal.

What’s more likely to happen, which The Street article points out, is that those in the Android camp band more closely together and leverage each others patent portfolios to protect Android.

Motorola however needs to continue to post solid financial results as they did for the most part last quarter. As I stated earlier making money on hardware alone is going to prove very difficult but Moto can and should continue to invest in innovations that differentiate their hardware allowing them a chance to profit from hardware. It would be wise of them to get more into the services game but not much is being shown there yet.

The Asus PadFone is a Glimpse of the Future

As a part of my work as an industry analyst I do a great deal of thinking about the future. Many of the projects we get pulled into and asked to add analysis on are related to the distant not the near future. This happens to be one of the things I love most about my job, thinking about the future and imaging what the world of technology will be like 5 years out.

Pat Moorhead wrote an article yesterday highlighting Why Convertible PC’s Are About To Get Very Popular. I agree these product designs have a place in the market and we will likely see a good deal of hardware experimentation through 2013. I however think another product idea may have much longer staying power.

Without going into too much detail on things I can’t go into much detail on, I want to use the Asus PadFone as an example of a future I think is highly possible. This future is one where the smart phone is the center of our personal connected ecosystem and in essence becomes the brains that power all the other screens in our lives.

We talk a great deal about the “smart screens” which will invade consumers lives and homes. Although it certainly looks like we are heading in this direction, I sometimes ask: “if the smartest screen is in our pocket why couldn’t that device power the others.” Thus eliminating the need to have a high performance CPU in all my screens.

The Asus PadFone is an example of this concept. In Asus’ solution the smart phone is the most important device in the ecosystem because it is the device with the brains. The smart phone has the CPU, the OS and the software. In the PadFone solution the smart phone slips into the tablet thus giving you a two in one solution.

The Motorola Atrix 4G employs a similar idea where the Atrix can be docked with a laptop shell. The laptop shell simply has a battery and a screen and the Atrix provides the rest of the intelligence needed to have a full laptop.

Both of these designs highlight something that I think gives us a glimpse of how our future connected gadgetry may come together. The biggest indicator for this future reality is the trajectory every major semiconductor company is heading in. Namely very small multi-CPU cores performing at very low power consumption levels.

We can envision a future where we could have an eight core processor in our mobile phones. An eight core mobile chipset would be more than adequate to power every potential smart screen we can dream up. In this model you would simply dock your phone into every screen size possible in order to make every screen you own “smart.” Docking your phone to your TV would create a “smart TV” for example. Docking your phone with you car would create a “smart car.” You could also purchase laptop docks, desktop docks, tablet docks, smart mirror docks, smart refrigerator docks, etc.

What’s also interesting about this model is that your phone can also power devices that don’t have screens. In this scenario you would be able to use your smart phone to interact with all your appliances without screens like washer, dryer, coffee pot, and others. We call these specific interactions “micro-experiences” where you use your phone to have experiences with non-screen appliances.

It is obviously way to early to conclude when or if the market could adopt a solution like this. None-the-less it is an interesting future to think about.