The Major Industry Battle Brewing Between Samsung vs Google (@techpinions)

Tim Bajarin:

First, they just make Google wealthier and continue to deliver customers to Google instead of to themselves. Yes, Android has served them well so far, but as long as Google owns the OS, Samsung is beholden to Google and is just a slave to them. Second, they drive revenue to Google, revenue that could be all theirs if they owned the customers. Third, they will continue to face margin pressure as hardware based profits shrink. As I mentioned above, our analysis suggests Samsung’s margins, even on their upper end products, could be reduced to around 10%-15% as even high end smartphones become more commoditized.

All of this is true. But if they go all in on Tizen, they’re going to see massive churn unless there’s some way they can still leverage Android’s app store or make it super simple for developers to repurpose those apps for Tizen.

They’re stuck. And they’re stuck in a major way. Nor is it particularly surprising since Samsung, as a company, have never been vertically focused, whether it be with phones, laptops or really any other technology they’ve had a hand in building.

App Store Revenue (@benedictevans)

App store revenue is not an ideal way to scope the value of an ecosystem to developers. The majority of the revenue comes from games, mostly freemium using IAP, while a large proportion of the most valuable apps are offered for free and generate revenue through other means (Facebook or Amazon, for example). However, it does give a pretty good proxy for the broader behavior of the users, and it also of course is very relevant for developers who do want to to charge.

If the current market dynamics remain, Google Android’s user base will at least double in the next few years – the iPhone base is still growing, but it will probably not double. However, those users will be gained at progressively lower (much lower) device price points, and with at significantly lower spending profiles. 

And to Apple, that’s just fine with them. They’ll take higher ARPU over difficult-to-monetize reach in emerging markets any day of the week.

Google won’t call games with in-app purchases free anymore (@engadget)

Google has already said it would implement several of the changes starting at the end of September. For instance, it won’t use the word “free” for in-app purchase games; it’ll come up with targeted guidelines for games to prevent encouragement of children to buy items; and will implement measures to monitor breaches of EU law.

Meanwhile, the EU said that Apple has “regrettably” not provided any firm solutions or timetable to address its concerns, though it added that Cupertino has promised to attack the problem.

Google Glass lead Babak Parviz leaves Google, joins Amazon (@venturebeat)

Babak Parviz, one of the leaders behind the Google X project and Google Glass, confirmed his move to Amazon on his Google Plus profile over the weekend.

The only time I ever hear of anyone using Google Plus, btw: its own employees. 😛

There is little detail on what Parviz may be doing over at Amazon, but people who have been paying attention to Amazon’s new product announcements may be able to guess. On June 18, Amazon announced that it will be releasing the Amazon Fire, its first smartphone. Optics designers like Parviz can could help propel these type of devices.

I can see Amazon having interest in tapping into the wearables market, whichever direction that ends up going. Amazon has shown a propensity for exploring the same kind of potential moonshots as Google has (albeit to a much smaller degree) with delivery drones, on-demand delivery etc.

Project Ara’s secret weapon? A smaller phone (@gigaom)

Recently I spoke to Gadi Amit, the founder and principal designer at New Deal Design, which designed the Fitbit and Whistle and, most recently, did the industrial design for Project Ara. He noted that, of the three different endo(skeletons), the one that’s getting a lot of attention is the mini size.

“Every time we showed the mini Endo, everyone gravitated toward it,” Amit said. “Obviously what I am saying is not scientific, but among the dozens and now hundreds of people who experienced it firsthand the smaller size looks very interesting.”

 

Apple, Hardware, and the Cloud (@innonate)

Nate Westheimer:

Many of these areas are experiences Apple could have won if they had truly invested in and understood the cloud; more importantly, they could have owned the experience even outside of Apple devices and if they had gone so far as to innovate and win with their Maps, Mail, and Photos in the same cross platform way they won with iTunes in the early 2000s, and in the way Google is winning with the cloud today.

I think all indications point to the fact that they were trying to get better in this area – it just didn’t happen fast enough for them. Steve Jobs was notoriously upset about the MobileMe product at the time and Drew Houston has spoken about acquisition talks Jobs had initiated with Dropbox back in 2009. But it obviously didn’t happen and iCloud has never really materialized into the entity I think Apple wanted it to be.

But to Nate’s point at the end of this piece, I think that’s OK. Apple isn’t a company that does the cloud well. Alternatively, Google doesn’t do hardware well, as we all saw with what transpired with Motorola. One company’s strength is another’s weakness and vice-versa. The thing is both models seem to be working for their respective companies – why shouldn’t that continue? This is not a Manichean choice of hardware vs. the cloud, as if one is inherently right and the other inherently wrong. They both can continue doing what they’re doing and doing it well.

Apple Retail And The Innovator’s Dilemma (@stratechery)

So I agree with Ben to the extent that the stores clearly help Apple as a company, particularly when it comes to less sophisticated consumers who may need help with some of the basics. Ben also argues that they’re probably under-appreciated in that regard. I agree. However, I’m less inclined to agree with this:

The lack of something similar to the Genius Bar makes low-end products a much less attractive alternative

Perhaps, but stated another way, has the proliferation of Microsoft stores made people more likely to buy a Surface, knowing their concerns about the product can be addressed by someone in-store? It doesn’t seem that way. Microsoft apparently doesn’t publish their retail data and I haven’t see anything elsewhere that would support the theory that the Microsoft stores have, since their introduction in 2009, done anything to push more product.

To me, low-end products are much less attractive precisely because they’re inferior products, in the way most consumers come to that conclusion:

-My friends don’t use them

-They don’t have the software (apps) that I use on a regular basis

-They have a learning curve that I don’t have the time to invest in, after having used device X for Y years

So while the Apple Stores continue to be of importance to Apple in helping them push more product, I don’t think that same theory holds as a general rule for the industry. Having a rep or MSFT’s own equivalent to a “genius bar” hasn’t seemed to mitigate the product gap in any substantial way for Microsoft, as an example. Although it will be interesting to see how Google fares with this, as they gear up for their own retail experience in the US after having opened a few Android-specific stores in Europe and Australia.

Was Square in Acquisition Talks With Google? (@gigaom)

Conflicting reports Sunday night centered on whether Google did or did not talk toSquare about acquiring the mobile payments company. First, the Wall Street Journal (reg required) reported that the San Francisco-based company, founded by Twitter co-founder Jack Dorsey, did, in fact, hold acquisition talks with Google earlier this year. The story also claimed that Square had talked informally with Apple and PayPal about a sale.

Hangouts and SMS (@fredwilson)

From day one of using Hangouts as my default SMS app on Android, I have been unhappy. Hangouts is a slow and clunky mobile app. That’s the antithesis of what an SMS app should be. Its unclear how to do all sorts of things in Hangouts like find a contact and send a message. And I’m always finding myself being pushed to do a Hangout when all I want to do is send a text.

After Google Pressure, Samsung Will Dial Back Android Tweaks, Homegrown Apps (@recode)

It’s unclear what concessions Google may have made on its part. The company could have, for example, agreed to work with Samsung on a Nexus device or offered other cooperation.

I don’t think Google had to make any concessions, frankly. I know there was chatter about it after CES and that Samsung would have had a bigger head start than most others. But Samsung was not in a position to start building their own platform that could compete against Google, Apple & even Microsoft. Going out on their own and trying to build their own app ecosystem, trying to wrangle developer support away from the established order was not in their best interest or Google’s, frankly. I think it just made a lot more sense for both parties to work in concert: Samsung doing what they know best in terms of hardware innovation and Google concentrating on the software side.

Would Selling Motorola to Lenovo Solve Some Big Problems for Google? Yes. (@recode)

A report in China Daily said earlier that Lenovo could be acquiring Motorola Mobility from Google in a deal worth at least $2 billion. Reuters has also reported that a deal is imminent, at a price of close to $3 billion.

And sources also told Re/code that the idea had been floated by Lenovo as far back as a year ago.

So what of the patents, what many considered to be an influential part of the original Google/Motorola deal?

Meanwhile, on the patent front, Google has continued to assert Motorola’s substantial patent holdings in various cases, but courts and regulators have largely taken a dim view of issuing injunctions or large damage awards based on standards-essential patents — the patent variety that makes up a large part of Motorola’s holdings.

Seems silly to write something as dismissive as “they were in over their heads,” but it’s hard to conceive of another reason why they would sell.

edit: According to Google’s official statement, they will be retaining the “vast majority” of Motorola patent portfolio.

Google as Kingmaker: First Search, Now Mobile

I’m reading this post-mortem from former Pingjam founder Elnor Rozenrot:

To this date, I don’t know what made Google suddenly not like us. I don’t know whether we got kicked out because 24 hours before banning our apps Google launched an almost identical feature in Android 4.4 or if it’s something else. The messages we did receive stated conflicting reasons. Beyond the obvious damage, the lack of communication caused us to assume the worst and that whatever we do in the space will be killed by Google.

Obviously, we may not be getting the entire story here. But Google, as a company, is notorious for issuing these kinds of vague edicts to their partners across a multitude of platforms. It’s gone on for years. I still remember back in 2007 when I was running a small content site business getting the e-mail that my Adsense account, the core source of my revenue, was going to be terminated in 24 hours unless I changed the formatting of my ads to comply with a TOS update that they had issued hours before. No phone communication. E-mail was routed to a support team overseas where the best they could give me on timing was 3 business days.

Same goes on in organic search. As an SEO practitioner, I’ve seen it with clients and other companies, big and small. Yes, you can use their tools to clean up link profiles, request re-inclusion in search etc. But once a decision has been made, there’s very little recourse or even getting a rationale explanation unless you’re a big brand or a Sequoia-backed startup with $100 million in funding in the bank.

Now that Google’s ecosystem has spread to mobile, it seems the same types of things are going on. No dialogue with partners that have made them money, no dialogue with the industry, just proclamations issued from on high. And this didn’t impact just PingJam but a litany of developers that were using the service.

From one of several message board threads on the topic:

Unfortunately this is becoming more and more just part of being an android developer. We are an Australian Development house, that lost over 30 casion related games over the weeknd. The worst part is, we stopped all production to update our entire network of 500 apps to meet all google policies, mainly removing airpush from all our apps. Our casino games has tested Pingjam only for 1 month and bout 3 months ago, we removed all sdk and all traces of pingjam. But only apps that had pingjam on them have been removed. Been in contact with google head office in Sydney getting passed around from one manager to another, each one says send an email…..an email! Over the last couple of years we have spent over $100,000 in inapp paid fees to google alone. And there is just no one to talk to.

Founders, developers, analysts, writers and everyone else in the mobile ecosystem can badger Google to death on this subject. But it doesn’t seem likely that they’re going to change their ways. If it continues, would more developers be drawn to alternative Android stores? More importantly, could they convince customers to use them, despite concerns over malware?

Either way, his advice to fellow founders is sound and mimics Fred Wilson’s “be your own bitch” narrative:

To stress the point, if your startup has one point of failure that is controlled by one entity – do what you can to not be totally dependent on that single entity. Develop for other platforms, decouple from the ecosystem. Do whatever it takes to get out from under their thumb.

Kantar: Android Accounted 70% Of Smartphone Sales In Q4, Samsung Now “Under Real Pressure” (@techcrunch)

Samsung, the handset maker that has led the charge for Google’s OS, is “now coming under real pressure in most regions” as it faces stronger competition from local players in markets like China. There, Xiaomi led in sales for the last 12 weeks of 2013, and other Chinese handset makers like Huawei also continued to gain ground. It’s still Android, but delivered in different, more locally focused packaging.

You have to think Google is of two minds when it comes to this news. Obviously, the growth numbers in the aggregate continue to bode well for Android’s future as far as overall smartphone penetration. But Samsung is their big money partner, particularly when it comes to the high end of the market. And with Chinese OEMs continuing to eschew the Google Play system in favor of localized, open-source version of Android, Google can’t reap the benefits of app installs the way they can in Western markets.

On the other hand, the consumers going for cheaper device manufacturers probably weren’t going to be big spenders in the app market anyway. So how much does it really hurt Google when it comes to top-line revenue? Probably not that much. The real issue will be if Samsung begins to lose significant ground in Western markets to other Android OEMs, whether they be Chinese-based (like Xiaomi, if they ever started producing phones in the US/UK) or otherwise. Could some of those manufacturers come to Western markets with an open-source Android version and try to cut down OEMs using Google’s version? Would Google be able to do anything about it?