Google Fires a Shot Across Apple’s Bow

We wish Google all possible success in taking on playground bullies Apple and Microsoft in a battle that has crucial implications for the use of patents to stifle competition. Google’s $12.5 billion purchase of cell phone maker Motorola Mobility, its largest acquisition to date, is a shot across the bow of more established competitors who would seek to throttle the search engine giant’s cell phone development and other promising technologies by suing them to death in patent court.  The Wall Street Journal recently detailed how high tech companies have been acquiring every patent they can get their hands on so that they stand a better chance of being predator rather than prey in patent litigation. Lawsuits over patents have become so ubiquitous that they are beginning to supersede innovation itself as the primary means through which high tech companies grow and prosper. In this respect, Google is the new kid on the block in head-to-head competition with firms like Microsoft and Apple that have been around since the 1980s.  As a relative newcomer to the technology scene, the company’s war-chest of patents was practically empty until recently.

To play catch-up, Google has been on a tear acquiring patents directly or buying patent-rich firms outright, such as cell phone pioneer Motorola.  In late July, Google bought about a thousand pending and issued patents from IBM to build up its patent ammo. Many of these patents have little to do with the company’s core businesses of search and advertising. One reportedly covers ways of automatically adjusting a clock, and another deals with surface treatments for electrical contacts. In the hands of a company as innovative and aggressive as Google, every little patent helps to thwart other firms that would seek to stifle them. “As things stand today, one of a company’s best defenses against this kind of litigation is (ironically) to have a formidable patent portfolio, as this helps maintain your freedom to develop new products and services,” blogged Google’s general counsel, Kurt Walker, in April.

Microsoft Like GM

Although we wouldn’t be shocked if at some future date Google itself becomes a vexatious litigant in patent court, we are rooting for the company nonetheless because its product track-record suggests the firm is far more innovative than, in particular, Microsoft.  For its size, we’d rank the Redmond producer of Windows and the Office software suite among the least innovative companies that America has ever spawned.  Apple has done far better, of course, but its main successes have been in marketing and design rather than in core technologies that are likely to improve our lives. Although we see Microsoft as being on the same track that brought General Motors to bankruptcy, competition – even vicious competition – between the likes of Google an Apple can only be good for consumers.  With the purchase of Motorola, Google has taken a step that could force Apple to do something it almost never does – i.e. lower the price of one of its products, in this case the iPhone.

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  • Chris T. August 17, 2011, 9:29 pm

    Rick,
    if you belatedly still see this post:
    What is the background on the battle picture?
    What ship, what battle, etc?

    As to Apple:
    There is something to be said about a toaster that works when you push the slide down everytime, without having to unplug it, or rewire it about once per day.
    That is where they have excelled, at least relatively speaking.

    But iPod innovation?
    MP3 players were fully developed and established by the time the iPod hit, that one truly was a marketing (and packaging with improvements) thing, not really innovative.
    Still boggles the mind, that they could be as successful at 0.89 a pop. But true dominance outside of the US for that gadget? Not really.
    And even a reg. MP3 player was not true innovation, just the adaptation of the Walkman to newer technology/media delivery…

  • Cam Fitzgerald August 17, 2011, 12:33 am

    It is articles like this that keep me coming back Rick. You have hit a big fat raw nerve here. Your comments are incisive and often ahead of the curve.

    Good work.

  • Mava August 16, 2011, 9:11 pm

    “APPLE…[are]..simply a testament to the overwhelming way in which they have successfully appealed to the sentiment of personal preference…

    A toaster is still a toaster.”

    Could not agree more.

    Ever since gods were here, humans are always confusing a pretty face for a sign of superior intelligence. It has become our hallmark.

  • Robert August 16, 2011, 8:56 pm

    I am FLOORED that the Windows versus Apple debates still rages.

    You know what? Everyone in the world (except Intel) lost out decades ago due to this debate.

    The best, most stable OS kernel ever invented was the 64 bit RISC kernel that underpinned VMS on the DEC Alpha processor.

    To say that DEC killed the goose that layed the golden egg is putting history politely. That company was run into the ground (and ultimately killed) by it’s own bureaucratic hubris.

    In fact, it was Dave Cutler who got so fed up that he left DEC and went to work for Microsoft to develop Windows NT … VMS…. WNT…. see the alphabetic progression? Not a coincidence.

    However, Cutler still lost. Bill Gates told him there was only one constraint that he could not touch- NT had to be compiled as an extension to DOS on the X86 platform first. Hardware companies peddling Intel CPU’s would have a 2 year head start with WinNT.

    Cutler succeeded in bringing NT to the Alpha, but it was too little, too late. By then DEC had been purchased by Compaq and the father of the Alpha chip (Cutler) was long gone, and so the superior processor had a “backroom bullet” put in its head.

    I worked with Alphas running NT in 1997 and, even with the need to render the familiar Windows desktop GUI, they were still nearly twice as fast (and more stable) than Sun Sparcs running Solaris (Solaris being one of the “who’s my Daddy?” gene pool candidates in Linux’ shady parental lineage)

    And so, the mass consumer computing world was denied the speed, efficiency and stability of RISC CPU architecture until Apple finally went on a limb in 2002 and re-compiled MacOS on LINUX with the release of OsX; although Linux really only makes X86 processors “as close to RISC” as they can get. It’s still not the real deal.

    The Intel X86 architecture didn’t win the race because they were the best athlete. They won the race because they had powerful snipers in the stands picking off the other runners. It’s easy to win when you are the only one to limp across the finish line.

    Today, even Sun and Solaris are about ready to finally fade off into obscurity, leaving a world of computers based on the sub-optimized core instruction set that is DOS to compete for world dominance.

    Moore’s law (That’s Gordon, not me 🙂 ) has blurred the benefit of RISC over time, since computers are now so fast that the efficiencies get lost in economies of scale (what’s a couple billionths of a second worth today?), however, there is one simple, elegant benefit that the world has been denied:

    At the core instruction level, RISC machines are about as hack proof as mainframes, and yet RISC was designed to be scaled out to handle all the I/O and graphics intensive applications of the modern world.

    Apple, like the USDollar, is simply the best horse in the glue factory. Man-O-War was killed long before he was ever allowed to run his first race.

    Of course, the flip side of this perspective is that the Nazis were defeated even though technologically the Germans had far superior rifles, tanks and planes… So perhaps being best is not always analogous to being the winner.

    So now whenever anyone asks me “Are Apple computers really worth the extra money?”, or “Do you think I should take a chance on a Droid or should I just spend more and get the iPhone?” I just cringe and say “Well, is a Honda really worth more than a Nissan?”

    I don’t denigrade AAPL’s financial successes, but to me they are simply a testament to the overwhelming way in which they have successfully appealled to the sentiment of personal preference…

    A toaster is still a toaster.

    • Larry D August 16, 2011, 10:34 pm

      “…the Nazis were defeated even though technologically the Germans had far superior rifles, tanks and planes…”

      Well, TWO out of the three, anyway… 🙂

    • mario cavolo August 17, 2011, 5:20 am

      Hi Robert! I have to say that with the ipad they created the slickest toaster in the world! Over the past 2 years I fully ignored the gadget world, kept using my cheap Nokia mobile phone and thinkpad. When I finally gave in with my wife and begrudgingly acquiringly an ipad and iphone over the past few months, once I started paying attention to what was really going on, I was converted quicker than Paul on the road to Damascus…. Of course the iphone screen is miserably too small, but besides that… these products have changed the way the world gets things done in terms of productivity and process on a global macro scale, while also creating a platform to spur innovation and creativity.

  • Mike J August 16, 2011, 4:06 pm

    That Microsoft is and has been on the path to insignificance is unquestionably true. Still, the company will remain viable for years to come, thanks to its hammerlock on the desktop. And with such a large marketshare, they might yet become competitive again, though it will require a wholesale makeover over the company and its culture, beginning with the ouster of Steve “Monkey Boy” Balmer.

    But I disagree when you say that Apple has not been an innovator in core technologies. The three biggest consumer products of the past decade – the iPod, the iPhone, and the iPad – are loaded with innovations, albeit ones that seem so obvious in hindsight as to make them nearly invisible.

    Designing products that don’t get in the way is part of the Apple magic. They’re had their share of lemons – Lisa, Newton – and the company also wandered in the tech wilderness for more than a decade after the ouster of Steve Jobs. But on balance, they have a track record of innovating and bringing to market those innovations that is the envy of the industry.

    Now, will all that success and a market cap to rule the world spoil the company and make them more Microsoftish?

  • paulg. August 16, 2011, 3:43 pm

    Rick-
    Enjoy reading your morning analysis, never commented before but have to say you are spot on. What Google has innovated has dramatically improved life. The success of the other two companies rests primarily in marketing and funneling emerging technology into their pockets while stiflingly competition in my opinion.

  • mario cavolo August 16, 2011, 4:37 am

    Patents – alternative tradable barterable currency asset 🙂 haha…

    Meanwhile, besides trashing Microsoft for its many missteps over the years, we’re setting to purchase the HTC HD7 right now….whoa, why would anyone buy a Windows 7 smartphone? Not so fast, we enjoy the benefits and efficiencies of both…

    First of all, we have an Ipad and an Iphone…its really nice kit together in terms of efficiency productivity and slick user experience…not to mention I scoured the internet recently to find the best apps out there which are great productivity and reference tools…amazing stuff. That Apple will continue to boom is as close to a sure thing as one might get…

    Second of all, we have two Windows 7 notebooks, one of which is my stellar performer ThinkPad. In the biz world with clients, we also need the Windows 7 platform and so the HTC HD7 Windows smartphone will make a nice matchup with our notebooks. Its quite slick in fact and gotta love that bigger screen…

    Cheers, Mario

  • Benjamin August 16, 2011, 1:22 am

    A bit O/T, but not by much…

    I think that patents are another area of commerce where ignorance and barbarism reign (the issue of money being the other).

    Whatever one thinks of how patents are used today, it would seem that the Constitution intended the patent to be a regulator of imports/exports. This would then provide stable conditions for industry and commerce to take root and stay (jobs, jobs, jobs!), while protecting the money supply from too sudden/great an exodus from the nation.

    Article I, sec 8 cls 8: “To promote the progress of science and useful arts, by securing [for limited times to authors and inventors] the exclusive right to their respective writings and discoveries”

    The [] is a break/seperatation. Read that way, the exclusive right is clearly being secured to a thing, not a person. And since the broader context of Article I sec 8 primarily deals with Legislative authority in foreign/domestic relations, the exclusive right the thing has is the right in the domestic market.

    Patents, in other words, disallow same or similar manufactured goods from being sold in the U.S. This would then make infringement the act of smuggling (with tariffs and possibly patent fees paying for the defense of exclusive right).

    Furthermore, none of this would curb competition among domestic enterprise. Quite the opposite, it would allow industry and commerce to retain the needed capital in order to develop or accquire (import) new things and ideas for patent and domestic production. Innovation would increase, not decrease, whilst removing the incentive for jobs to leave for foreign shores. And finally, foreign countries could likewise buy ideas/things from us (except military secrets), and freely produce them in their respective country/territories.

    I believe this is what free trade is really supposed to be. Of course, I don’t expect the governments and “great innovators” of our times to see it that way. But I think it none the less important for people to see why they’re not on the right side of things, as well as why they’re not.

    Anyway, good luck to Google and all, but I think Rick is right to suspect they’ll become just about like everything else, in time.

    • Aron August 16, 2011, 6:00 pm

      Thanks for your newsletter which I read every day…

      Just a question, do you have any contacts in Google, as we have a very interesting technology patent which I would like to approach them with,
      If so could you share that contact with me please
      Many thanks
      Aron