Google Enters The Smartphone Business, Maybe

With its acquisition of Motorola Mobility, Google could potentially make branded handsets running on its own Android operating system, though Google hasn't officially announced it will do so. Technology writer Glenn Fleishman discusses what the deal means for the smartphone and tablet industries.

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IRA FLATOW, host: This is SCIENCE FRIDAY. I'm Ira Flatow. Earlier this week, Google snatched up Motorola Mobility to the tune of $12.5 billion. Google already makes an open-source mobile-phone operating system, Android. So this would appear to give Google the opportunity to manufacture its own branded phones running on its own software, right?

Well, maybe not because Google's been downplaying the manufacturing aspect of the deal, pointing instead to Motorola's tens of thousands of patents as motivation for the acquisition. But you can't help but wonder: Is Google getting into the mobile phone business? Is it ready, willing and able to challenge Apple and the iPhone-iPad juggernaut? How worried should Apple be, if at all? Might we just - might we see not just Google smartphones but tablets also?

If competition is good, then maybe we all win in this deal. What do you think? Do you like the Google gobble of Motorola? Give us a call. Our number is 1-800-989-8255, 1-800-989-TALK. You can also tweet us, @scifri, @-S-C-I-F-R-I.

Glenn Fleishman is a contributor to the Economist.com Babbage blog. He's also a writer for the online news site TidBITS and the Seattle Times. He joins us from KUOW in Seattle. Welcome to SCIENCE FRIDAY, Glenn.

GLENN FLEISHMAN: Thanks for having me.

FLATOW: Well, what's your take on the deal? Why did Google do this?

FLEISHMAN: Well, I think the focus has been on patents, and Google missed out on the Nortel patents a few weeks ago, where Apple, RIM and Microsoft formed a consortium and sort of snatched them away from them. And I think Motorola is the other low-hanging fruit from the patent side.

They need a defensive portfolio of patents because otherwise, they're not doomed, but they're in a position where they have to have some strength to defend themselves. This is all kind of, you know, people sitting around at a table, and you look at the stacks of paper and say whose stack is bigger.

Motorola has 24,500 patents underway or given to them, already assigned, and that's a big portfolio to help leverage what Microsoft, Apple, RIM and all the other companies, Nokia, Qualcomm, everyone else in this space has.

FLATOW: What strength do all these patents give you in practical terms?

FLEISHMAN: It's defensive really. I mean, these companies, you know, you can see cases in which one firm wants to prevent another from going to market with something, like Apple trying to keep Samsung tablets off the market in Europe.

But really, the companies don't benefit from trying to keep products off the market. They need to compete in the market. You know, there's a competitive advantage there, but then they can be the victim of this same approach. So this is kind of a nuclear war. You don't really want to do a first strike because if you do, you know that there's all this other retaliation, including from other member-states, not the first worlds.

FLATOW: But it's hard to deny the idea now that, you know, Google has an Android operating system, and now it has access to all these patents. Why not go the Apple route, make the hardware and the software for it?

FLEISHMAN: Well, and that's exactly what they've got to do now. I mean, they didn't buy - you know, I happened to make this joke the other day that Google woke up and said oh, we just acquired 20,000 employees along with the 25,000 patents. And Google hasn't been a hardware company.

They've had other companies make hardware. They've been at a few removes from it, and it shows. You know, Apple controls everything from start to finish. Even though they have a contractor make their products, they work very, very closely with them, and only one company or companies make Apple products. There's no licenses.

So Google has the opportunity to make something that is a completely realized version of their vision of what a mobile phone or mobile tablet should be and control every stage of the process. No one else can gainsay what they want to do.

FLATOW: Does that mean that they're going to clamp down on this open-source Android platform?

FLEISHMAN: It's very tricky. Once you let the open-source cat out of the bag, you can't put it back in. The nature of the - I mean, people think about open source as being free and unlicensed, but it's not. There's very stringently defended licenses beneath most open source code, as distinct from free software that is licensed free.

So Android, once it's been released, you know, there are discussions that Amazon might come out with its own tablet. Amazon could take everything that is Android up until some moment and say, well, we're going to take this and modify it and not call it Android. We'll use all the same code and call it the, you know, the Amazoid tablet operating system. And they'd be perfectly within their rights to do so.

So there is still the potential for competition from companies taking the Android source code and making their own versions going forward.

FLATOW: So we might see a battle of all these cell-phone makers and tablet makers boiling down to the big three.

FLEISHMAN: That's what it feels like right now. We've got Apple. We have Microsoft. We have Google. And, you know, HP just took itself out of the running yesterday, which is - you know, it's baffling because they haven't lost that much money in relative terms to what they could gain if they actually got a foothold in the tablet or smartphone world.

But yeah, three big companies, and they're enormous, and no one could really reach the scale to compete against them now because they're so entrenched in the marketplace.

FLATOW: Google, as we say, has had Android, but is Android, is it in some way in danger of losing its market?

FLEISHMAN: Well, it could because Google, until now, has been licensing it, has been - you know, they - Android itself is free as an operating system. If you're a Microsoft customer, if you're Nokia, for instance, you pay some fee to use the phone. Android, you don't pay a fee as a cell-phone maker to use it.

But Google has controlled the Android name. You can't call it an Android without their approval, controlled access to the application marketplace, to the market, Android market, controlled access to Google apps and services, like driving directions. So there has been that level of control.

But they've got HTC, LG, Samsung and Motorola, other companies have all - and dozens of hundreds of smaller ones have all licensed Android and, you know, put it into the marketplace. And the question is: Do they want to compete against a Google-owned hardware company? I don't think anyone has a clear answer yet.

They don't know. They - if you look at the - there's a page of quotes at Google's site from all of their partners, their Android partners, and it reads like "The Stepford Wives." So these quotes: We're very happy...

(SOUNDBITE OF LAUGHTER)

FLEISHMAN: If you read this, you know, this is the ultimate public relations issue where Google said hey, would you say something like we're really happy about the defensive action that this acquisition represents? And then HGC says: We are very happy about the patent acquisition defensive position - page and page of quotes like that.

FLATOW: You know what the irony here is, as someone who's watched this business for 40 years, is that Apple used to get killed by people, these competitors saying why are you in the hardware business, right? And they even went out of the - they even actually licensed their hardware for a little bit, it didn't work out very well but kept, you know, saying when you buy a Mac or an Apple, you're buying the hardware as well as the software.

And people laughed at them. And now they're all coming back to that side.

FLEISHMAN: Yeah, well, it used to be you couldn't make something good enough and cheap enough to compete in the marketplace. And Apple has figured out how to sell enough products at high enough margin that they have this $75 billion-plus cash war chest. And they can buy every tablet screen of the quality they want for the next five years from the companies that make it, and all their competitors that are paying a higher cost for lower-quality components.

So Apple used to be, you know, it was the high-cost product, and now an iPad is actually relatively cheap for the features it delivers compared to any of the competitors on the market. That's a tricky competitive position to be in.

FLATOW: So what do you think Apple's take in their boardroom is now on this decision? Are they just - are they saying we welcome your challenge, and just, you know, try to take us on? Or what?

FLEISHMAN: I think they're laughing and laughing and rolling around in piles of dollar bills because this is the affirmation of so many years of Apple's strategy. This is the ultimate confirmation. They're the biggest or second-biggest company in the world by stock market capitalization. Their competitors have fallen by the wayside. Microsoft won't have a tablet until next year. This is going to affect the Android market even if Motorola produces a fantastic tablet under Google's guidance. So Apple says I guess everything we did turned out right, didn't it?

FLATOW: Let me get a quick phone call in, John(ph) in Concord, North Carolina, hi, John. John?

JOHN: I hope this comes through OK on a headphone. But, you know, I have dealt firsthand with Google Docs and was - and Google Mail and was totally disappointed in their support. I just hope their support, if they do start building hardware, is going to be better than it is for Google Docs and Gmail.

FLATOW: Good point. Thanks, John. What do you think, Glenn?

FLEISHMAN: Yeah, it's a real issue. I mean, Apple has this huge advantage of, again, the thing that everyone laughed at them for, all these retail stores. But now they have hundreds of places around the U.S. and hundreds more around the world where you can go in. You have a problem with the phone, you go in there, and they go - my wife's had to go in with her phone. Everyone you know has a story about if they have a problem.

You go in there, say something's wrong with this, and under warranty, they say oh, you're right, here's another phone. See you later. Just plug it into your computer and it's back up and running. And it's having a single infrastructure, having that hands-on touch - I've had to send my laptops back to Apple, and there's no questions asked, and two days later, I get either a new one, or it's completely replaced when it's under warranty. And that will go a long way. That goes a long way.

Google doesn't like people very much has always been my impression. They want to keep people arms-length away and let the algorithms, the automatic things, the user support forums handle everything.

FLATOW: Well, you know, we're entering the school buying season and the holiday buying season, when we typically see all the new hot stuff coming out. Could Apple throw down the gauntlet this fall and say yeah, OK, Google, try to match this with some - who knows what kind of iPad or iPhone coming out?

FLEISHMAN: Yeah, well, there were rumors that they might come out with yet another model of iPad, maybe a higher resolution screen, in September-October timeframe. There's clear evidence - in fact, some of the cell carriers have said openly there's another iPhone, the iPhone model five, will be coming out in that time frame.

And Android will have a new - there's a new version of their operating system, 4.0, Ice Cream Sandwich is the codename, will be out around then as well.

FLATOW: Ice Cream Sandwich.

(SOUNDBITE OF LAUGHTER)

FLEISHMAN: They like food at Google.

(SOUNDBITE OF LAUGHTER)

FLEISHMAN: Currently (unintelligible).

FLATOW: I've been there. I've seen their - they've got great - they've got a great cafeteria over there.

FLEISHMAN: They put up giant icons of all these things. So there'll be a giant ice cream sandwich out in the front lawn there soon. But the question is - you know, Google is making, their partners are making good hardware. And the Android operating system is quite good. Apple's borrowing things liberally in the next release of its IOS for iPhones. It's very clear, no question.

But the issue, does Apple have something that's so monolithic, that's so - there's one model, there's one thing you buy, you just go, and you plug it in, and that's what it is, and the question is: Is that so compelling that people don't want the choice of looking around out of, you know, hundreds of other products that have different features?

FLATOW: Today, making an Android app isn't as simple as making an iPhone app because there are so many different Android phones. Do think now that that's going to change, that we're going to have more with Android being controlled?

FLEISHMAN: Absolutely. I mean, this is what Motorola Mobility brings to the table for Google is they could release a set of five or 10 or 20 phones, but they're all going to work in exactly the same way for developers. And right now, that's not true even from a single handset or tablet maker. You don't know that the same device, the same Android device, as a programmer, will function the same way.

And if you look at - like Netflix has only been able to release its software for a handful of Android phones.

FLATOW: Well, we know we're making a - you know, we make an Android app on SCIENCE FRIDAY, and we know the difficulties on all the different phones.

(SOUNDBITE OF LAUGHTER)

FLEISHMAN: Right.

FLATOW: Getting them to play the same on all the different phones is not easy. All right. Thank you, Glenn, thanks for the insight.

FLEISHMAN: Thanks for having me.

FLATOW: And we'll be following you, and we'll be back, OK? Stay by the phone. Glenn Fleishman is a contributor to the Economist.com Babbage Blog. He's also a writer for TidBITS and the Seattle Times.

We're going to take a break, and when we come back, we're going to change gears and talk about this - what happened in San Francisco and the loss of the cell phones being shut off and the storm that has - the verbal storm that has ensued, people talking about it. We'll allow you to talk about it. Stay with us. We'll be right back after this break.

(SOUNDBITE OF MUSIC)

FLATOW: I'm Ira Flatow. This is SCIENCE FRIDAY from NPR.

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