Microsoft and Apple find common purpose as they gang up on Google

Apple versus Google in mobile warsHead on over to the official Google blog and you’ll find a very interesting article posted yesterday (August 4th 2011) entitled “When Patents Attack Android” that went on to spark a very pubic and very bitter argument  between the technology giants.

Chief Legal Officer at Google, David Drummond, used the original post to launch a highly critically attack on Microsoft, Apple & others for buying up mobile technology patents with the direct intention of limiting innovation and forcing up prices for handsets using the Android operating system.  In Drummond’s own words

“Android’s success has yielded…a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents”

This is what seems to have happened.   A group of companies (Rockstar) led by Apple and Microsoft have acquired a number of old patents previously held by Novell & Nortel that cover mobile operating software.  They were purchased for the princely sum of $4.5 billion, 5 times more than the pre-auction estimate.  A hefty investment and one seemingly made to inflict maximum pain on Google’s ambitions for the mobile space.

In doing so they are now able to levy a $15 licensing fee against every handset that uses the Android system.  They’re taking violations of these patents very seriously and have already launched suits against Samsung, HTC and Motorola.

Google have hit back and called upon the US Department of Justice to look into this purchase citing it as anti-competitive.   Google claim that the Rockstar group are both stifling innovation and limiting consumer choice and that rather than competing “by building new features or devices, they are fighting through litigation“.

At this point  Microsoft’s General Counsel Brad Smith disputed Drummond’s version on the Novell patent issue on Twitter.

“Google says we bought Novell patents to keep them from Google. Really? We asked them to bid jointly with us. They said no,” Smith tweeted in response to the blog.

And so it seems to go on with executives from both sides taking shots at each other over the issue.  But with the mobile market continuing to expand and the prize of dominating the (non-Apple) mobile OS space being granted to the winner of this fight we think it’s going to get much worse for both sides.

To read the original Google blog post go to

http://googleblog.blogspot.com/2011/08/when-patents-attack-android.html

 

 

 

 

Has Android killed the video games star?

As sales of Android powered smartphones soar across the globe, Nintendo announces drastic cuts to it’s profit outlook and slash the cost of the new 3DS by up to 40%.   Has the Google effect finally hit the video gaming mark?Image of Nintendo 3DS

In a striking reversal of fortune for the world’s largest video game maker, Nintendo drastically cut its annual profit outlook on Thursday and said it would deeply discount its new 3DS hand-held device as it struggles to stem a flow of users to casual gaming across other platforms such as smartphones and tablets.

On August the 12th , Nintendo will cut the price of the 3DS, introduced in March, by 40 percent in yen and 32 percent in dollars, a remarkable drop so soon after a game system’s debut.

Nintendo said it lost 25.5 billion yen  in the three months that ended June 30, the first quarter of its fiscal year, as sales plunged 50 percent from a year earlier. The loss prompted Nintendo to lower its annual profit forecast 82 percent, to 20 billion yen ($257 million) for the year ending in March, down from a previous estimate of 110 billion yen. The company also slashed its annual sales forecast by 18 percent, to 900 billion yen.

The gaming giant had been looking to the 3DS, its first major innovation since the launch of the revolutionary Wii home console, to propel them back to the heady days of the success they achieved with the console so memorably advertised by Jamie Redknapp!  This hand-held machine lets users play games that appear in 3-D, without the need for the weird geek-boy glasses that accompany most current 3-D technology.

But sales of the 3DS — which went on sale in February in Japan and in March in other parts of the world — have fallen short of expectations, hurt partly by the device’s worldwide release date, just after the devastating earthquake that struck Japan in March.  However, this isn’t the root of the problems.

Nintendo have been badly hit by the huge up turn in sales of the Android powered smartphones that are being purchased in such large numbers that Samsung overtook Apple in terms of sales in Q2 of this year.

Smartphones that run Google’s Android operating system are the perfect platform for causal gamers to play instantly downloadable games and critically don’t require gamers to carry multiple devises as they travel.     Smartphones also allow users access to games played within social networks like the now ubiquitous Farmville.

Yes, the 3D technology is amazing and Nintendo have produced another revolutionary product but unlike the Wii this handheld is facing massive competition on multiple fronts.  Will casual gamers invest in this technology when smartphones are delivering a good (if not great) experience but critically a massive choice of available games, many of them free?    So with cost, portability and gaming choice already stacking up against the 3DS, do Nintendo have any choice but to slash prices?

Nintendo has dominated the last generation of consoles with the Wii  but for now, players complain of a lack of games for the 3DS, a problem that plagues most new systems. Nintendo said Thursday that two flagship titles for the 3DS — Super Mario 3DLand and Mario Kart 7 — would go on sale in November and December. The releases are expected to improve sales of the device.

But unless more consumers start buying the 3DS soon, third-party developers could be discouraged from making games for it, leading to a vicious cycle of fewer games released and fewer 3DS units sold.

Nintendo is hoping that the steep price cut will help drive sales. From August the 3DS will cost 15,000 yen in Japan, down 40 % from the original price of 25,000 yen.

In a letter posted online, Satoru Iwata, Nintendo’s president and chief executive, offered a profuse apology to Nintendo users, saying that lowering prices so soon after a game machine’s release was a painful move.

“Never in Nintendo’s history have we lowered prices to such an extent, less than half a year since the product launch,” Mr. Iwata said. “But we have judged that unless we move decisively now, there is a high possibility that we will not see many of our customers enjoying a Nintendo 3DS.”

The future looks bright for Google as US kids opt for Android

iphone v. android imageGoogle the guys we love to hate have delivered another set of bad news for the mighty Apple.

New research from Nielsen suggests that the future is looking very good for them as they make even further strides in the battle of the Smartphones.  In the US 18-24 year olds were significantly more likely to purchase a phone with an Android operating system than iOS or Blackberry.  27% of all active phones in the US are still iPhones but it’s the change in taste of the youth market that’s very telling.

This is great news for the publishers who’re  still facing the imposition of the 30% Apple tax and also for the techno-liberals (like us Levellers) who object to the closed wall garden approach taken by Apple and Blackberry.

We think that this is only Round 1 of an epic battle and we’re looking forward to the benefits delivered to the consumer as these mighty Krakens of the technology world go head to head in the mobile wars.

Is Apple’s design Genius about to quit?

Image of jony iveWith today’s news being dominated by the mixed success of The Social Network at the Oscars we’d be forgiven for thinking that there was much else going on in the world of digital technology. But wait, hidden amongst pictures of Justin Timberlake  modelling a divine Tom Ford ensemble there’s rumour and speculation that Jony Ive the Brit responsible for the iconic iPhone design is on the verge of quitting.

Reports say that Ive is desperate for his children to be raised and educated back home in our fair isle but that his bosses at Apple say that a move back to the UK would make his position in the company untenable.  He’s also just cashed in his share options and with it boosted his personal wealth to over $120 million.  Company insiders say that Ive and the Apple board are at loggerheads with neither side willing to back down.

All of this wouldn’t be too much of a problem if there was a clear succession plan in place as it becomes increasingly likely that Steve Jobs won’t return.  With over 1/3 of shareholders voting for a proposal to force the board to disclose their plans, more turmoil at the top of the tree comes at a bad moment for the board and shareholders alike.

What we do know for sure is that for Ive it’s never really been about the money and with Apple becoming the new frenemy is he feeling uncomfortable with an organisation that seems to be shifting away from it’s founding philosophies?

What ever Ive’s decision his work and achievements at Apple will remain legend.

As Apple force through their 30% tax will we see a new “beer and sandwich” culture emerge?

Bad apple image For those of you who’ve had your attention to digital media distracted by events playing out in the Middle East and New Zealand then it may be news to you that Apple intend to charge publishers to it’s iPad and iPhone platforms a whopping 30% of subscription revenues.

The plan proposed by Apple would require that those who wish to distribute their online content to iOS devices (which includ the iPad and iPhone) would be required to offer users an option of subscribing directly from their application.

Apple would then take nearly one-third of the selling price for the online product. Previously, users had been able to purchase products through their Internet browser and sidestep Apple. The publishers were then able to collect 100% of the revenue from their sales. Also, links within apps to purchase products in this manner will be banned as of the 30th of June.

Publishers in the UK and US have reacted angrily to the proposed “tax” and there have been lots of suggestions that Apple are about to back down.  But we at the The Levels think that this is the very last thing that they’ll do.

The power has shifted and publishers better get used to that.  As the divine Pete Cashmore says ” unless a media company is able to build a better tablet or a better phone or convince customers to return to paper magazines and newspapers, nothing changes the fact that the publishing industry has lost control of its most valuable asset: distribution. It was always the printing presses and the delivery trucks, not the words themselves, that were the seat of the publishing industry’s power. The audience has moved elsewhere,”

So, for the smaller and niche publishers the 30% tax is going to be a reality.  But, we also anticipate that there may be more than a few back room beer and sandwich deals going on between Apple staff and the heavy weight publishers.

For some like News Corp there will always be a deal to be done that doesn’t involve handing over vast amounts of revenue to Apple and for others like Conde Nast there are advantages even to Apple to be associated with key influencer titles such as Vogue and GQ.

Smaller publishers saw the iPad as the answer to many of their collective dreams, and launched headlong into their perceived nirvana forgetting that Apple operates a closed walled garden that’s in place for a reason.    Apple are now cashing in on their dreams.

So, I guess the choice for the smaller player is either pay up or flip flop your way to Android.  And for the big guns, cheese & pickle and a pint of Bass it is then!