Verizon lost ten points of Android marketshare — since making a deal with Apple to sell iPhones.
Maybe $12 billion wasn’t such a big price for Google to pay to protect Android.
Did Google spend $12 billion dollars on Motorola, just for the juicy patent portfolio? That’s what some very smart people are saying:
I don’t think Google is going to get into the handset business in any serious way. It’s not a kind of business they know how to run, and why piss off all their partners in the Android army? Much more likely is that the hardware end of the company will be flogged to the Chinese or Germans and Google will absorb the software engineers. Likely Google’s partners have already been briefed in on this plan, which is why Google is publishing happy-face quotes about the deal from the CEOs of HTC, LG, and Sony Ericsson.
My guess is that hardware is sometimes seen as a necessary step to get the software out there. The way this whole thing seems to be going is to protect the Android operating system, and when they began to figure out how to dig themselves out of this patent hole and as is often the case with Larry, the solution winds up to be much bigger, and encompasses some other opportunity. The way he likes to deal with a problem is to come up with a scheme that not only addresses the problem but comes up with something big in addition.
I don’t think there’s a love of hardware there but I think that besides the patent thing, they’re now enamored by the idea of doing interesting things that you can only do if you own the hardware company along with a software company.
And Farhad Manjoo explains why Google must keep Moto’s manufacturing, if they ever want to recoup their investment:
When you buy an Android phone, none of your money goes to the search company—remember, the phone manufacturer got the OS for free. Instead of taking a cut of the sale of phones, Google says, its main goal with Android is to keep a foothold for its websites in the emerging smartphone market. The theory is that every Android user will spend a lot of time using Google services and thus seeing Google ads.
It’s a circuitous path to revenue, something akin to an oil company offering carmakers free engines in order to stimulate demand for gas. Still, this strategy made sense as long as Google’s investment in Android remained small. The Motorola purchase changes that rationale; it’s as if Exxon Mobil bought General Motors. Now Google has to find a way to recoup at least $12.5 billion from Android (on top of whatever else it was investing to build the OS). That looks very difficult. Earlier this year, Gene Munster, an analyst at Piper Jaffray, estimated that Google makes just $6 in ad revenue per Android user per year. By 2012, that number could be $10 per Android user per year. Across all users, that would mean about $1 billion in annual revenue. Even if that figure grows over time, it will take a long time for Google to make back the money it spent on Motorola, let alone to turn a profit.
Stripped of its patents, I doubt Google could get much more than a billion or two by selling what’s left of Motorola — the company has been losing money on every handset it sells. That’s a big, deep hole, and only Apple-size mobile profits will fill it. And Google can’t earn those big margins at ten bucks a sale.
Who’s got it right? Only time will tell. But $12 billion is an awful lot of money to spend — two years of Google’s total profits — on a purely defensive patent portfolio purchase.
Best Buy is reportedly unhappy with HP after having sold just 25,000 of the PC maker’s TouchPad tablets and is unwilling to pay for the more than 240,000 unsold units, according to a new report.
Multiple sources who have seen internal HP reports have told Arik Hesseldahl of AllThingsD that big-box retailer Best Buy took delivery of 270,000 TouchPads and has only managed to sell less than 10 percent of its inventory. One source suggested that the 25,000-unit sales number may even be “charitable” because it doesn’t take returns into account.
According to the report, Best Buy has refused to pay for the remaining tablets and has asked that HP take them back.
As I noted two weeks ago:
This is what so frustrates me about the TouchPad. For the way I work, WebOS might just be a better choice than the iPad. But I’ve used one, and it was pretty awful. Unreliable scrolling, unresponsive screen rotations, and apps took forever to load. Even the email app, which should pop up instantly, had me wondering if I had enough time to clip my nails.
HP should have gotten these details right out of the gate. Customers see the snappy iPad ads on TV, then go play with a TouchPad on display, and wonder, “Why doesn’t this thing work?” Then they go buy an iPad.
HP has gone on to try and fix what’s wrong. The WebOS update is supposed to be snappier, and they also knocked $100 off the asking price.
Even so, no one seems to be asking for a TouchPad.
During a sometimes-raucous session of what’s being called the “For the People” Jobs Initiative tour, a key member of the Congressional Black Caucus told an audience in Detroit Tuesday that the CBC doesn’t put pressure on President Obama because he is loved by black voters. But at the same time, Rep. Maxine Waters said, members of the CBC are becoming increasingly tired and frustrated by Obama’s performance on the issue of jobs. Even as she expressed support for the president, Waters virtually invited the crowd to “unleash us” to pressure Obama for action.
“We don’t put pressure on the president,” Waters told the audience at Wayne State Community College. “Let me tell you why. We don’t put pressure on the president because ya’ll love the president. You love the president. You’re very proud to have a black man — first time in the history of the United States of America. If we go after the president too hard, you’re going after us.”
Obama’s policies have hurt the most, the people who turned out in the greatest numbers to vote for him in 2008 — minorities, millennials, college grads. What will he have to do to get that enthusiasm back in 2012?
It’s not easy to pick the most cynical political act you’ve ever seen. For me, however, it occurred early in 2002, when President George W. Bush signed the McCain-Feingold campaign reform act — over his own objections over its constitutionality. Bush wanted his signature on a popular bill, without losing support from conservatives and libertarians who worried (correctly) that it was a bad law. The buck stops with the Supreme Court — Bush expected, in vain, that the Supremes would do his job for him.
That is, I thought that was the most cravenly cynical political act of my lifetime — until I read Michael Tomasky’s piece today in The Daily Beast. Close your office door or stuff a sock in your mouth before reading the opening graf:
Last Friday’s decision by a three-judge panel of the 11th Circuit Court of Appeals in Atlanta, holding the individual mandate portion of the Affordable Care Act (ACA) unconstitutional, will almost surely force a Supreme Court decision next year, many legal analysts believe. So, bam, right in the middle of a presidential election, we’ll have the biggest and most political high-court decision since Bush v. Gore—and one with far greater destructive potential as precedent. The standard liberal position is to fear that the court will overturn the ACA. Sure, I fear that. But I also fear the political consequences on next year’s election of the court upholding it and worry that those consequences could be even worse for the progressive cause.
You read that right — heaven forbid voters should hold the President responsibly for “his signal legislative accomplishment,” as Tomasky would have it. Surely, no one could be that cynical?
Well, yes. Tomasky admits that a Supreme Court decision against ObamaCare would “be a disaster in terms of legal precedent and health-care substance.” He understands that an overturn would be “a terrible blow to a whole body of jurisprudence that has helped support and sustain the New Deal.” Furthermore, “politically it would be a crushing defeat for Barack Obama… What would he have left to run on?”
If the Supremes uphold the law, Tomasky worries that “‘Obamacare’ becomes a hot-button issue all over again.” And then “multimillionaires and billionaires out there who will throw money at independent expenditure campaigns” to put more Republicans into office, especially the oval one. Even the headline screams it’s “Obama’s Best Hope for Re-Election.”
In other words: Better to have the Court knock down ObamaCare to give liberals a reason to rally around the Democrats next year — so they can try, try again to shove collectivized medicine down our throats. After, of course, they get the Supreme Court stacked in their favor.
Never forget that Progressive will use any means — fair, foul, or just plain villainous — to advance the cause of statism.
On Day 938 of his Administration, President Obama announced that he will announce a jobs plan — sometime around Day 968 or so.
Now maybe I’ve just grown cynical, but I’d wager that Obama’s “plan” involves increased spending and increased taxes. To create jobs. Because that’s worked so well already these past two and a half years. But it’s all he seems to know how to do — other than blame everyone else, that is.
This is the dead end of tax & spend liberalism. Give the President credit — he might just be the one to fully and finally discredit the Great Society. At the very least, this pedantic one-trick pony has discredited himself.
Meet SGT Dakota Meyer, the first living Marine to receive the Medal of Honor since the Vietnam War. It’s a helluva story.
Moody’s Analytics said its near-term outlook for the U.S. economy has fallen significantly in the past month wake of the debate over the U.S. debt ceiling and the downgrade of the nation’s credit ratings by Standard & Poor’s .
Moody’s Analytics, a sister company to credit-ratings company Moody’s Investors Service, now expects real gross domestic product to increase at an annualized rate of about 2% in the second half of this year and just over 3% next year, compared with its estimate a month ago for growth of 3.5% for the second half of this year and through 2012.
With those numbers, we’re looking at about 9% unemployment on Election Day next year.
It’s a small shot, but a taste of things to come from the New York Times and the rest of the complicit media. You can see it in the headline:
In Texas, Perry Has Ridden an Energy Boom
The Texas economy? It’s just oil. Those OPEC thieves raise the prices, and Rick Perry looks like an evil geeeeeeeeeeeenius. Of course, the best they can do is quote a confessed Perry critic:
But some economists as well as Perry skeptics suggest that Mr. Perry stumbled into the Texas miracle. They say that the governor has essentially put Texas on autopilot for 11 years, and it was the state’s oil and gas boom — not his political leadership — that kept the state afloat. They also doubt that the Texas model, regardless of Mr. Perry’s role in shaping it, could be effectively applied to the nation’s far more complex economic problems.
“Because the Texas economy has been prosperous during his tenure as governor, he has not had to make the draconian choices that one would have to make in the White House,” said Bryan W. Brown, chairman of the Rice University economics department and a critic of Mr. Perry’s economic record. “We have no idea how he would perform when he has to make calls for the entire country.”
The very next line is a real winner:
And if Mr. Perry were to win the Republican nomination, he would face critics, among them Democrats…
Democrats would say bad things about the GOP candidate? Stop the presses!
But it isn’t just Democrats and critics. Oh, no. It’s also liberal research groups:
“The Texas model can’t be the blueprint for the United States to successfully compete in the 21st-century economy, where you need a well-educated work force,” said Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities, an Austin-based liberal research group.
Krause then goes on to quote some nice conservatives saying some nice things about Perry — all of them just as “newsworthy” as the ones I clipped for you above. And then Krause gets right back to the punches:
When Mr. Perry succeeded Mr. Bush, a barrel of oil was worth only $25. Experts warned that Texas’s natural gas and oil fields, which directly and indirectly support about one-third of the state’s jobs, were in steep decline. But during his first term, global market forces began driving oil prices up. They peaked at $147 a barrel in 2008 and have largely remained above $80 over the last two years.
Left unasked: How Texas manages to keep its energy economy humming, with a spiteful White House and a hateful EPA monkeywrenching all the gears. Krause, via Bernard L. Weinstein, even makes the claim that recent advances are just luck:
“He’s been lucky,” said Bernard L. Weinstein, associate director of the McGuire Energy Institute at Southern Methodist University in Dallas. “Obviously, neither the governor nor public policy in Texas has pushed oil prices up, and clearly the technological innovation has created a whole new industry in Texas.”
Where did those “technological innovations” come from? For New York Times readers, they just happen. But the fact is, innovation occurs in a kind of leave-it-alone economy. Texas, to the extent Washington allows it, has enjoyed just that kind of freedom.
I guess that’s just Rick Perry’s “good luck.”
UPDATE: How did I miss this the first time around? Look at the picture the NYT chose to illustrate the story, just below the headline.
It’s a month old — and Perry has done one or two things in the last couple weeks that might be more newsworthy than a news conference that the NYT couldn’t even determine what it was about. And, of course, it features that lucky braggart watching himself play football.
MORE: At The Atlantic, Kathleen Kennedy Townsend asks “is Rick Perry as Christian as he thinks he is?” That’s her big question in an article where she also reminds us that “the Bible is certainly open to interpretation,” and that “no one has a monopoly on faith.”
“Cognitive dissonance” must not have much meaning to Kathleen. Or “irony.”
I understand why Google bought Motorola Mobility today — they need bigger battalions in the Patent Wars. But did they overpay? Maybe:
Google is paying a premium of 73 percent compared with Motorola Mobility’s 20-day trading average price before today. The average premium of more than 360 deals in the wireless- equipment industry on that basis was 32 percent in the past five years, according to Bloomberg data.
“This is a heck of a premium” said Lee Simpson, an analyst at Jefferies International in London. Motorola Mobility’s patents are “a good counterweight if Apple comes after Google.”
Apple has been quite carefully not going after Google. Instead, Apple has chosen to fight against its biggest Android-infused copycat manufacturers. Now that Google is becoming a manufacturer, via Moto, that could change.
Despite Android’s runaway success, Google has proven itself a not-very-adept cellphone maker. Google has released two name-branded phones, both built by other makers to Google’s specs. The first, the Nexus One, was something of a flop. Manufactured by HTC, it was supposed to be the flagship Android phone, but it never really took off.
Samsung was chosen to build the follow-up Nexus S. It has done better than its predecessor, but like many Android phones it’s gotten lost in the shuffle. That, by the way, is a feature of the Android ecosystem, not a bug. Google’s entire Android strategy is to make it available to anyone, and to get it on as many devices as possible. Still, that does make it more difficult for manufacturers to build standout phones — or for them to stand out for very long.
By design, it appears Google is going to wade willy-nilly into making its very own handsets. Maybe not — maybe it bought Moto purely for the patent portfolio. If so, that makes the 73% premium even harder to justify. So I’m betting that Googarola or whatever will soon be building Android handsets to put up against the best Android handsets from HTC, Samsung, and all the rest.
Right off the bat then, Google has given its Android OEMs a reason to flirt a bit with Microsoft, maybe take a quick peek under the skirts of Windows Phone 7. But that’s not all.
Google has never been much of a handset maker. Barring Android, Motorola hasn’t been an interesting handset maker for half a decade or longer. It’s profits are weak and the company is suffering product delays. Googarola is going to have to do something to make its products stand out from the crowd — a difficult feat in the Android world, as we’ve already discussed.
As I see it, Google has three ways to do that.
Premium hardware? That’s Apple’s niche. Aggressive pricing? That’s (unloved) Nokia’s specialty and, besides, it would be just another reason for Android OEMs to look to Microsoft. Google’s third option is: Unique flavors of Android no other manufacturers can get, if only for a while. Now there’s a way to Samsung and HTC racing to Windows Phone 7.
I suppose there’s a fourth option. Google could remain a tiny manufacturer. Which begs the question: Why bother? No, I think Google has its eyes set on gobbling up some of the massive profits Apple enjoys in the cellphone business. And that means going big.
Imagine if Microsoft swallowed Dell whole, and vertically integrated itself like Apple. Windows OEMs would have to start thinking very seriously about their dependence on Microsoft. MS would also set itself up for a mano y mano fight with the most beloved computer maker on the planet. And let’s be honest: A Microsoft-built box is just not going to garner the loyalty (and profit margins) that an MacBook Air does. Yet that’s the situation Google seems to have gotten itself into.
The whole point of Windows is that it runs on most any PC, anywhere — and cheaply. That’s what Android does, too. If I’m seeing this correctly, Google is trying and bootstrap Android from cheap-but-plentiful to pricy-and-exclusive. And they’ll have to do that without scaring off the OEMs who make the Android ecosystem work.
That’s a helluva tightrope to walk. It’s enough to make me wonder if Google paid the Moto premium just for the patents, after all.
In which case, yeah, they overpaid.
UPDATE: Blodget says, “It could end up being a disaster.”
GRUBER: “The Stepford Handset Makers.” They ain’t happy with Google right now.
INVESTORS: Aren’t happy, either. GOOG is down more than 2% already.
Warren Buffett: Tax me more!
Pat Buchanan: Put your money where your mouth is and pony up $5 billion right now.
That’s cute, Pat, and a nice little rebuke. But $5 billion wouldn’t cover much more than a day of new federal debt. Which is why the dirty little secret of Obamanomics is: They’re going to come after the middle class, and hard. Because that’s where the money is.
Just got back from four days of living in a tent in the woods — and nobody would have known I was gone, if it hadn’t been for those meddling kids at YouTube.
I’ll get that thing fixed in a bit.
Meanwhile, I’m rested, bearded, and ready to tune into This Week with guest host Jake Tapper.
Honestly, a week without Christiane Amanpour is the best welcome home present a blogger could ask for.
What’s the opposite of “entrepreneurship?” It must be “Obamanomics.” A(n almost) sad tale of (nearly) just giving up in Texas:
Main Street Bank lends most of its money to small businesses and is earning decent profits. But the Kingwood, Texas, bank is about to get out of the banking business.
In an extreme example of the frustration felt by many bankers as regulators toughen their oversight of the nation’s financial institutions, Main Street’s chairman, Thomas Depping, is expected to announce Wednesday that the 27-year-old bank will surrender its banking charter and sell its four branches to a nearby bank.
Mr. Depping plans to set up a new lender that will operate beyond the reach of banking regulators—and the deposit-insurance safety net. Backed by the private investment firm of Microsoft Corp. co-founder Paul Allen, the company won’t be able to call itself a bank, but it will be able to do business the way Mr. Depping wants.
“The regulatory environment makes it very difficult to do what we do,” says Mr. Depping, who last summer saw his bank hit with an enforcement order from the Federal Deposit Insurance Corp.
Call it, “going Midas Mulligan.”
Midas, you’ll recall, became the private banker to the residents of Galt’s Gulch, after regulators and courts convinced him it was better to close up shop.
If you lost your virginity outdoors, anywhere from Indiana to Kansas, Minnesota to Missouri, then this is one song that will stick with you for just about ever.
It’s difficult to imagine, but US Fifth Fleet might soon be… homeless. Strategy Page has the story:
The United States is quietly looking for another country, on the west coast of the Persian Gulf, to host an American naval base. This is because months of political unrest in Bahrain has put the American base there in danger. So the U.S. Navy is looking at the possibility, and cost, of moving the Bahrain base to Dubai or Qatar. The navy is not happy about making the move, as it would be expensive and disruptive. But if the unrest in Bahrain continues, and escalates, there may be no choice.
I’m picturing an admiral on the streets of some dusty Arab town, holding up a sign saying “Will protect shipping lanes for shelter.”
Will the next big gaming console be your phone? Epic Games president Mike Capps is betting on iPhone 8 just a few years from now:
It’s about how do we deal with iPhone 8… if you watch where the gamers are going that’s where they are. Your iPhone 8 will probably plug into your TV, or better yet, wirelessly connect to your television set to give you that big screen gaming experience with good sound. So really, what’s the point of those next-gen consoles? It’s a very interesting situation to be looking at. That’s what we’re starting to think about more… not how do we scale from some Nintendo platform to some other future console.
That’s courtesy of Christian Zibreg, who adds:
Many people think Apple should launch a dedicated gaming console. Frankly, Apple may not even need a dedicated gaming hardware. iPad 2 and iPhone 4 already have capable GPUs that will only get better when the A6 chip comes out (some say it’s in test production now). The AirPlay technology can already wirelessly beam some games from your iPhone, iPod touch or iPad to the big screen TV. And if Apple ever makes that rumored television set, they will have in place an end-to-end entertainment system, most likely cloud-based, that will be second to none. How do you rival that with a dedicated gaming hardware and decades-old business model that boils down to overpriced games distributed (mostly) exclusively on physical media?
I’d add Google in there, too, since Android has taken such a huge chunk of the smartphone market, and will probably — eventually, someday — do the same in tablets. Now they just need to figure out an app store model that works as well as Apple’s, and gets similar amounts of cash into the hands of developers.
But I’m not much of a gamer, and the few games I do sometimes play are almost all historical strategy titles from Strategy First — which don’t lend themselves at all to anything but a desktop computer. But the business of console games is fascinating, especially given that Apple and Google are poised to knock the legs out from under Nintendo, Sony and Microsoft.
Milton Wolf has a column detailing exactly how much damage ObamaCare is doing to the country now (lots), and how much it will burden the economy in the future (smothered to death). But one figure shocked me:
What’s worse, Obamacare is a parasite that threatens the very survival of its host economy. When Mr. Obama signed his namesake health care takeover into law in March 2010, he converted his wishful-thinking “recovery summer” into the Obama Depression. This before-and-after moment of the Obama presidency saw private-sector job creation plummet from a modest 67,600 new jobs per month to a flat line of 6,500. Compare that with the 285,800 jobs created per month under President Reagan during the similar time period in the 1980s.
If you’re about my age or older, you remember those heady days of 1984. Employment was skyrocketing, but better yet, so were real wages. In the 11 months leading up to Reagan’s reelection, personal income swelled more than seven percent. It’s the jobs-created figure that really needs to be put in perspective, however.
In Reagan’s recovery, we averaged 285,800 jobs each and every month. That was working from a population of 235 million, and a labor force almost exactly the same percentage of the population as it is today. So the overall population has increased by almost exactly 30% since 1984, and the labor participation rate has declined (dramatically) back down to where it was in 1984.
Do the math.
Starting in the “Recovery Summer” of two years ago, the Obama recovery should have been generating 371,540 jobs, on average, each and every month. Today, we still have fewer people working worse jobs for less pay than we did in 2009.
It’s no coincidence that the 371,540 figure is pretty much right in the middle of Joe Biden’s 2009 estimate that any month now, the economy would be generating between 250,000 and 500,000 jobs each month. “Any month now” was 28 months ago.
They really thought the jobs would come. They really did. They thought they could jump up and down on this economy and threaten its castigate the entrepreneurs and embolden the union leaches and swell the debt and everything would still come roaring back to life.
Well, it hasn’t Jobs creation is off by a factor of almost five, compared to 1984. And total full-time employment has actually decreased since then — the net gain has been in part-time work that nobody wants, but anyone will accept.
Could we at least see a repeat of 1984′s 7% increase in wages? Fuggidaboudit. And if you have any savings in something other than commodities, it’s either evaporating in the stock market crash, or sitting in your bank account and suffering the death of a thousand Bernankes.
The solution is strait-forward. It is also painful:
1. Stop borrowing.
2. Raise interest rates to protect the dollar.
3. Repeal the last 32 months worth of laws. Do it in one bill called “The Omnibus Do-Over Act of 2013.”
4. Lower marginal tax rates, eliminate deductions, broaden the base.
Oh, and hold a kick-ass election next year, or else you can’t even get to the first step.
In the meantime? We’re pretty much screwed.
Mr. President, it’s time to go big on the economic solutions. It’s time to propose a massive second stimulus, offset by some serious tax hikes and budget cuts once the economy regains a semblance of good health. Republicans won’t go for it, but they don’t go for small economic solutions either, be they extensions of unemployment insurance or a miniaturized infrastructure bank. (The current level of GOP commitment to infrastructure would about cover the purchase of a Lego set.)
Economically, the case for a massive stimulus is a good deal stronger than the case for the rather minimal one that you’re calling for — extending unemployment insurance and the payroll tax cut, and establishing an infrastructure bank. A major stimulus is the only conceivable source of substantially increased economic activity and jobs for at least several years.
I’m speechless. Just speechless.