December 16, 2019

News Analysis: Google Goes Hardware Shopping

“MOVE bits, not atoms.”

It has been the motto of the Internet age, coined by Nicholas Negroponte and popularized in his 1995 best seller, “Being Digital.” Mr. Negroponte, founder of the M.I.T. Media Lab, was saying that innovation and fortunes would increasingly be made doing imaginative things with the basic elements of computing — bits, short for binary digits — instead of working with the atoms of the physical world.

No company has followed that advice more single-mindedly and lucratively than Google. The search giant is the ultimate digital company, and its most precious assets are its algorithms — software snippets of distilled mathematical intelligence. As Steven Levy writes in his book “In the Plex,” the company’s DNA is “rooted in the primacy of algorithms” and its young leaders believe “in a future guided by benevolent algorithms.”

Yet Google announced last week that it would pay $12.5 billion for Motorola Mobility, a maker of smartphones. It is a big bet and a step into the messy physical world of selling products to people — and perhaps a sign of the times.

Even Google, analysts say, recognizes that its prosperity will depend on mastering atoms as well as bits. That is particularly the case, they add, in the new growth markets for search advertising on smartphones and tablets, where software and hardware must knit seamlessly together for a pleasing consumer experience.

The digital future, it seems, will be less a takeover of the physical world than a marriage with it. “This bits-atoms dichotomy is becoming less and less true,” said Erik Brynjolfsson, director of the M.I.T. Center for Digital Business. “And Google understands that it needs a deeper knowledge of product design and hardware to get the most value from its bits business, search and search advertising.”

Google, to be sure, is buying Motorola Mobility for more than its phone-making expertise. Motorola holds more than 17,000 patents, and that portfolio could be a formidable shield against patent-infringement claims. The industry has been rife with suits and countersuits recently, as competition in the marketplace spills over into the courts. Apple, Microsoft and Oracle, in different cases, have accused Google or the companies that use its Android smartphone operating system, including Motorola, of infringing on their patents. It is possible that the patents are the prize in the Motorola deal, and that Google will sell off the phone business sometime later.

But in a blog post, Larry Page, Google’s chief executive, mainly emphasized the business opportunity ahead. “Together,” Mr. Page wrote, “we will create amazing user experiences that supercharge the entire Android ecosystem.”

Android has proved extremely popular with phone makers, and its market share of new handsets sold is now well ahead that of Apple, the pioneer and pace-setter in smartphones. But Google licenses Android to 39 handset makers worldwide, and the operating system is free and open-source, which means the manufacturers can tweak and tailor the software.

Google’s openness comes at a cost; the phones vary widely, and some customers complain that Android phones are clunky and confusing to use.

So Google is borrowing a page from its Silicon Valley neighbor. “In fast-changing technology product markets, there is a real advantage to controlling both the hardware and the software — that’s the genius of Apple,” said Thomas R. Eisenmann, a professor at Harvard Business School.

The Motorola Mobility venture, business experts say, promises to educate Google about consumers — and just how cranky and demanding they can be.

In its search and advertising business, Google deals with consumers at arm’s length, online and through software. Users type in search queries, contributing vital raw data that Google’s clever algorithms mine to produce more useful search results and more accurately directed ads.

Google is a triumph of computer-automated efficiency. For the most part, the formula works to the benefit of all — people searching for information, advertisers pursuing customers online, and Web publishers seeking ad dollars. It works best of all for Google, which is collecting profits at the rate of about $10 billion a year.

Still, the approach can be mechanical and brittle. When Google decides to evict a small Web publisher from its ad service, it sends a computer-generated form letter with the bad news. It says the Web site “poses a risk of generating invalid activity.” Why, the publisher might ask? You will never find out from Google. The only appeal is to fill out a Web form. Good luck. You can’t talk to an algorithm.

Last year, Google tried selling its own smartphone, the Nexus One, manufactured by HTC of Taiwan, through an online store. The experiment was folded after a few months. When buying a complex gadget, most consumers want to see the product, touch it, get a little hand-holding and help.

Apple certainly knows that, as any visit to its stores makes clear. Can’t figure something out? Make an appointment at the Genius Bar, and friendly, knowledgeable Apple employees will most likely solve your problem. Buy the wrong connector cord or some gizmo, and bring it back a few days after the 14-day return policy expires? No problem. It is commerce guided by human accommodation.

No one expects Google to open stores or drastically change its corporate culture. But for the Motorola purchase to pay off, Google is “going to have to master new skills like customer service and industrial product design for consumer products,” said Mr. Eisenmann of Harvard Business School. “It’s going to be a challenge for Google, but it’s not impossible by any means.”

Google, after all, often describes itself as a learning machine.

Article source:

H.P. Weighs Spinning Off Its PC Unit

By acquiring Autonomy, based in Britain, Mr. Apotheker would sharply refocus the company on business services and products. He has been trying to speed the company’s growth, which has stagnated amid internal missteps, a sour economy and shifting consumer tastes.

Mr. Apotheker’s plan includes killing off the TouchPad tablet, introduced into stores only weeks ago, Pre smartphones and other WebOS products it acquired last year when it bought Palm for $1.2 billion. A spinoff of the PC unit would also reverse H.P.’s $25 billion acquisition of Compaq in 2002.

“It’s Day 1 of the transformation,” Mr. Apotheker said in an interview. He spoke of the “difficult decisions” that had to be made, but said he was seeking better performance from the company.

Splitting off the PC unit would eliminate the drag of a slumping, low-margin business on H.P. Instead, Mr. Apotheker, who joined H.P. last year, is trying to move toward providing corporate customers with more services and cloud computing — a term used to describe delivering products and services online — that he says is more “high value.”

The strategy challenges I.B.M and Oracle, two giants in the market. By unloading its computer business, H.P.’s would follow in the footsteps of  I.B.M., which sold its computer unit to Lenovo, a Chinese company, in 2005.

H.P. said it would take 12 to 18 months to decide what to do with the PC unit. Meanwhile, it will continue to run the business as usual. Mr. Apotheker said the company did not intend to dispose of its printer business.

“Enterprise is where the growth is, that’s where the margins are,” said Brian Marshall, an analyst with Gleacher Company.

Wall Street has been concerned about H.P.’s growth ever since Mr. Apotheker joined the company, and the weakening economy has added to the uncertainty. A series of disappointing quarters and forecasts had sent the company’s shares down nearly 22 percent since the start of the year before Thursday.

Shares of H.P. fell $1.88, or 6 percent, to close at $29.51.

Acquiring Autonomy, which makes software that searches and keeps track of corporate and government data, would greatly enhance H.P.’s shift to software and business services. The company has become one of the biggest technology firms in Britain and counts BP, Ford Motor and the United States Defense Department among its customers.

Autonomy would be H.P.’s third-largest acquisition ever, after Compaq and Electronic Data Systems. The $10 billion offer for Autonomy would represent a rich 64 percent premium over its market value. It produced almost $1 billion in revenue in the 12 months that ended June 30.

Mr. Apotheker said that Autonomy would get access to H.P.’s huge customer base. Its products would be sold across H.P. business, he said.

That also was H.P.’s strategy in buying Compaq. It gave the company the scale to cut costs and secure favorable prices on parts. It was also supposed to give it clout with corporations that were also seeking printers, servers, storage and data management services.

As recently as February, Todd Bradley, H.P.’s executive vice president for the company’s computer division, insisted in an interview that the PC was still a valuable part of H.P.’s business. He dismissed speculation that the company would dump the unit. “The PC business has been strategically important to H.P,” he said. “The strategic importance hasn’t changed as the leadership changes.”

H.P. has dominated the PC business, but in recent months the industry has gone through a downward turn with the shift from desktops and laptops to tablets. 

Contributing reporting were Evelyn Rusli, Michael J. de la Merced and Jeffrey Cane from New York, and Julia Werdigier from London.

Article source:

When an Android Phone Becomes a GPS Device

To my surprise, on the way there, it looked as if the smartphone was performing as well as the Garmin GPS device. But also to my surprise, sometimes they were both about as good as leaning out the window and getting advice from a stranger.

The smartphone found the exact name of the cinema but somehow placed it 75 miles and 90 minutes away. The GPS device seemed to nail it; I recognized the exit it told me to take and I took it. Then, following its turn-by-turn directions, I found myself blocks away in the middle of a residential street, with no cinema in sight.

Thanks to both, I missed the first 20 minutes of the movie.

As most users will testify, all GPS devices make mistakes, whether you have spent $2,000 for an in-car navigation system or one-tenth the price for the same features on a portable device.

Now drivers should be asking themselves: why do I need to spend even $200 for a GPS unit that sometimes makes mistakes when a just-as-smart (or dumb) smartphone can do the same thing?

Owners of smartphones that run the Android operating system are finding an even better reason: the navigation advice on an Android phone is free.

Google’s no-cost Maps app, bundled with Android smartphones, includes voice directions and turn-by-turn navigation, just like the stand-alone big boys. (This is a category in which Androids clearly trump iPhones. The iPhone’s Google Maps app does not offer these features.)

But is a free smartphone app as good as a device specifically designed for navigation? I set out to find out with a side-by-side test.

The manufacturers of navigation hardware, who have seen sales of stand-alone units drop almost 20 percent since their 2008 peak, argue that free and low-cost smartphone navigation apps and stand-alone devices can coexist. Each appeals to a different kind of person. Younger people are attracted to apps, while older drivers like stand-alone devices with larger screens, according to Bill Strand, Magellan’s senior product marketing manager.

To test this premise, I stuck Garmin’s Nuvi, model 2350LMT ($185), and Motorola’s latest Android phone, the Droid X2, onto the dashboard of my Audi. (There are hundreds of GPS models; I selected the Garmin as the representative because of its popularity.) Peering over this bank of devices, I took off with the children onto Los Angeles’s traffic-choked Ventura Freeway and down to Disneyland.

The Droid and Garmin both have 4.3-inch screens. The Droid’s screen was brighter and, with its reflective surface, appeared very sharp.

I typed in “Disney Grand California Hotel and Spa,” and the slight vibration let me know when a key push had been registered. By contrast, I often pushed the wrong button on the Garmin.

Each device’s maps were easy to follow and read; the graphics style comes down to personal preference. But if you like to catch a bird’s-eye view of your travels, only Google offers a satellite view of your route, much like its satellite view on a Google map on a computer. Graphic maps work just as well, but I found something satisfying about seeing what is really there on the ground.

When you approach your destination, Google Maps automatically switches to its familiar street view, giving a street-level shot of where you (hopefully) want to be. Using Google Maps to find my way home, I found it a bit discomfiting to suddenly see a photo of my house — that I hadn’t shot — as I drove up to it.

In navigation, seconds can mean the difference between getting off on the correct freeway exit or driving an extra 10 or 20 miles to the next one. Google Maps was generally quicker; at times, its voice commands arrived as much as three seconds sooner, which could make all the difference if your reflexes are not that snappy.

Google Maps also took first place when it came to searching for a destination. A search for the nearest Peet’s coffee stores on the Garmin took 27 seconds — and it never found the one closest to my home. The Garmin did not find it even when I was parked in front of the store. Perhaps Garmin’s maps supplier is a Starbucks fan.

Alas, speed does not always translate into accuracy. Neither of the devices was ever completely accurate, either in determining the shortest route or figuring out the location of an address.

Article source:

2 Korean Search Engines File Antitrust Complaint Against Google

SEOUL — The two biggest Internet search engines in South Korea filed a complaint on Friday  with the Fair Trade Commission, charging that Google was blocking  the installation of their services on  smartphones preloaded with Google’s Android operating system.

The NHN Corporation, which owns Naver, the  largest search portal, and Daum, the No. 2  portal, asked South Korea’s trade commission to investigate whether Google had  improperly maneuvered to have Android preinstalled on most smartphones being sold in the country.

Android-based smartphones use Google as their default search engine,  and NHN said in a statement that the  preloading of Android had made it “virtually impossible to switch to another option” for Internet searching.  

Worldwide, Android is expected to become the preferred operating system on  smartphones. “For the vendors who made Android  the cornerstone of their smartphone strategies, 2010 was the coming-out  party,”  Ramon Llamas, a senior research analyst with the International Data Corporation, said in a recent report.

“This year will see a coronation party as these same vendors broaden and  deepen their portfolios to reach more  customers, particularly first-time  smartphone users,” the report said.

In its complaint, NHN said that Google, “through  a marketing partnership with major  smartphone producers,” had unfairly  created “a new ecosystem” by offering  the Android system free as a way to control the market.

Google denied the accusations, saying in a  statement  that “carrier partners are free to decide which applications  and services to include on their Android  phones.”

South Korean consumers are famous  as early adopters, and most new phone buyers here are opting for smartphones. About two-thirds of all smartphones sold in South Korea last year  were Android-based.

  The Korea Communications Commission said last month that more than 10 million smartphones were registered in South Korea. In December 2009,   800,000 smartphones were in use.  

Telecommunications analysts expect the  number of smartphones in use in South Korea could  reach 20 million by the end of the year.    

Naver and Daum currently control  more than 70 percent of the mobile Internet search market in South Korea, and it is technically possible to switch to their search applications on Android  phones. That switch is not easy,  however, and Naver and Daum said  their applications could not be purchased as a preloaded option.  

“Google, which has a 1 to 2 percent  share in the fixed-line Internet search  market here, has been the only program  preloaded on smartphones,” Lee Byung-sun, a spokesman for Daum, told  the Yonhap news agency in Seoul.  “That can’t be the result of mobile carriers’ and manufacturers’ free choice.”

A longtime Google rival, Microsoft, lodged a similar antitrust complaint last month with the European Commission, asserting that Google was engaging in anticompetitive practices, both on the Web and in smartphone software. The European complaint accused Google of hampering Microsoft  applications in connection with videos  on YouTube, which is owned by Google.

Article source: