The Real Reason Andy Rubin left Android

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Business Insider:

Earlier this year, the Wall Street Journal reported that Andy Rubin viewed Android’s most successful partner, Samsung, as a potential threat.

Why?: Samsung could grow so popular with consumers, that it could eventually re-write Android’s code in an entirely customized way, and stop calling it Android altogether.

The report said Rubin told a room full of Google executives that Google-owned phone-maker Motorola was a hedge against Samsung growing too powerful.

Rubin’s comments indicated a view of Android as something to preserve and protect.

Our source believes that Larry Page isn’t nearly so worried about Android itself. This source says that Page views it as a means to an end.

He says Page views Google as “a cloud services company,” built on cornerstone products like Search, Maps, Mail, and YouTube.

He says Page views Android as a way for Google to partner with hardware-makers to make these services more available to consumers.

As a side benefit, Android has made it so that the world of smartphones is not dominated by a single player: Apple.

One of the reasons I started this blog was to write this exact theory, almost word for word. Guess I’ll have to link to it instead1 — I think it’s spot-on.

For all of Google’s obfuscations, at the end of the day they are a very simple company with a very simple maxim:

The more people use the web, the more money Google makes. And if they’re logged in, all the better.

If one keeps this in mind, and doesn’t view them through an Apple lens, then everything about Android makes perfect sense:

  • The original vision of Android, which remember, predated the iPhone, was certainly to get people online in more places and on more devices. I imagine it was more of a side project at that point, but what a prescient investment it was.
  • Google rightly viewed the iPhone as a serious threat. Having endured Microsoft’s domination of the desktop, Google more than anything wanted to avoid a repeat in mobile. And so they threw in what was for all intents and purposes an uncontrollable monster to eat the entire industry. This was not an accident! Would Google have preferred to lead the way with a unified, consistent operating system that brought the phone online? Sure, but once Apple was on the scene, it was better for Google if no one dominated, rather than to take their chances with Apple. Again, prescient.
  • Chrome OS has always been a priority. Having Android doesn’t change that. And why should it? If the goal is to get people online in as friction free away as possible, then device specific OS’s make a ton of sense. Critics who insisted they “focus,” whereby focus they mean imitate Apple, are viewing Google through the wrong lens

I am no Google lover. I am a longtime Mac user who jumped on iOS from the very beginning; I was at Apple when Google really became the villain; and now I work for Microsoft. Moreover, I find their hypocritical grandstanding repugnant.

But the fact of the matter is that from a business and strategic perspective the company has more often than not executed brilliantly. Google knows exactly what they are doing, and the sooner the rest of the industry takes them very, very seriously as a major competitor and threat, and not as a good-intentioned kid who is a little in over his head, the better.

  1. Veering dangerously close to too-much-information territory here, but I’m actually in the hospital, most likely with appendicitis. I wrote this entire post using Siri in between IVs, a pretty intense pain killer, and peeing in a jug. First off, please forgive any incoherence. Second off, I just LOVE tech. Seriously, it’s awesome and I feel so privileged to live in such amazing times. Oh, and updates may be a bit sparse for a day or two… ↩

Like Once, Friend Anywhere

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Two good pieces on Facebook today.

First, this piece from Reuters on the challenge mobile messaging apps present to Facebook:

Create personal profiles. Build networks of friends. Share photos, videos and music. That might sound precisely like Facebook, but hundreds of millions of tech-savvy young people have instead turned to a wave of smartphone-based messaging apps that are now sweeping across North America, Asia and Europe.

The hot apps include Kik and Whatsapp, both products of North American startups, as well as Kakao Inc’s KakaoTalk, NHN Corp’s LINE and Tencent Holdings Ltd’s WeChat, which have blossomed in Asian markets…

Firms that can take over the messaging world should be able to make some big inroads, investors say. “True interactions are conversational in nature,” says Rich Miner, a partner at Google Ventures who invested in San Francisco-based MessageMe, a new entrant in the messaging market. “More people text and make phone calls than get on to social networks. If one company dominates the replacement of that traffic, then by definition that’s very big.”

Major problem number one: Facebook, from business model to UX to platform, was built for the desktop. Apps like LINE were built for mobile, giving them an inherent advantage. I wrote extensively about this last Friday.

Second piece is from Benedict Evans:

The primary threat posed by all of these apps is unbundling. Instagram took photos and Whatsapp and others take messaging: both are just an icon on the home screen next to Facebook, and it seems much more fluid to switch between apps than to go to a whole other website…

This is, of course, exactly the same problem that everyone points out for Google: apps erode web search. Google is trying to address that by moving beyond web search with things like Google Now, which is just one manifestation of a deeper reorientation of how it looks at search (indeed, some of those pieces of content might well appear in Google Now). But apps may actually be just as big a problem for Facebook, both because they enable competitors, and because they might erode the actual use cases that make Facebook money.

So that’s major problem number two: While Facebook may deliver a more integrated experience on the desktop, on mobile there are many more “channels” (apps) and a remarkably efficient discovery and distribution method for those channels (app stores). Customers are much more likely and capable of selecting an a la carte app experience.

(As an aside, it’s striking how resistant customers are to most all-in-one solutions. How many tech companies have pushed all-in-one solutions that fit their narrow ideal of efficiency, only to be blithely dismissed by consumers more than happy with their “inefficient” methods that actually fit their context? You know, like this. But I digress.)

Three more problems come to mind when considering Facebook and mobile:


Major problem number three: The underlying architecure of PCs generally and browsers specifically was developed long before security became a major concerns. While this has been a boon to bad actors, it’s been just as much of a boon to advertising-based companies like Facebook (and Google). Once you log in to Facebook, you are effectively being tracked all across the Internet thanks to those ubiquitous “Like” buttons. The liking is an incentive for sites to plant tracking code on Facebook’s behalf. Frosting on the cake if you will.

On smartphones, however, apps are sandboxed; cookies registered in one app aren’t shared with other apps. This is infinitely more secure — and infinitely more damaging to Facebook’s ad business.1 Of course, the best way out of this box is simply to own the whole platform (Hi Android!).

Major problem number four: If we accept the thesis that messaging is the foundation of social on phones, and that messaging is inherently personal, then that means Facebook has a pretty significant brand perception problem. Their definition of social is public broadcasting, a definition they have reaffirmed both through word and deed. Users have learned that nothing on Facebook is personal or private; why would they expect to use Facebook for messaging? It’s not just that other apps are better at messaging; it’s that Facebook’s carefully cultivated value proposition is in direct opposition to messaging.

Major problem number five: The proliferation of messaging networks, on top of phone numbers, Facebook contacts, email addresses, and more, is seriously testing the assumption that the network effect is all that matters. A central piece of Facebook’s value is the fact that everyone else uses it as well, and to rebuild your connections on another network would be exceedingly difficult.

And, to be fair, to rebuild a network of ~500 people (the number of friends I have on Facebook) would be exceedingly difficult. But this is a case where the theorists have made the same mistake as those product guys building all-in-one solutions: we’ve ignored context.

The truth is that there just aren’t that many people I want to communicate with on my phone. Anything done on my phone is contextual to time and place, and high school classmates hardly make the cut. No, I don’t have my Facebook network in my messaging app, but I don’t really care.

That’s a problem.

  1. Ad networks have had to come up with all kinds of nefarious ways to track users, but those efforts are only usable in apps that have ads ↩

Two seemingly unrelated links, posted without commentary

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Huge construction firm uses iPads and Apple TV to save millions

Shortly after the global construction giant Balfour Beatty got the multibillion-dollar contract to rebuild two terminals at Dallas-Forth Worth airport, the company discovered an unpleasant surprise: the architectural and planning documents were expected to run to 60,000 pages…

It was time to go digital. Pistor arranged to buy about 50 iPads for the superintendents in the field, and chose Egnyte’s back-end system for storing and managing all the digital documents in digital form.

Microsoft Surface chief: Consumers were first, but focus is shifting to business

The head of Microsoft’s Surface unit said to expect updates to the Surface line that will make them more appealing to business users.

“We did design them to get consumers first… No question,” said Panos Panay, corporate vice president for Surface at Microsoft. He spoke briefly this week during Microsoft’s annual CIO Summit.

But he said that the company also had businesses in mind when building the Surface and that Microsoft is “right on the cusp” of the products being in the position to target business customers.

Benchmarking Apple, Android, and Windows Tablets

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Anand Lal Shimpi:1

Looking at the offscreen results, we finally get what we came here for. Intel’s HD 4000 manages to deliver 3x the performance of the PowerVR SGX 554MP4, obviously at a much higher power consumption level as well. The Ivy Bridge CPU used in Surface Pro carries a 17W TDP, and it’s likely that the A6X used in the iPad 4 is somewhere south of 5W. The big question here is how quickly Intel can scale its power down vs. how quickly can the ARM guys scale their performance up. Claiming ARM (and its partners) can’t build high performance hardware is just as inaccurate as saying that Intel can’t build low power hardware. Both camps simply chose different optimization points on the power/performance curve, and both are presently working towards building what they don’t have. The real debate isn’t whether or not each side is capable of being faster or lower power, but which side will get there first, reliably and with a good business model.

First off, the fact that there is an article comparing an iPad/Nexus with a full Intel-powered Windows PC, and no one thinks this is weird, is pretty amazing.

Second off, this shows how much trouble Intel is in.

Here’s the thing: what matters in tech is being “good enough.” Once a product is good enough on a particular vector, than any additional gains on that vector are likely to be unappreciated by consumers and lead to over-serving.2

The problem for Intel is that their chip’s performance has long since passed good enough. The fact their processor wipes the floor with the same ARM architecture that on absolute terms owns gaming is evidence of that fact. Customers don’t care about what Intel has for sell.

ARM, on the other hand, focused on power. And ARM chips are still not good enough. In fact, they will arguably never be good enough (who doesn’t want week-long battery life, or, per the link earlier today, more efficient data centers?). What they will be is far ahead of x86.

  1. Anand, along with Jon Stokes, taught me more than anyone how computers work back in the 90s. It’s amazing how far we’ve come. ↩

  2. I explain many of these ideas in a paper I wrote several years ago about Apple and the Innovator’s Dilemma ↩

China’s Telecoms to Charge for WeChat?

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WSJ:

China’s state-run telecom companies are no strangers to angry customers, who complain loudly and often about poor service or hidden charges. But the companies experienced a new level of consumer rage over the weekend as rumors emerged that they’re working on a plan to charge for the use of the country’s most popular free mobile application, which they did not develop and do not operate.

The application in question is WeChat, a messaging and social media program created by China’s largest listed Internet company Tencent. Since its introduction two years ago, the app, which allows users to send voice and text messages and also share photos with groups of contacts, has accrued more than 300 million users.

It’s not just Apple (although there may be some anti-US tit-for-tat1 in Apple’s case). It’s State-owned Enterprises (SOEs), like China Mobile, against tech companies.

Any Apple observer should closely follow stories involving SOEs and tech companies closely, for a very simple reason:

Benedict Evans, Twitter
Benedict Evans, Twitter

What’s China Mobile worth to Apple? $100/share? $200? All we know is that Cook deemed it worth an apology.

  1. There’s also a good discussion in that article about Apple’s PR weakness ↩

The Building is the New Server

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Scott Weiss:

The evolution of the modern hyper-scale datacenter reflects the hyper-scale needs of the applications that run on them. Modern web 2.0 (and increasingly SaaS) applications need to handle thousands of user requests per second, processing terabytes of information in real-time across hundreds of customers. They are by necessity massively parallel and work in concert to service a user request. This is the modern equivalent of a giant supercomputer — except cobbled together from commodity server components and interconnect fabrics. It’s a profound software and hardware architectural shift that is taking us from a world where datacenters consisted of small number of independent high performance branded servers to a brave new world where the giant, datacenter building is the server.

Of course, even if Dell does indeed exit PCs and focus on services, they’re hardly in the clear.

One quibble on this generally excellent post, from the intro:

The personal computer is dead. As quickly as we moved from the desktop to the laptop, we are moving to the tablet — never to return. With the death of the PC, an entire ecosystem dies with it. The chipset is ARM based, rather than Intel. The operating system is all iOS and Android, rather than Windows. The applications are hosted cloud apps like Box, Google Apps, and Evernote rather than Sharepoint, Office and Outlook.

I wouldn’t characterize it as desktop->laptop->tablet. Rather, general purpose computer->device. A tablet is a device that’s great for consumption, but I’m not going to author this blog on one. ChromeOS, on the other hand…

Thinking about things this way actually makes the overall article’s thesis stronger.

Apple Apologizes in China

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9to5Mac:

Following controversy in China with state-controlled media outlets going after Apple over its warranty policies, Apple CEO Tim Cook today addressed the issue in a letter published to the company’s website in China. Within the letter (translation below), Cook apologized to customers and announced the company would implement a number of changes to “improve the level of service” for Chinese customers.

At first blush, I thought this was an April Fool’s joke, but it’s serious. More pertinently, it shows how seriously Apple takes the China market.

Could this signal concessions to China Mobile as well? All of this stuff is ultimately interconnected.

Blackstone to Lead Dell LBO?

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This Bloomberg update is a great overview of the Dell saga to date:

Dell Inc. founder Michael Dell will only consider backing a buyout by Blackstone Group LP if the private-equity firm guarantees he can remain as chief executive officer, according to a person familiar with the discussions…

The challenges to the original bid, which came as Dell struggles to catch up with a new wave of nimbler competitors in mobile computing and business services, mean Michael Dell could lose control of the firm he founded in his Texas dorm room. His plan was to retool Dell as a maker of data-center gear and software for corporations — without the scrutiny of public investors.

A Blackstone led LBO would presumably not include Microsoft, who is a part of the Silver Lake led consortium along with Michael Dell. One wonders if this increases the likelihood that Dell post-LBO would divest itself of the PC business it was built upon.1

  1. Although the PC business may be necessary for at least a little while longer for cash flow, if nothing else ↩

Price

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Benedict Evans:

From 2007 to 2012 annual handset sales grew from 1.1bn units to 1.7bn units. This was, obviously enough, driven by an expansion in the number of ‘human’ mobile phone users from 2.1bn to 3.2bn (the number of total connections was much higher).

Almost all of the growth in subscribers and hence in handset volume growth came from the low end at low prices. So, one would have expected the average price of a phone to fall. It didn’t.

Understand what is happening with price, and you will start to understand the mobile market. More importantly, that is how you will know when phones are good-enough.

(For more on “good-enough,” the discussion about low-end-disruption in a piece I wrote about Apple and the Innovator’s Dilemma is a great place to start.)

The Week in Review — March 25-29, 2013

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This week was a relatively slow one in tech, but a big one for this blog. On Monday, March 25, 2013, stratechery.com officially launched. And what a week it was! Four full articles, 12 linked list items, and this summary. I’m still working to find the right voice and post frequency — I don’t think four articles a week is sustainable — but there is no shortage of interesting things to talk about. I’m incredibly grateful to the folks that have already subscribed, whether via Twitter, RSS, or weekly email, and would gently ask that you share with others whatever you find interesting.

Articles | Linked List Items | Other Links Worth Reading

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