Patent power (part 2) – Google buys Motorola Mobility

Today’s big news is Google’s acquisition of Motorola Mobility. What is fascinating is the logic for the deal. This is not a deal driven by customers or operating synergies – it is all about Motorola’s patents.

The give-away is the final paragraph of Google’s announcement:

“We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.” – Google

Having failed to acquire Nortel’s patents, this move is all about positioning Google for a series of multi-jurisdictional patent claims and counter-claims coupled with positioning for cross-licensing deals.

It remains to be seen what impact this will have on other parts of the mobile eco-system, but it may heralds the start of the more aggressive use of patents by technology companies – by way of example see Apple’s recent successful blocking of the launch of the Samsung Galaxy Tab in Europe as a result of a German court injunction.

Apple and Google go head to head for on-line subscription payments

With exhibitors packing up their stands in Barcelona, this week has seen the launch by Apple and Google of payment services for on-line subscriptions. The two propositions are different, and in this post I’ll unpack the details.

Taking them in turn:

Apple Subscription Payments in Apps Store

Used for the launch of News Corp‘s new online newspaper The Daily, Apple this week launched a new billing system in its Apps Store:

‘Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases’

However, the sting in the tail is some ancillary requirements:

‘Apple does require that if a publisher chooses to sell a digital subscription separately outside of the app, that same subscription offer must be made available, at the same price or less, to customers who wish to subscribe from within the app. In addition, publishers may no longer provide links in their apps (to a web site, for example) which allow the customer to purchase content or subscriptions outside of the app.’

I can see a number of potential avenues of challenge to these ancillary requirements, so will be carefully watching developments.

Google One Pass

There are a few key differences between Google’s new One Pass Service and the Apple offer:

  • Google only takes 10%, as opposed to Apple’s 30%;
  • it is a free-standing payment system, rather than being tied into the Apple Apps Store and ecosystem.  This increases its potential uses. 

There is a very pointed comment in the product description, that reacts directly against the Apple restrictions noted above:

‘It also offers payments in mobile apps, in instances where the mobile OS terms permit transactions to take place outside of the app market.’

Going back to my conceptual model for digital money, these are interesting moves from the online payment providers that increasingly overlap with the mobile ecosystem.

 

Microsoft to rescue Nokia?

“There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform”, and he needed to make a choice.” (allegedly) Stephen Elop, CEO Nokia. 

When an internal memo from the new CEO of Nokia was leaked earlier this week it was clear that he was not a man happy to steer Nokia on a ‘steady as she goes’ course.  Instead, he liken Nokia to a burning oil-rig with three major fires – Apple at the top-end, Android in the middle and low-cost  OEMs at the bottom.

This morning’s announcement of Nokia’s switch to Windows Phone as its principle smartphone platform is a dramatic shift in strategy for Nokia as it abandons the Symbian platform. Nokia has also restructured and reorganised its management team.

For Microsoft, whose mobile platform has quietly been winning plaudits, but has struggled to get volume distribution, this seems like a great opportunity, whereas for Nokia this represents a leap off the burning platform into icy waters. It remains to be seen what Nokia looks like when it surfaces.

Will Apple’s move into NFC mobile payment reshape industry alliances?

My eye was caught today by a story on TechCrunch (an excellent blog BTW) that Apple may incorporate near field communications technology (NFC) into its next generation of devices, thereby enabling ‘real’ payments on the move. For those confused as to the difference between mobile payment for real and virtual goods the easiest way to think about it is to think about what would happen  if you ever tried to buy a can of your favourite soft drink via the iTunes Apps store.

In a prior post about the eco-system for mobile money I described my conceptual mental map of three overlapping circles – traditional bank and credit cards, internet payment and mobile payment.  As the TechCrunch article makes clear, this would position Apple bang in the middle of the intersection between mobile and internet payment and could be another ‘game-changer’. For me, the real question is here is who does what to react? Players in each of the circles have to date tended to define their competitors by reference to their existing competitors and there is not currently significant co-operation across the circles (until you tell me otherwise of course…).

It seems to me that Apple’s move (which of course is unconfirmed) will require some of the other players to co-operate in order to react. It is an issue I am spending some time on at the moment, by undertaking some primary research with some of the market players. To the extent confidentiality permits I will share any insights in future posts.

Do more tablets mean more ‘lean-back’ consumer browsing?

Sadly I’ve not been in Las Vegas at CES, but remained at my desk in London reading the various updates.  As the dust starts to settle it seems that tablets are the story of this year’s show.  Not having had the opportunity to personally play with any shiny new toys, I am not in a position to advise readers on whether they should stick with their iPads (works for me) or rush out to buy a Motorola Xoom, Blackberry Playbook, Dell Streak or any one of a large number of new tablets.  Nor am I able to comment on the merits of the various operating systems – Apple, Android, Blackberry or Windows.

However, stepping back from the technology I wondered if this sudden upsurge in tablet offerings, as well as been driven by suppliers wanting a slice of the new category created by the iPad, also heralds a shift in consumer behaviour?  If so, what does that mean for the wider industry?

Shifting markets, one perceived barrier to the take up of streamed IPTV has been the difference between consumer ‘lean-back’ and ‘lean-forward’ behaviour.  Crudely summarised, ‘lean-back’ behaviour is sitting back on the sofa and passively viewing TV, whereas ‘lean-forward’ behaviour is using a PC in an interactive way for social media, web-browsing, email, etc.  The barrier of consumers not (in large numbers) wanting to consume TV as ‘lean-forward’ content, has been one driver behind the creation of ‘over-the-top’ IPTV platforms which deliver streamed video content to TV screens – iPlayer, YouView, Hulu and NetFlicks

The rise of the tablet could be part of a behavioural shift whereby activities which would previously have been ‘lean-forward’, sitting at a PC activities, and instead undertaken in ‘lean-back’ mode.  On a personal level, I have found, post-iPad, that I now spend much  more time connected on my sofa, rather than at my home desk.  If this is right, and the trend is more general, then this could be bad news for desktop PC / laptop PC hardware and software vendors, but good news for TV and console manufacturers as the focus of consumers’ connected world shifts from the home desk to the sofa.