If the battle royale between Google and Apple for dominance in smartphones feels vaguely familiar, then you’re probably as old as I am.  Back in the 1980s, Apple and Microsoft fought for dominance of computer operating systems. As today, they took opposite approaches: Apple maintained tight control over its operating system and hardware, forcing would-be partners through a tight licensing regime. Microsoft let any computer hardware license MS-DOS and later Windows…for a price.

Apple ended up selling superior, easy-to-use products. Microsoft ended up dominating the PC market and almost driving Apple out of business, despite its infinitely more buggy product.

In mobile, Apple again has complete control of a leading hardware platform (the iPhone) and is setting tough standards for anyone who wants to build apps. It’s restricting the iPhone to just one cellular network, AT&T. Google is giving its Android software away to all comers on any cellular network for free, betting that increased mobile Internet usage will give it the same dominance in the nascent mobile advertising market it has on the Web.

It puts in a new perspective NPD’s recent report that Androids outsold iPhones in the first quarter (28% to 21% of the smartphone market, with BlackBerry at 36%). You can dispute NPD’s figures, as Apple did. But you can’t dispute that Google’s made huge inroads in a very short time. 

No doubt, Steve Jobs (who’s even older than me) remembers all too well how he was almost done in by Microsoft. Since he surely won’t start licensing iPhone software, he only has two ways to maintain or grow marketshare in the U.S.: constantly introduce new products (such as this summer’s iPhone upgrade); and expand beyond AT&T’s creaky network to Verizon and the other carriers. Google, meanwhile, just needs to tweak its software and sign deals. 

It’s tempting to give Google the upper hand in this battle. But then, it would have been tempting to anticipate Apple’s demise in the 1980s, too.

Posted under Michael's Blog

I’m no big fan of Rupert Murdoch, but I think he’s right about Google and newspapers. Something has to be done about the fact that search engines get a completely free ride sourcing millions of articles on the Web…and then taking most of the advertising revenue.

Murdoch called Google’s actions “theft” at a Washington forum on the future of newspapers. That’s true, although it’s akin to leaving your trunk open and then bitching when your laptop is taken.

The question is how to fix the problem.

Murdoch’s own Wall Street Journal may have part of the solution, although it predated Murdoch’s acquisition of the newspaper.  The Journal is the only mass market newspaper I know of that gets away with charging for its product on the Web. If you want to read the full text of the newspaper online, you need to either have a subscription or pay $50 a year.

You can get away with that if you have a product so valuable people are willing to pay for it. But not if your competitors are willing to provide the same news when you start charging for it.

So one piece of the solution will undoubtedly be a consortium of publications willing to band together to charge — say, accessing all the articles from the L.A. Times, New York Times and San Francisco Chronicle for a set monthly fee.  That, and pressuring Google to give up a small piece of the billions of dollars it makes off newspapers’ backs.

Posted under Michael's Blog

Warner Music's Led Zeppelin in Concert

Warner Music Group’s decision to take down videos and music on Google’s YouTube reflects the music industry’s frustration that video sharing on the Internet still isn’t paying off.

Warner Music, says the Wall Street Journal, had expected to garner more advertising revenue from the video site — proof once again the big audiences doesn’t necessarily guarantee big revenue. YouTube earns only about $200 million this year, a tiny fraction of Google’s total revenue.

Google pays licensing fees to music companies when users click on advertising content. But clearly, online video has a long way to go before it pays its way for Hollywood content.

Posted under Michael's Blog

To most entertainment executives, Google’s introduction of “Chrome” this week probably seems too inside baseball to care about. But actually, it’s all related to something that keeps studio heads up at night:  control  of distribution.

That’s one way to look at all the consolidation in Hollywood over the last 20 years: Sony       bought Columbia and TriStar because it wanted “content” for its electronics. Disney bought ABC because Michael Eisner worried the TV networks could squeeze any fees they wanted for his TV shows and movies. Winning Paramount gave Sumner Redstone films to fill his National Amusements theater chain and pipe to Viacom’s cable channels.

Google is clearly concerned that Microsoft could make Internet Explorer unfriendly to Google applications. This is not paranoia. Much of Microsoft’s explosive growth came from its leveraging its monopoly in computer operating systems to decimate smaller rivals. Netscape was done away with by making IE the first thing that showed up on every new computer desktop. Microsoft Word worked better with Windows than Wordperfect.

So Google wants to make sure it has secured its own route from the consumer’s desktop to the Internet. And from the mobile phone to the Internet as well, when Android is introduced toward the end of this year.

An interesting twist: Google is making the code for Chrome available to anybody, including its competitors. Not exactly akin to giving away the copyrights to all your movies, but its certainly a shift from the monopolistic ways of Microsoft.

Posted under Michael's Blog

Yahoo! Entertainment and Lifestyle General Manager Karin Gilford will explain at Digital Media Summit on Monday how Yahoo! TV grabbed 3 million more unique visitors in April than arch rival AOL Television in April.

Gilford said in a brief chat that Yahoo! climbed to the top of the online television category by focusing on launches of original online shows and working closely with cable networks to promote their programs.

"We’re in a world where everybody has a library of movie trailers, TV shows and full-length movies online," Gilford said.  "How do you rise above the crowd?"

Gilford will give Yahoo’s answer to that question on Monday in a fireside chat with Hollywood Reporter Deputy Editor Andrew Wallenstein.

See Also

• Digital Media Summit

Posted under Uncategorized

Sprint Nextel and Clearwire’s reported $12 billion joint venture to roll out ultra-fast wireless Internet access would be a significant boost to the cellular aspirations of Comcast, Time Warner Cable and Google.

The Wall Street Journal said the two companies have raised $3.2 billion in outside financing, including $1.05 billion from  Comcast, $550 million from Time Warner Cable, $500 million from Internet giant Google and  $1 billion from Intel. 

Cable companies are fretting at the wireless advantage of AT&T and Verizon, both of which have rolled out IPTV service to millions of customers over the last year. This combination, which reportedly will allow them to brand the service as their own, would allow them to add high-speed wireless to their TV, Internet and telephone options.

For Google, the deal helps cement its position as the dominant search provider in wireless in advance of an expected Google phone over the next 12 months.

Intel, which wil merge its broadband wireless services into Clearwire, gets a new breath of life for its data services, which have been sorely underutilized as subscribers flee its service.

According to the Journal, the new service will ultimately be as much as eight times faster than existing coverage.

See Also

• Sprint, Clearwire Deal Near

Posted under Uncategorized

While it’s easy to see what AOL gets out of a potential merger with Yahoo!, it’s harder to see what Yahoo! gets.

Digital Cities/AOL’s own former managing editor, after all, recently called the challenge of reviving AOL — 20 million of whose users have fled since 2002 — akin to "making a Marc Jacobs purse out of a sow’s ear."

AOL seems sadly lost in the broadband age. The very thing that powered its initial rise to prominence — its $9.99 dial-up service — has now become a liability in negotiations with potential suitors. Its own search capabilities are touted as "enhanced by Google".

Were Yahoo! to combine with AOL, it may choose to grab AOL’s remaining 10 million members and its workable sub-brands,

and, taking its cue from Time Warner’s Life Magazine, allow AOL to gently fade into the history books.

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Two tech bellwethers may provide a glimpse of how digital media will fare in the months ahead.

Cisco helped stocks recover today after CEO John Chambers said he was "even more comfortable" with projections for long-term growth rate. Google fell to 52-week lows, amid continuing fear about flattening ad sales.

It’s hard to generalize about anything in these skittish economic times, but their performance today show’s what’s likely to happen in tech

The "heavy metal" companies are going to do the best (or suffer the least). Digital media companies focused on marketing, advertising or pure content will get hammered.

Why? Because companies will cut their marketing and advertising budgets long before they cut their budgets for the computing and networking investments they need to run their businesses.

Venture capitalists, which at the best of times aren’t fond of content companies, will also move to the comparative reliability of companies that make tangible products.

Consumers can pick up some of the slack in a recession.  If past is precedent, consumers will go to more movies, watch more TV and presumably will spend more time on Facebook and Google as they avoid more expensive recreation.

But digital media can’t survive on more clicks by consumers alone. It needs ad dollars — and hence the concern about Google.

See Also

• Stocks pull off lows on bargain hunting
• Cisco, Ambac Soften Blow to Stocks

Posted under Uncategorized

Google’s China plans could end up having a big impact on the music industry.
    The search giant is reportedly planning to join with China’s Top100.cn to provide free, licensed music to the Chinese masses – a direct swipe at home-grown competitor Baidu, which controls more than 60 percent of China’s search market and turns a blind eye toward the millions of users who download pirated content.
    Google would cover labels’ royalty fees by selling advertising and offering premium services such as tickets or ringtones through Top100.cn, according to the Wall Street Journal.

    Google’s goal, of course, is to increase its meager 66 percent share of China’s search market. But it could also the biggest test yet of whether ad-supported music can be profitable.
    Pay-per-download’s future is dim at best for a simple reason: no one has to do it. Even if every pirate in the world were shut down, you’d still have upstanding citizens trading their music libraries freely over the Internet and using every imaginable storage medium. The halcyon days of CDs are over for good.
    So the old music industry arguments that free or low-priced songs “devalue” their best product just don’t hold water. It’s hard to see how free songs that make the labels money devalue the product more than overpriced CDs and downloads that are slowly driving them out of business.
    Google will be able to amass invaluable information about the Chinese public by the music they download and tailor its search ads accordingly. That could finally make music a profitable endeavor in China. More importantly for Google, it gives consumers a reason to hang out on Google instead of Baidu.
It’s the same logic that drove Target and Wal-Mart to start selling CDs. They certainly don’t make much of their money from selling the discs (although it was enough to bankrupt the record stores). But people browsing for music are likely to buy something else on the way out.
That’s not devaluing music, anymore than listening to jazz while catching brunch at a restaurant devalues jazz.
Universal, Sony BMG and EMI – the three big labels that will probably accompany Google on its Chinese adventure – have a low-risk opportunity to test the feasibility of ad-supported, free music in a market that’s already stealing their product anyway. How ironic if the country most vilified for music piracy helped validate a system for making money from free music at home.

See Also

• Google Aims to Crack China With Music Push

Posted under Uncategorized

Microsoft’s $44.6 billion bid for Yahoo! is as much about its software business as its Internet business.

Microsoft is ill-prepared to counteract Google’s assault on its Office monopoly.. Instead of fighting Microsoft in the PC software market, Google has taken word processing, spreadsheets and calendars to the web – creating a free, ad-supported, collaborative service-as-software  business that threatens Microsoft’s  bread-and-butter.

At the same time, Google’s search strategy has essentially made it the Internet’s operating system. You go to Google to search. But you stay for the other cool applications. Just like you get all kinds of great extras like Internet Explorer and Media Player when you install Windows.

Google’s software-as-service approach – nascent as it is – bears an ironic similarity to Microsoft’s own clandestine assault on IBM, DEC and other big iron companies in the 1980s.  The giants were slow to retool their seemingly dominant  mainframe businesses to account for the rising profile of PCs. IBM virtually handed Microsoft a monopoly for MS-DOS and paved the way for cheap PC clones that threatened its survival.

Now Microsoft is watching from the sidelines while Google pulls a similar ploy.  As broadband penetrates everywhere, Google is betting that consumers will favor options that reflect the  ethos of the Web – free and community-based. Why install Office if you can get the same functionality from an always-on, super-fast connection that lets you collaborate with your friends and colleagues?

Microsoft’s own attempts to cash in on the Internet have been relatively feeble thus far. Its search business only commands a roughly 6% market share, compared  with about 77% for Google and 17% for Yahoo. Small wonder that it’s bidding for Yahoo!  It has little choice.

The software-as-service  business model has interesting implications for the entertainment business. What are DVDs , CDs and games if not software?  As consumers become more comfortable with low or no-cost server-based applications, might they become more open to video-on-demand and streaming music? It’s a question that has important implications for Time Warner, which which faces the specter of growing irrelevance for AOL in a search universe dominated by Google and Microsoft.

Microsoft  still has plenty of life. Profits are bountiful. No software competitors seriously threaten Office’s dominance. But then, IBM dominated computers in the 1980s, too.

See Also

• Ballmer Makes Big Bet to Get to ‘Next Level’

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