An investigative report by the Australian Financial Review reveals how, over the course of a decade, Apple shifted almost AUD$9bn in untaxed profits from its Australian operations to Ireland-based Apple Sales International.
Dublin: 07.03.2014 07.18AM
Forget smartphones and tablets and other shiny consumer devices, Google's US$12.5bn acquisition of Motorola Mobility is very much about the next big thing: the 'invisible web' or the 'internet of things' where wireless machine-to-machine sensors enabled by IPv6 will define the next living, breathing web.
Like most people who learned yesterday of Google's all-cash buyout of Motorola Mobility, I felt a giddy rush of excitement about the implications of Google actually moving into making hardware and what this meant for its ascending Android OS. Yes, Google is a hardware player now.
My imagination went into overdrive when I considered what Google could do with a business that has 20,000 mobile experts and thousands of valuable patents. I thought about the smartphones, the tablet computers and the many, many invisible machine-to-machine (M2M) ‘internet of things’ technologies that may spew from this behemoth.
Like most people who remember Motorola in its heyday as the supremo of mobile devices – who can forget the starTAC or the RAZR – I have a soft spot for the wireless giant and was appalled at its steep decline in recent years and hoped fervently that devices like the DROID and the XOOM, which was best product at the CES earlier this year, would mark a turnaround.
The acquisition was a considerable coup for Google, which was left high and dry recently when a consortium of six companies, including Apple and Microsoft – snapped up Nortel’s rich patent portfolio for US$4.5bn.
It is understood that Microsoft was also in the running to buy the Motorola Mobility division but Google was victorious in this instance - poetic justice? I don’t know why Microsoft, with its deep pockets, doesn’t just go ahead and acquire Nokia at this stage. Get it over with, Microsoft, and stop fooling around!
Beyond Google sticking it to Apple and its eponymous iPhone and iPad devices, I thought about what this latest acquisition could make Google become.
Firstly, Google has emphasised Motorola Mobility will remain a licensee of Android and Android will remain open. Google says it will run Motorola Mobility as a separate business.
Google has always emphasised its ‘open’ philosophy and more than a month ago chairman Eric Schmidt said how the open model has allowed other manufacturers, such as Samsung, Sony Ericsson and LG to thrive, resulting in more than 300 smartphone devices and some 500,000 device activations a day. Schmidt said competition keeps everyone honest.
“We benefit from the competition between various Android devices. It drives prices down and the reach up. Tablets in the Android space have really only just happened in the last six months, there are big enough markets and there won’t be just one winner,” he told me.
Despite the stellar success of Android, Google’s ‘open’ model is the polar opposite to Apple’s ‘closed’ loop philosophy of owning as much of the ecosystem – from the OS to the hardware – as possible.
Apple CEO Steve Jobs in the past berated competitors like Samsung and its Galaxy Tab devices, pointing out how little control they would have over the quality of the end product. “Unlike Windows, where most PCs have the same interface and run the same apps, Android is very fragmented,” Jobs said less than a year ago. “The largest OEMs who make Android devices – including HTC and Motorola – have had to use proprietary interfaces to separate them from the commodity experience where the user is left to figure it out. This compares with the iPhone, where the interface is the same.”
But Jobs was wrong in believing the Samsung Galaxy Tab would be “dead on arrival”, 600,000 units sold in its first month.
However, Jobs may be right in his assertion over who controls the ecosystem wins. It emerged in recent weeks that in the US some stores are seeing return rates of 30pc-40pc, much higher than competitors.
I don’t doubt Google’s sincerity about staying ‘open’. My doubt arises when I think about the lure of producing quality products when you do, in fact, have a manufacturing arm. Sure, it wants to support its partners like Samsung, LG, et al, but when the first Google-manufactured hardware hits the streets, the advantages enjoyed by Apple and its closed model will become all the more tempting.
I expect tension because I expect this ‘separate’ company will be tempted to close the loop on certain products.
I think Google will struggle in the face of the option of taking a step towards closed. Why? Because when it realises how much it can actually control the user experience, it will want to enjoy the same wow factor and respect with its products that the iPhone and iPad command at present.
But supposing I’m wrong. Suppose Google resists this temptation and stays true to ‘open’ working with partners and manufacturing products that set the standard, raise the bar and drive innovation forward?
My theory then rests with the ‘internet of things’. “Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere,” Google CEO Larry Page wrote yesterday.
In his blog, to my mind, the magic words were “home devices and video solutions business”, beyond the obvious smartphone opportunity.
Motorola Mobility’s edge is in wireless. We are moving towards a world where wireless sensors and computers will be everywhere, managing and monitoring our environment, and equipping us with the knowledge and expertise to make real decisions. These M2M sensors and computers will be in your home, at work and on the street.
This fits in with the many, many investments Google has made in the area of renewable energy and environmental systems, for example. With the internet as we know it through IPv4 reaching the edge of the web's known limits, new standards like IPv6 will result in limitless IP addresses for a limitless number of intelligent ‘wireless’ devices. That’s the prize, I believe, Google has its eye on.
In just three to four years, the mobile world has exploded. The smartphone and the mobile computing experience can only flourish. But the next big thing is the invisible web, the world of information all around you.
Whether or not Google yields to the temptation of a closed ecosystem – highly unlikely considering Page’s public commitment to open – the greater prize goes beyond the Android versus iOS argument and extends to the ‘internet of things’ – a living, breathing world of information everywhere that will thrive with or without human input.
Devices or vessels that allow us to interact with that world will always be in demand, but the victor in this new space will control both the access and the plumbing of this exciting new world.