Will Intel go Google on Apple?

Intel has just bought the mobile chip-maker Infineon, which has the technology industry abuzz.

Intel is the biggest maker of computer ‘brains’ on the planet, and its x86 architecture has been a successful model running Microsoft Windows on PCs, so far. However, it has become clear that the mobile devices are at the threshold of overtaking the desktop computers.

Intel has developed a low-power Atom processor, but it has not been quite popular in the face of processors that use the ARM based architecture. With the purchase of Infineon, Intel gets its foot in the door of the mobile processor world. Previously, Intel had partnered with Nokia to develop a mobile platform; at that time, this was a move by these companies to counter Qualcomm cornering “…the market on vague- sounding, ultra-mobile device niches…

That project wasn’t too successful, but with the purchase of Infineon, Qualcomm, which makes ARM-based processors, beware: “Intel-Infineon deal goes far beyond handsets, putting new technologies in netbooks, tablets, embedded PCs, and more“; this could make Intel “Mobile’s next Goliath“.

In addition, it mounts a challenge to Apple’s lead of making its own A4 chip based on ARM. “…the Intel (INTC) acquisition of Infineon’s wireless unit has probably changed the balance. The move allows Intel to add an piece of the mobile puzzle that it never had before. Given its expertise in advanced semiconductor construction, the company could create a single package that would offer most of what handset manufacturers need to catch up to the iPhone, at least in terms of size and power, and still be compatible with the Android operating system.

Given Intel’s expertise in putting “…more stuff onto chips and get more chips out of a piece of silicon…“, this acquisition will be synergistic in providing Intel to “…offer bundled packages and potentially make itself economically attractive to handset vendors.

Paul Otellini, Intel’s CEO, told Liz Claman of Fox Business that about his deal, “Steve was very happy…and there were a number of competing companies for it…I think they’re very happy that Intel won the bid.”

Only time will tell if Steve Jobs remains happy about having someone providing aid and comfort to iPhone’s competitors. He has been burnt once by Eric Schmidt sitting on Apple’s Board and then coming out with an Android handset; he has to be carefully watching Intel’s moves, especially since Apple uses Infineon’s chips in the iPhone.

I would not be surprised if Apple ditches the ‘Intel-Infineon’ altogether. It could use AMD (it already uses ATI graphics, now a part of AMD) instead of Intel processors, and ramp up its in-house chip manufacture to avoid dependence on ones made by Infineon.

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Future of Android? Take 2

A week ago, I discussed the Future of Android and felt that one thing that will come to haunt Google will be the fragmentation of the OS, which will be difficult to correct because each OEM (Original Equipment Manufacturer) will tweak it differently to make it distinct in the market flooding with Android handsets, and also that this will make it difficult to upgrade to the latest version of the OS.

Well, Dell has just come out with its first handset, the Aero. It runs on version 1.5, which is 16 months old and four versions behind the current Android OS, 2.2. It is the “The ultimate example of Android’s flaws,” says Bill Snyder; “Dell’s new Aero shows yet again that the fragmented Android platform is broken and the carriers still rule idiotically“.

The venerated non-Apple blog, PC World, gives “3 Reasons to Avoid it“. Besides it being a mediocre hardware and being on AT&T, the third reason is that it has “Really Old Software“. It explains that “Dell has customized heavily the user interface on the Aero, something that would delay the company significantly if it ever decides to give Aero users a software update to the latest version of Android. Because of the old software on the Aero, many applications from the Android Market won’t be compatible with the phone, as they require 2.X version of Android, so you would be stuck with a limited selection of software add-ons to your Aero“.

Dell is not alone with this problem. Motorola has recently unveiled a successor to its Droid, the Droid X. However, in another article, PC World believes that the “Motorola’s Android 2.2 Rollout [is] a mess“, which “…is becoming an exercise in frustration“. The reasons are similar: fragmentation, and uncertainty as to when it will have a full functioning Android 2.2. Ken Segall has made a summary of this article:

• The first Android 2.2 (Froyo) upgrades to Droid failed to deliver Flash. An upgrade to the upgrade will shortly fix that.
• The overseas Droid (called Milestone) gets Froyo in late Q4, but only in Europe and Korea. Froyo is “under evaluation” for Canada, Latin America and Mexico.
• Motorola phones with pre-2.1 versions of Android won’t get Froyo anytime soon.
• The Motorola Cliq, Cliq XT and Backflip are waiting for Android 2.1, but the Devour won’t get it.
• Owners of the Droid Incredible are still waiting for their upgrade.
• The brand-spanking-new Dell Streak was delivered with Android 1.6 and won’t get an upgrade till the end of the year.
• Samsung Galaxy phones are expected to get Froyo, but no one knows when.
• The only company to “ace” the Froyo launch was … Google. Nexus One users got their upgrades back at the end of June.

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I have no doubt that the Android OS will soon become, and remain, the dominant OS. As I showed in my last article, it will populate the plethora of handsets manufactured by a number of OEMs who will fight with each other the on remaining slice of the profit pie left over by Apple and RIM.

Android is the Windows Mobile of the coming decade.

Being evil?

Jason Hiner tells us The dirty little secret about Google Android: Google’s “…Android is enabling the U.S. wireless carriers to exert too much control over the devices and keep the U.S. mobile market in a balkanized state of affairs…

This is because “The carriers and handset makers can do anything they want with it. Unfortunately, that now includes loading lots of their own crapware onto these Android devices, using marketing schemes that confuse buyers (see the Samsung Galaxy S), and nickle-and-diming customers with added fees to run certain apps such as tethering, GPS navigation, and mobile video.

This is very much unlike Apple that took control of technical follow through from AT&T, and this is very likely the reason it had to have an exclusive with just one carrier at the iPhone launch in 2007. For example, Apple refused to throttle data speeds so the users cannot watch YouTube. All wireless carriers, and not just AT&T, disable hardware features on handsets all the time, so that the data demand remains low and not tax their underdeveloped infrastructure; in fact, Verizon is the worst. This assertiveness by Apple has proved to enhance user experience with the iPhone.

Google, however, has no such concerns. Customer experience is not its business model to make money. Its main revenue source is advertisements and all it wants is as many eyeballs as it can garner, whether it means giving the license to use Android for free to OEMs and letting them tweak it, or giving a free rein to wireless carriers to disable any features they want.

The Google-Verizon deal on net-neutrality should be looked in this light as well. If the “Voogle” understanding prevails, the wireless access to the Internet by mobile devices will have two tiers of service, the classification of which will be controlled by the telecom carriers. If a company pays a certain fee, or shares advertisement dollars, the carrier will let that company’s site be accessed at a faster speed. Smaller companies will less money to spare and common users without money, who do not have any such restriction now, will have their websites and blogs load at a much slower pace.

Google and the carriers know that the next big thing is mobile computing. The search giant has a lot of money to throw around and share, and will get preferential treatment. The faster Google sites, like YouTube, load, the user will have a better experience and is more likely to revisit them over others that load slowly. Google wins with being able to generate more ad revenue, and more dollars to share with the carriers. For Google and the carriers, it’s a virtuous cycle.

The sad part is that it is us users who will be at a loss. The breath of fresh air that Apple brought with having a tight control over the hardware and software of the iPhone will be lost pretty soon. We will once again become worse than a third-world nation regarding telecom services. We already pay more per user for the third-class services than any other nation in the world; we’ll be paying even more without any significant improvement in resources.

Future of Android?

While the iPhone OS (iOS) has been dominant for a while, Android recently surpassed it in the US and globally.

Is this good news for Google? Yes and no.

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Apple has introduced one phone a year for the last 4, and at any time, it offers 3 flavors: 16 and 32 GB versions of the current model, and one lower GB version of last year’s. Apple makes both the hardware and software of the device, and tightly controls software by 3rd parties.

Google, on the other hand, only supplies the OS (for free) to any OEM (Original Equipment Manufacturer) who wants it, and has little, if any, control on software by 3rd parties. Consequently, there are numerous flavors to choose from for an Android handset. This is why Android is outpacing the iOS in the number of devices installed. It won’t be long before it becomes the dominant platform for mobile phones, just like Windows once was.

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However, there is bad news for the future of Android.

Firstly, since OEMs are allowed to tweak the OS to their liking, there will be OS fragmentation because different makers would like to differentiate their device from the competition.

Secondly, different Android devices may have different versions of the OS (1.6, 2.0, 2.1, 2.2), and the path to upgrade to the latest version will be different for different manufacturers and will be dictated by them, as well. This has led to further OS fragmentation.

How does it matter? Well, any software (app) written for an OS works the best if it is written for a particular version of that OS. Certainly, it can be programmed to be backwards compatible but then it would lose some of the optimization for a later version it was primarily intended to work with.

In addition, if an app is written for one particular version of the OS running on one particular device (hardware) will be the most optimal in function. If and app written for a particular OS version for several different devices will not be as good. It would be worse if an app is written to work on several OS versions running on several different devices by different vendors.

In other words, Apple has the best of all worlds: one device, one manufacturer and one OS version at a time. Certainly, there is some fragmentation of the iOS (a user with an older model may not choose to, or be unable to, upgrade to the latest version), but it is not as bad as Android. Google, on the other hand, has the worst of all options: several devices, several manufacturers and several OS versions at the same time.

In addition to the quality of apps produced for the OS, any software designer will prefer to make money by making only one version of the app, like for the iPhone; he/she will have to make several versions to run on different versions of the Android to make the same money.

As a device user, I’d like to have the latest version of the OS as soon as it is available. I’d be rather upset that I cannot upgrade to the current version of the OS because of my hardware or the OEM would not allow it. I’d be very irked to see another person sporting a similar gadget with the latest version of the OS.

Finally, there are rumors of a Google-Verizon tablet that will run on the Chrome OS. This will lead to even more OS fragmentation of Google’s mobile devices; developers who write several versions of the same app for the Android OS that powers the mobile handsets (different OS versions, different OEMs), will now have to write a totally different app to run on a Chrome based tablet.

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It is a bit perplexing why Google is following this model. Apple has only one iOS for both its phone and tablet, and therefore has a single App Store. True, all of the 250,000 iPhone apps do not look great on an iPad, but you still can use them. While there are apps exclusive to the iPad, there are many more that are scalable to both the iPhone and iPad displays (universal apps). Google on the other hand, has two ‘App Stores’: an Android Market and a Chrome Market (announced to open later this year).

It could be that Google’s decision to put Chrome on its rumored tablet is because of the recent suit by Oracle: “In developing Android, Google knowingly, directly, and repeatedly infringed Oracle’s Java-related intellectual property” an Oracle spokesperson said in a statement. “This lawsuit seeks appropriate remedies for their infringement.”

If Oracle prevails, it could mean the end of Android, as “Google makes heavy use of Java in the Android software development kit (SDK). Third-party developers code Android apps in Java, which is then translated into bytecode that runs in Dalvik, Google’s own custom VM Virtual Machine).Google’s sole purpose of creating Dalvik was to route around Sun’s IP-based licensing restrictions on Java ME.

Android could be cast away like a hot potato by Google, like Microsoft ditched the Windows Mobile platform!

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There is more bad news for Android. The three most profitable cellphone makers are Apple, RIM and Nokia. They also have their own OS and would not likely use Android in their handsets. So the OS is left to be picked up by manufacturers like Samsung, LG, Motorola and HTC. While they make a lot of phones, their profit margins are very thin.

This chart is courtesy of another blog, asymco. The article, ‘Android Pursuit of the Biggest Losers‘, is very well written and worth a read.

In three years, RIM and Apple now have increased their EBIT (Earnings Before Interest and Taxes) from 6% to 17% and 1% to 48%, respectively, of the share among the top 7 mobile vendors. This was at the expense of Nokia, mainly. What is quite interesting is that all the prospective Android (and Windows 7) manufacturers share the humble pie of the remaining 13% of the EBIT.

Something to think about.

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UPDATE: A good explanation of why “its time to end the forced use custom skins” by different OEMs (Motoblur, Sense), and why “the fragmentation of UIs slows Android upgrades and removes customer choice”.