I Just Called To Say I Own You

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I Just Called To Say I Own You
By Daniel Stacey
Created 03/31/2009 - 5:52pm
This month's launch of Google Voice [1], an application that offers
U.S. customers free landline and mobile calls, is not just a bold
move to build a new-age phone-service provider. It's also the latest
sign of official war among the big tech companies in the mobile-phone
market: Apple, Google, and Microsoft. Remember Steve Ballmer's
chest-beating [2] launch of the new Windows Mobile OS in February-and
then the iPhone's 3.0 update [3]?
You might wonder why, in the middle of a nasty recession, the major
engine rooms of American innovation are jostling like crazy to break
into a market that has existed since the Cold War, when Mikhail
Gorbachev accidentally made the Mobira Cityman [4] 1987's must-have
accessory. But this contest is about much more than mobile phones as
we know them. It's about smart phones, which have become the red-hot
convergence point of telecoms and handheld computing. It's a battle
that captures not only the rapid changes sweeping through this sector
but the long-term strategies of three very different companies
competing to realize alternative visions of the future. And with
each, there's the cheery story firm flacks are peddling, and the
other story-of insatiable greed and late-night scheming to achieve
total market dominance [5].
Take Google. With its "Don't be evil" slogan, the company has offered
smart-phone users an endless swoon of utopian applications-like the
friend-finder Google Latitude [6] and Google Book Search's 1.5
million free smart-phone e-books [7]-since it launched the first
Android phone with T-Mobile last year.
But beneath the marketing spin lies the cold, hard fact that 97
percent of Google's revenue comes from search advertising [8]. And
its main ways to expand this stream are to form a search monopoly by
eating Yahoo and to find new (and, potentially, more invasive)
methods of collecting data to target its ads more efficiently at Web
users. To that end, the whole point of Google's push into the phone
market is to force you to continue to search and navigate the
Internet using Google products. The first Android-compatible phone,
the T-Mobile G1, even has a dedicated "Google search" button [9],
just to remind you what's at stake.
Google phones are also loaded up with a version of the Chrome
browser, which doubles as a machine that feeds Web navigation and
search data to Google's mother ship. [10] This preserves Google's
ability to expand its data vaults and grow its advertising model as
the mobile Web takes off.
And there is even speculation [1] that Google Voice-which uses speech
recognition software to send you voice messages as SMSs and
e-mails-could be linked into the same invasive advertising model
behind Gmail, where the content of e-mails is scanned to target ads
at users. Your idle phone chat could become a rich seam of
information for Google's data banks.
Apple, however, appears to have entered the mobile-phone market in a
way that enhances its unique brand equity. The iPhone, launched in
June 2007, is a sleek handset with a user-friendly operating system
that focuses on satisfying plug-and-play types rather than fiddly
geeks. But beneath the veneer of Jonathan Ive's [11] polished ceramic
surely lies a larger plan.
Because Apple, Google, and Microsoft are really competing for
ownership of the handheld-computing market. Convergence has meant you
can't really go after one without the other. If Apple can create the
killer smart phone-as it did for MP3 players-then by default it will
also become the mobile operating system of choice. That would allow
Apple to start building an operating system monopoly for handheld
computer users in the way Microsoft did with PCs in the '90s. And
once it's got users hooked on Apple devices for all their mobile
computing, mobile Web, music, video and print media needs, well, why
not encourage users to sync up all their devices with a nice ol' Mac
desktop? It's the sort of aggressive multipronged pincer movement
Apple would rather mask than-as PR buffoon Steve Ballmer
might-trumpet to the world.
Another long-term goal for Jobs and Co. appears to be the complete
domination of the digital media market through the creation of a
converged device that allows you to listen to music; watch video; and
download books, newspapers, and magazines [12], supported by an
overarching iStore stocked with any forms of media that can be
digitized and sold. Last year, Apple's growing control over the
distribution of video content forced the major studios to form a
creepy consortium called the Digital Entertainment Content Ecosystem
[13]. In the music industry, Apple is so powerful that it was able to
bluff its way through negotiations last October to increase the
royalties paid to artists and record companies, simply by threatening
to close its iTunes store. More recently, Amazon released an iPhone
application [14] that allows you to download its Kindle books onto
your Apple phone, a concession to the potential for the iPhone to
become the default e-book reader.
Microsoft, for its part, has been one of the slowest tech companies
to react to the sector. But it has recently come out swinging with a
new mobile operating system, a giant deal to distribute Windows with
phone manufacturer LG, and a sexy retail plan [15] that will soon see
Microsoft-branded stores jostling for attention with Apple's hipster
temples on a High Street near you. Like the launch of the Zune in
2006-five years after the iPod-it seems like another application of
their well-known strategy "embrace, extend, extinguish [16]." That
is: Wait until someone comes up with a good idea, then copy it and
try to muscle him out of the market with your sheer size.
But is Microsoft really after a slice of the handset market? Like
Google, Microsoft has a core focus [17] that makes all its other
projects look like pointless hobbies. That focus now is selling
Windows and Office-and it's here that Microsoft is more blatant but
also honest about its intentions. As Ballmer said at the annual
Mobile World Congress [2] in February: "Volumes speak volumes." More
than 20 million phones [18] sold last year used a Microsoft operating
system, 46 percent more than Apple [19]. And the deal it's just
signed with LG, the world's third-biggest phone manufacturer, will
see Windows on 50 new models over the next five years. Still, Windows
Mobile holds only a 13.9 percent market share [20] right now, behind
Nokia's Symbian (52.4) and the BlackBerry OS (16.5), and it's a long
way from achieving the 90 percent dominance it holds over home and
office computers.
With these three tech behemoths all in the ring, what are the
possible outcomes? If Google emerges victorious, a world of smart
phones that protect the search giant's ability to control most of the
time you spend on the Internet. A world of Google phones is also
likely to be one plagued by privacy issues as it tries to grow
advertising income by farming more and more data. Under Microsoft's
plan, we might see a mobile-phone market in which your handheld,
home, and office computers all run Windows and the company gets to
keep its global dominance of the operating system market. And if
Apple has its way, it could realize a more audacious plan to take on
Microsoft by claiming an operating system monopoly over mobile
computing that can then be eased into homes and offices, making life
so simple and synchronized for you that, like the atrophied residents
of the Axiom [21], all your needs are supplied by one feel-good
company.
Game on.
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