Google Blows It Big Time: Microsoft, Apple, RIM Get Nortel Patents - ZDNet (blog)

Google (GOOG) has pulled off a rare feat in business: blowing an opportunity so big that the company will be living with the fallout for a really long time. Microsoft (MSFT), Apple (AAPL), and RIM (RIMM) — in a consortium with Sony (SNE), EMC, and Ericsson (ERIC) — bought the Nortel patent portfolio for $4.5 billion in an auction. Google’s original bid of $900 million simply wasn’t enough.

You can debate whether the patents of the bankrupt Canadian communications company were intrinsically worth that much. However, value is relative. The winning group here will get more than its money’s worth because it’s managed to keep an important weapon away from its biggest mobile competitor. And Google lost its best chance to negotiate some healthy live-and-let-live agreements with rivals intent on putting it out of the mobile business — a business that is critical to Google.

Hit us, please

Google has had a sloppy approach to patents when it comes to Android. That has given Oracle (ORCL) room to allege infringement and demand $2.6 billion in damages. But even worse is that Microsoft and Apple have threatened Android’s existence with a series of patent infringement lawsuits.

Most have targeted Google’s hardware partners because they have less money to defend themselves than the search giant, and so could become a choke point for Android’s business. Make things too expensive for the hardware companies, and they might reevaluate whether the product is a commercially viable option.

It’s expensive being Google’s BFF

Microsoft already has at least four companies paying, one of which is HTC, a big name in mobile phones. Both Motorola (MMI) and Barnes & Noble (BKS) are fighting in court, but neither has Microsoft’s deep pockets. Add a significant per-unit cost for Android, and suddenly licensing Windows Phone might look far more appealing, particularly since Microsoft indemnifies its users for patent infringement actions.

That’s why the 6,000 Nortel patents were so important to Google. The entire mobile industry has worked on cross-licensing and the threat of mutual destruction. Only Google entered this nuclear arms race armed with a pea shooter. The Nortel patents would have given it a better negotiation position. (You also have to ask whether the consortium might now pursue Google and its partners for allegedly infringing any of the Nortel patents.)

Would Google’s problems have disappeared with the patent portfolio? Not a chance. But as intellectual property analyst and blogger Florian Mueller wrote to a number of us that cover IP issues, “Google lost an unprecedented opportunity to acquire a major bargaining chip that would strengthen it at the mobile industry’s intellectual property negotiating table.”

No second chances

His use of the term unprecedented is anything but hype. This was a one-time chance Google needed to protect its investment in Android, which represents the company’s entire future. The final price was stiff, and even with its big bankroll, Google would have difficulty in matching the combined resources of the companies in the consortium.

However, it should have been worth more than $4.5 billion to Google. This was a must-win for the company. Did it have the money to go higher? Without a doubt. Failing to ensure a successful bid is the single biggest mistake the company has made, because this is one from which it cannot recover.

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Image: Flickr user Calgary Reviews, CC 2.0.

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Microsoft Launches Office 365 Without Support for iOS or Android - PadGadget

Microsoft has announced the much-anticipated Office 365 service that brings Microsoft Office, Microsoft SharePoint Online, Microsoft Exchange Online and Microsoft Lync Online to consumers in a cloud environment. Available for a monthly subscription fee ranging from $2 to $27 per user per month, all applications will remain up to date and usable from all anywhere… as long as you aren’t running iOS or Android.

Boasting a variety of collaborative features as well as the ability to hold virtual meetings and communicate via instant messaging, the key benefit is the availability of the Microsoft Office suite of software without the large initial investment that is currently required.

Having tested Microsoft 365 on iOS and Android extensively, Galen Gruman from InfoWorld confirmed what Microsoft tried hard not to say: “Office 365 is basically useless on mobile.”

Initial advertising done by Microsoft certainly led us to believe that this service would be available and intended for use by mobile devices, although they never specifically mention being compatible with any in particular.

This isn’t the only shortcoming either, while Microsoft proclaims compatibility with FireFox, Safari and Chrome browsers, their use of ActiveX and Silverlight controls mean much of the functionality of their apps will be unavailable outside of Internet Explorer.

These deficiencies seem unwise given the numerous other alternatives available for cloud storage, collaboration and document editing and management. It may be that Microsoft is hoping to use this as an incentive to resuscitate Windows 7 based smartphones for use by interested businesspeople, but I think it is more likely that they will alienate and annoy them.

Microsoft Office 365 is available as a free 30 day trial for businesses.

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First Microsoft, now Google: Does the government have it in for consumers? - CNET

Editors' note: This is a guest column. See the authors' bios below.

Ten years ago this week, an appeals court upheld Microsoft's conviction for monopolizing the PC operating system market. The decision became a key legal precedent for U.S. antitrust enforcement. It also cemented the government's confidence in its ability to pick winners and losers in fast-moving technology markets--a confidence not borne out by subsequent events.

Now this sad history seems to be repeating itself: By uncanny coincidence, news broke just last Friday that the FTC had begun an antitrust investigation into Google's business practices. Unfortunately, there's no reason to expect the outcome to be any better for consumers this time around.

There is, in fact, no evidence that the case against Microsoft or its settlement contributed to the spectacular innovation in the IT sector over the last decade. Indeed, they may even have solidified Microsoft's role as the perennial also-ran in this latest wave of technological progress, as the company struggled to keep innovating under the threat of constant antitrust scrutiny in the U.S. and abroad.

The true lesson of the Microsoft case is this: antitrust intervention in information technology has a poor track record of serving consumers. Even Harvard law professor Lawrence Lessig, who was a court-appointed Special Master in that case and has since championed government tinkering with the Internet, finally admitted in 2007 that he "blew it on Microsoft" by underestimating the potential for innovation and market forces to dethrone Microsoft, particularly through the rise of open-source software (which now in part powers Apple's popular iOS).

But even that misses the importance of the broader, unimaginable technological evolutions that rendered the Microsoft case moot before it began. First, the desktop operating system is fast losing its central importance as more and more desktop applications are run in "the cloud" (Webmail, Salesforce.com, Tweetdeck, etc.). This evolution has been driven largely by open Web standards like HTML--which predate the remedy in the Microsoft case.

Second, Microsoft's desktop operating system is significantly threatened by the mobile revolution, and Microsoft's own forays into this market have been singularly unsuccessful. Tellingly, in 2007, when Apple transformed the mobile market with the iPhone, Microsoft released Windows Vista, the "Edsel" of operating systems. Apple's market cap is now larger than Microsoft's--a result unthinkable just a decade ago.

Finally, Microsoft has struggled to compete with Google, a company that supports with advertising revenues a growing variety of free (cloud-based) offerings beyond Internet search and in areas (operating systems, e-mail, Web browsing, word processing...) central to Microsoft's business.

In all three cases, Microsoft moved too slowly to keep up. And in all three cases the government and the courts (and likely even Microsoft itself) failed to anticipate these evolving threats to Microsoft's business.

The Microsoft case demonstrates how hard it is for antitrust regulators to determine which technologies and business models will ultimately best serve consumers, largely because they simply cannot predict how digital markets will evolve. The Justice Department of 1998 (when the Microsoft case began) couldn't have predicted the rise of Google, Facebook, Twitter, Chrome, Android, the iPhone, or cloud computing. Indeed, who in 1998, or even 2001, could have imagined that Microsoft would face an existential threat to its Windows, server, and Office-focused business model from a company that provides free, ad-supported services built on a core Internet search business--and that was incorporated just a month before Microsoft's antitrust case began? So how can today's FTC possibly predict how search will change, or how Google's success might be disrupted by "social" search (e.g., via Facebook), "semantic" search (understanding language), or any other combination of possibilities?

Even if Google today were the monopolist Microsoft supposedly was a decade ago, it doesn't follow that another drawn-out antitrust battle and cumbersome consent decree will actually benefit consumers. If anything, the futility of the Microsoft case demonstrates the wisdom of letting rapid technological change play out in digital markets.

Moreover, the Justice Department in the Microsoft case at least seemed genuinely focused on antitrust's bedrock consumer welfare standard. But today, the FTC seems to be motivated largely by a desire to lower the bar for future antitrust interventions, with Google's rivals cheering the agency on. Recent statements by FTC Chairman Jon Leibowitz (a Democrat) and Commissioner Thomas Rosch (a Republican) suggest their agency intends to prosecute Google under "Section 5" of the FTC Act rather than the agency's more traditional Sherman Act "Section 2" authority. Commissioner Rosch has claimed that a Section 5 unfair competition claim could address conduct that has the effect of "reducing consumer choice." But a reduction of choice of competitors put out of business by pro-competitive behavior is not a harm to consumer welfare, and such a case would (and should) fail under Section 2. The fact that Google's rivals--including Microsoft itself--are complaining about the company suggests, ironically, that Google's practices are in fact pro-competitive and thus pro-consumer.

It took Professor Lessig years to admit that he "blew it" on Microsoft. Here's hoping Chairman Leibowitz and the FTC are quicker to recognize the dangers of antitrust intervention in fast-moving markets. Another legal precedent like the Microsoft decision will hamstring not only Google but also, eventually, other innovative companies that might someday dethrone Google. How will that benefit consumers?

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