Quick Thoughts: Facebook Fone, iTV, and Googlerola

sagawa

Follow SecSovTMT on Twitter

 

–          Facebook may want a phone to avoid the squeeze by Apple and Google, but building from scratch or buying Opera would be a big mistake.  The logical partners Microsoft and HTC.

–          Amazon could do a smartphone using the Android variant used in its Kindle Fire.  Going cheap and then giving a subsidy based on future e-commerce could allow them to undercut the market.

–          Reports of a December Apple iTV launch seem premature.  Making the device and adapting iOS are the easy parts – Apple needs to secure content and a content delivery network with a lot of capacity.

–          Google will expand its Nexus program to include more OEMs in the launch of its future OS upgrades – a good step to support the ecosystem in the wake of the Motorola deal.

 

Will they or won’t they?  A check to the rumor mill suggests that Facebook is hard at work on its own smartphone platform, and that they could be sizing up either Research in Motion or Opera as a means to that end.  Amazon, fresh on the success of the Kindle Fire, is said to evaluating their own move into smartphones.  The word on Apple has their Chinese manufacturers building prototype television sets, presumably, as a precursor to launching a full blown iTV for Christmas.  Google’s plans are somewhat more transparent – LG will imminently launch a next-generation GoogleTV set and the company just closed its acquisition of smartphone maker Motorola – but speculation abounds on how the master of Android will manage conflict between its new hardware subsidiary and its erstwhile competitors.

First, the Facebook Phone – like many others I am skeptical about the company’s ability to launch its own platform starting from scratch almost 5 years after the commercial launch of the iPhone.  Google made up the ground from a year behind, but HP, RIM and Nokia all whiffed badly on their own smartphone platforms, and all were experienced portable hardware engineering stalwarts.  The software would also be a huge challenge – a sprawling, cloud-based user interface is not even a good start on building a viable OS for a device with a small screen that has to run on batteries.  Assuming Mark Zuckerberg’s hubris knows bounds, which after the IPO road show is admittedly a big assumption, I suspect Facebook already knows this, but there is another way.  Facebook could launch a customized version of someone else’s platform, a la Amazon’s extreme makeover of Android.

Apple’s CEO Tim Cook made noises at the All Things Digital conference about being open to closer dealings with Facebook, but integrated into iOS, Facebook would be in a tight box and would have to tithe a hefty share of its mobile revenues to Cupertino.  It’s hard to imagine an iPhone that allows an open FB news feed at all times or that boots with your Facebook wall as its first screen.  Bad blood with Google makes Android a long shot, but HTC did sign on a year ago to create a Facebook smartphone, code named “Buffy”, that has yet to see the light of day.

The obvious candidate, Microsoft, which owns a stake in Facebook, is probably the best one.  Facebook has already partnered with Microsoft and the Metro interface, running on both Windows Phone and Windows 8, features tiles that allow apps like Facebook to stay open.  Microsoft, coming from behind in the smartphone wars, could use the boost from the Facebook nation and would likely be amenable allowing more extensive customization and to ceding some consumer opportunities to its partner in exchange for marketing oomph.  Facebook could work with HTC to create a Facebook specialized device, running Metro and supporting Windows Apps, but putting the FB experience front and center.  This makes a lot more sense to me – it could be a win-win-win for Facebook, Microsoft and HTC without undue risk.  It certainly beats shelling out for RIM or Opera.

Next up, Amazon is said to be working on a phone of its own, based on its tear down renovation of Android.  This makes some sense, as comparison shopping via smartphone became a killer app during the past Christmas season and Amazon doesn’t want Apple or Google getting first crack at these ready to buy consumers.  The Fire interface needs some work but is a good start, and Amazon understands that its opportunity is with the buying masses.  I would expect a cheap, free with contract smartphone subsidized both by carriers and by Amazon itself, offering web access, support for many Android Apps and Amazon’s shopping and media services front and center.  Given the thin margins for other low-end smartphones, a subsidy by Amazon could give its product a clear price advantage that could be tough to beat.  I wouldn’t be surprised to see an Amazon phone hit the market for this year’s Holidays.

Now, on to Apple: I suspect that many of you are weary of the endless iTV speculation.  We know that Apple would like to offer an integrated Apple TV experience – they already have the AppleTV experiment and the Steve Jobs biography claims that he cracked the case – but there are a lot of hurdles to clear.  They have to cut deals to get programming on the Apple TV and they have to figure out how they are going to deliver streaming video without their own CDN to deliver it and against the determined interference of the Cable industry.  If it were simply designing a cool TV, implementing iOS on it, writing a bunch of well designed applications to help users manage their media consumption, and integrating it all across iPhones, iPads and iTVs, I’d have no doubt that this would be an iTV Christmas.

To that end, it doesn’t matter that Chinese contract manufacturers are making 42” prototype TVs for Apple, I need to see a deal with CBS and Hulu, a big infrastructure build by someone like Akamai, and some resolution with the likes of Comcast, which favors its own on-line video product and could seriously hamper iTV with draconian usage caps.  A fallback position could be launching a TV that merely smoothes the user experience in choosing between content sources that are already available – e.g the cable box, the game console, Netflix, etc. – and integrates the access across Apple devices.  Such a TV might sell at a nice margin, but would undoubtedly bring critical brickbats to a company used to rave reviews.  Given all of this, I’m not holding my breath for the reported December due date.

Finally, Googlerola:  Buying Motorola Mobility did net Google a raft of patents to use in its IP war with Apple and Microsoft, but may also have stopped Motorola from further Android fragmentation, from licensing Windows and/or suing other Android licensees for infringement.  In any case, Google now owns a major handset maker and will have to tread lightly to avoid disturb its ecosystem.  To that end, Google has leaked its intention to open its “Nexus” program, through which it has worked with a single OEM on a flagship product to launch each major software revision, to a broader range of licensees.  Instead of a single Nexus product, “Jelly Bean”, “Key Lime Pie” and subsequent Android releases will see 5 or more Nexus devices from various manufacturers.  Meanwhile, I expect Google will pull back on Motorola’s market share ambitions, using the devices to push service integration – e.g. products like Google Wallet, Google+, Google Voice, Google Drive, etc. – and experiment with device configurations.  Ultimately, I believe all of this will work to lessen the costs of Android fragmentation.

By the way, I still expect that the patent wars between members of the Android ecosystem and Apple will end in negotiated cross licensing deals.  The pursuit of a legal solution is expensive and ultimately, fruitless.  Even with court-ordered injunctions, none of the patents involved is so definitive that the infringing party couldn’t engineer around it without completely disrupting the value of the product.  The process of suits and work-arounds could be endless, and as the relative value of the various patents being asserted is established through the pattern of court decisions it is in the best interest of all parties to settle.  This has always been the situation in mobile device patents, and, removing ego and emotion, I expect it to be the same here.

For our full research notes, please visit our published research site.

Print Friendly, PDF & Email