Tuesday, August 16, 2011

Google, Apple, Microsoft which is the greater fool?

Diagram Android DevelopersImage via WikipediaI was reading this article, specifically the comments. The author felt that google stuck it to Apple and Microsoft, hence the title, “Larry Paige Just Made Apple and Microsoft Look Like Fools”. The comments however were mostly the exact opposite. Many of the commenters specifically mentioned that Google paid three times the price for three times the patents, or that Motorola, the company Google bought, has a less than stellar reputation lately, not to mention the fact that they are losing money. They point out that Google is probably annoying the other hardware manufacturers that build phones with their Android operating system. I think they are all missing the point.

The commenters also point out that Google probably did this for protection from patent lawsuits brought about by Apple. This is the point, but not as the commenters see it. The consensus opinion seems to be that Google will use the patents they bought to hit back at Apple or create their own phones and compete with already established companies that are building phones with the Android operating system.

I think this is wrong on both accounts. As much as many of the commenter's think it would be foolish for Google to spend 12.5 billion to buy patents and then set them free, I think that is exactly what they intend to do with them.

Google isn’t in the phone making business. They aren’t even in the phone operating system making business. They are in the advertising business. To make money on advertisements they need a lot of advertisements on a lot of real estate, even if that real estate is a phone. by supporting and giving away the Android operating system they essentially get all that real estate for free. The patent lawsuits from Apple has cost Google a lot of money to keep and expand that real estate. By buying the patents and making them open source companies who make phones (and tablets) with the Android operating system no longer need to fear lawsuits from Apple and can and will expand their use of the Android operating system.

Really Google didn’t buy Motorola for hardware, or patents. They bought an end of the patent lawsuits from competing companies. Too many people are trying to simplify this to be a simple straight line from the cost of building a widget, subtracted from the price of the sale, equaling profit. Business is more complex than that and the larger the business the more complicated the line from cost to profit.

What does this have to do with education you ask? Simple, the profit from education is generally at the end of a longer and more complex line than any business you can imagine. To reform education requires us to be able to see past what looks like a foolish purchase and envision the ultimate possibilities.

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