Mobile in chaos! Has the industry gone nuts?

The mobile computing industry went crazy last week.

HP, which has long been a leader in mobile computing, has announced that it will stop selling laptops, tablets and smartphones.

Meanwhile, Fusion Garage, which is the least-successful tablet maker ever, is getting back into the tablet business.

And Google, which has avoided selling handsets save for one brief failed attempt, is buying Motorola Mobility, one of the top handset makers.

And everyone in the industry, it seems, is suing everyone else.

Nothing makes sense anymore. What’s going on?

The root cause of all this turmoil is Apple. While the mobile industry is becoming increasingly central to all computing, and is being woven into our lives like never before, Apple is the only company making real money at it. And it’s driving everyone crazy.

Here is what’s happening.

HP quits.

The world’s number-one PC company this week announced that it’s getting out of the PC business. HP is has also long been a leader in mobile hardware — and it’s getting out of that business, too.

HP announced plans to spin off its PC unit as a separate company. It will stop making hardware for devices purchased as part of the acquisition of Palm Computing, and will most likely license the webOS platform software to other companies.

These announcements represent a radical departure for a company that has gone to great lengths and expense to remain a leader in PCs and mobile devices.

Fusion Garage won’t quit

One of the most epic mobile computing fails in recent years was the CrunchPad fiasco.

Blogger Michael Arrington, founder of TechCrunch, started a project in 2008 to create a cheap web-based touch tablet that would be called the CrunchPad. He worked with Singapore-based design studio Fusion Garage on the project.

As the project got nearer to completion, Fusion Garage somehow fired Arrington from his own project and launched the device under the brand name JooJoo. The tablet was a piece of junk, and failed in the market.

So that’s the last we’ll be hearing about Fusion Garage, right?

Wrong. The company announced this week that it would re-launch a newer, improved version of the tablet to be called the Grid10. The only reason this launch is making news is because of the controversy around and failure of its previous attempt.

I guess there’s no such thing as bad publicity.

Google becomes rival to its partners, partner to itself.

There are two kinds of mobile software platform companies. There are companies like Microsoft that make the software and cultivate developers and OEMs to support the environment. And there are companies like Apple that don’t license their software but instead use that software only for their own hardware.

Google wants it both ways. The company announced this week that it has agreed to purchase the mobile phone pioneer Motorola for $12.5 billion in cash. Google intends to keep Motorola functioning as a separate company.

While the deal was motivated primarily by Google’s desire to fortify its patent portfolio, the purchase puts Google in a strange and unprecedented relationship with both itself and its OEM partners. In effect, Google becomes both partner and competitor to current Android-based handset makers. And Google becomes its own partner. Motorola will continue making Android-based phones and tablets.

Everyone patents up and sues like crazy

Microsoft is suing Barnes & Noble, Foxonn and Inventec. Oracle is suing Google. Sony is suing LG. Samsung, Motorola, Nokia, HTC and Kodak are all suing Apple, and Apple is suing them all back except Kodak.

To win these lawsuits, and to bolster licensing negotiations, the biggest players are buying any company they can that is sitting on a sizable mobile patent portfolio.

And thanks to previous lawsuits, Microsoft is making more money from Android than Google is. The company licenses technology in Android that Microsoft claims to have invented to Amazon and HTC.

Patent trolls have emerged that do nothing but buy and sell patents — and sue companies that violate inventions they had no hand in inventing.

The U.S. patent system is crazy. And because mobile devices are the most complex consumer products in existence (and have the most patentable components), the crazy system is making everybody do crazy things.

Has the industry gone nuts?

The mobile industry is going bonkers in part because mobile is becoming central to everything we do in our lives, yet only one company is making big profits on it: Apple.

Hundreds of companies make cell phone handsets, including some of the largest consumer electronics companies in the world. Yet Apple by itself makes about two-thirds of all profits from handsets. That means Apple makes twice as much profit as all other companies combined.

Apple’s success in mobile has made the company the first or second most valuable company in the entire world, depending on the vagaries of the stock market.

Apple makes big profits from hardware, big profits from its own software, big profits from other people’s software, big profits from carriers and pretty good profits from advertising on those mobile devices. Nearly three-quarters of Apple’s revenue come from mobile devices launched in the past decade.

And Apple hasn’t even signed its deal yet with the world’s largest carrier, China Mobile, which has more than 600 million customers in a country that’s already hungry for the iPhone.

Mobile computing is in chaos, and it’s Apple’s fault.

Apple shamed HP right out of the mobile and PC business. They’re so profitable with the iPad that Fusion Garage can get rich by gaining only a tiny fraction of it. Apple’s financial success in both phones and tablets has made Google, a search engine company, want to make hardware. And the desperate need to monetize colossal investments in mobile that are not profitable (thanks to Apple) has motivated aggressive lawsuits and licensing agreements.

The bottom line is that mobile computing has never been hotter or more profitable. But only one company is making almost all the money. And it’s driving everyone crazy.

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Jim Love, Chief Content Officer, IT World Canada

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