Power Grab at Google

The change at Google with Larry Page becoming the company’s CEO may seem inconsequential but Information Consulting believes it is a significant development. The change reflects the market realities of intensified competition and increased regulatory oversight.

Even when Eric Schmidt was at the helm, its co-founders, Page and Sergey Brin, were essentially running the show. Page, in particular, has been the driving force behind the company. Schmidt, nevertheless, was the face of the company, and all major decisions flowed through him. Now that Schmidt is the company’s Chairman, he has a diminished role. Page’s ascendancy will accelerate decision-making and Google will adopt a more aggressive posture as it pursues new markets.

The change in leadership reflects Google’s desire to expedite decision-making and take a more proactive approach in confronting competitive threats and regulatory roadblocks. The U.S. Justice Department, for instance, is pondering whether to file an antitrust lawsuit challenging Google’s proposal to acquire ITA Software, Inc., a provider of online flight and ticket information. The proposed acquisition is being vehemently opposed by software and online travel companies including Microsoft Corp., Expedia Inc. and Sabre Holdings Corp.

Google’s rivals are employing every tool in their arsenal to try to counter the software giant’s market onslaught. Despite Google’s dominance of the search engine market, a resurgent Bing is beginning to gnaw at its market share. Its Google TV is facing resistance from cable companies making its future uncertain. Another ominous development for Google is its delay in introducing Chrome OS. The software, ostensibly designed for notebooks and netbooks, was expected to threaten well-established rival platforms from Microsoft and Apple. But reports suggest that Google is finding it challenging to pull it off.

However, not all is lost for Google. Its Android platform has been a runaway success, and its share of the Internet advertising market is growing. And with a more aggressive leadership, Information Consulting believes Google will continue as a force to be reckoned with.
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Steve Jobs’ Illness

 Steve Jobs, Apple’s founder and CEO, sent a note to his company’s employees yesterday saying he is taking a medical leave of absence so he can focus on his health. The note said that Jobs would continue to be involved in major decisions, but that he would give up the day-to-day running of the company. Information Consulting earnestly hopes that Jobs recovers from his illness and comes back to the helm of Apple. He is only 55 and should have a long life ahead of him.

 Since August 2004 when his pancreatic cancer was first revealed, Jobs’ health has been the subject of frequent speculation. This speculation was further fueled by the fact that in public appearances, Jobs has appeared thin and frail. Jobs took medical leave in the first half of 2009, returning to the company in late June. He received a liver transplant while on leave.

 Because Jobs has been the force behind Apple’s products, his health issues have raised concerns about the future of Apple. The latest news about his illness is vague; it is not known what the nature of the problem is. Jobs’ previous medical history and the very real possibility of medical complications means that Apple should be more forthcoming about the medical condition of the company’s founder.

 Few would doubt that Jobs is one of the brightest men ever born with an array of accomplishments under his belt. Under Jobs’ guidance, Apple has created products which made their mark on the industry. The brain behind the Macintosh line of computers, Jobs panned out the idea of an iPod, followed by the unleashing of ground-breaking products such as iPhone and iPad.  

 No major corporation is identified with its creator as much as Apple is with Jobs. Should anything happen to Jobs – and it is by no means certain that anything will – it is likely to have a profound impact on the future of Apple.

 Jobs’ heir apparent is Timothy Cook, Apple’s Chief Operating Officer. Cook has distinguished himself for his ability to make Apple’s sprawling operations move on time. He handled the company’s day-to-day operations during the first half of 2009 when Jobs was on medical leave, and received a bonus of $22 million for his “outstanding performance.”

 Information Consulting has concerns whether a post-Jobs Apple will be able to maintain the kind of momentum and market clout that the company currently enjoys. Despite Cook’s exceptional management skills, it is unclear if he will be able to offer Apple the kind of direction that Jobs provided.
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Bill Daley and the Telecom Industry

The appointment of William (Bill) Daley as the White House Chief of Staff is raising eyebrows in the telecom industry. As commerce secretary under President Clinton from January 1997 to June 2000, Mr. Daley oversaw the National Telecommunications and Information Administration (NTIA). He played a more direct role in the telecommunications industry when he was president of SBC Communications Inc. from December 2001 to May 2004. Mr. Daley worked at SBC before it acquired AT&T and took the smaller company's name.
Mr. Daley’s stint as commerce secretary was free of any major controversies. However, his stewardship of SBC made many in the telecommunications industry uncomfortable. In essence, he was seen as having moved from a cabinet position, where he represented the wider concerns of the U.S. government, to representing a vested corporate interest.
Mr. Daley assumes his position as President Obama's Chief of Staff while a battle is looming in Congress over net neutrality rules. Net neutrality is based on the concept that companies providing Internet service should treat all sources of data equally. Supporters of net neutrality contend that Internet providers cannot give preferential treatment to their own content or that of content providers for a fee, and that they cannot block or impede content that represents controversial points of view. The FCC favored keeping things that way, but its ability to do so was hampered by a federal appeals court decision in April 2010 that restricted its authority to regulate broadband providers.
In December 2010, the FCC passed a watered down “compromise” version of these regulations that, for the first time, allows for “reasonable” paid prioritization. Nevertheless, the rules ban outright blocking and “unreasonable discrimination” of Web sites or applications by fixed-line broadband providers.
President Obama, whose campaign commitment was to enforce net neutrality, supported the FCC decision. However, consumer groups blasted the new rules, calling them woefully inadequate. On the other hand, Republicans have rejected the regulations, maintaining that they represent an interventionist overreach on part of the FCC.
With Republicans in control of the House of Representative, a bill is on the anvil seeking to scrap the net neutrality rules. If the bill goes to the President’s desk, Mr. Obama will most likely veto it. However, consumer advocates are concerned that Mr. Daley may try to influence the president not to do so.
Information Consulting believes that Mr. Daley does have corporate leanings, but he is unlikely to try to influence the President when it comes to net neutrality. Now that he is a part of the President's team, Mr. Daley is more likely to support Mr. Obama's decisions and faithfully follow the President's agenda.
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Verizon's iPhone launch: Better late than never

The iconic iPhone is finally coming to Verizon Wireless. And the new device will not only support Wi-Fi but the carrier’s CDMA network as well. Verizon, the largest U.S. wireless carrier in terms of subscribers, made the much anticipated announcement on January 11, 2011 at an event in New York City.
Existing customers will be able to preorder the smartphone on February 3rd, and others will be able to do so on February 10th. With a two-year agreement, the device will cost $200 for a 16GB model and $300 for a 32GB model.
In most ways, the Verizon iPhone will be similar to iPhone 4 that uses the AT&T network. However, the smartphone will use Verizon’s older CDMA EV-DO network and not the newer LTE. Unlike AT&T’s device which can tether to only one computer, Verizon’s iPhone will have a five-user Wi-Fi hotspot capability. This functionality has been standard on Android devices.
This is the first time U.S. consumers will be able to choose between two networks for their iPhone device. Lifting AT&T’s exclusive hold on iPhone, the Verizon smartphone will unleash competition in the market for iPhone handsets.
The rollout of a Verizon iPhone embodies Apple’s move to expand the user base of its devices. The move comes as iPhone faces increasing competition from Android smartphones that have flooded the market. In fact, Verizon itself strengthened its position in smartphones by launching Android handsets from Motorola and HTC.
Apple’s iOS has been fighting a losing battle with Google’s Android. While Apple’s OS is technologically more advanced, the company has not been able to match Google’s market savvy. Android smartphones have already overtaken iPhone handsets in terms of end-user sales. (For a better understanding of the two companies’ market positioning, please read Information Consulting, LLC’s report, Google vs. Apple: Clash of the Titans.)
Ever since it introduced iPhone on AT&T’s network in June 2007, Apple kept itself confined to the same carrier. Rather than use all possible carrier outlets for its device, it chose to put all its eggs in one basket. Information Consulting is of the view that Apple may have paid heavy price for this decision.
Due to its Wi-Fi capability, anyone should have been able to use iPhone on any network. But that was not to be. Despite user complaints of dropped calls and poor service on AT&T’s network, Apple’s commitment to its carrier of choice was unwavering. On the other hand, Android devices have been available with every U.S. carrier, giving Google a huge advantage in terms of solidifying its market position.
Information Consulting wonders if other U.S. carriers – Sprint and T-Mobile - will carry iPhone. So far, there are no signs pointing in that direction. Moreover, Information Consulting is curious if Apple will offer the CDMA version of iPhone to operators in emerging markets such as China and India. Failure to do so – and soon – could inflict irreparable damage to Apple’s already vulnerable position in the market.
www.information-consulting.com