Opinion

The Great Debate

Inside the Apple and Google smartphone war

This is an excerpt from DOGFIGHT: How Apple and Google Went to War and Started a Revolution by Fred Vogelstein, published in October 2013 by Sarah Crichton Books, an imprint of Farrar, Straus and Giroux, LLC.

By 2010 Apple and Google were attacking each other on every possible front: in the courts, in the media, and in the marketplace. Android’s surge in popularity was astonishing, and Andy Rubin, Eric Schmidt, and the rest of Google made no secret of their glee. It seemed that every chance they got during 2010 they would expound on how many monthly activations Android had racked up and how mobile devices were going to change the future of Google and the world. In an April 2010 interview with the New York Times, Rubin even predicted that Android was going to rule the entire mobile universe.

The year before he had been worried that Google would abandon Android and that he and his team would need to job hunt. Now he confidently proclaimed, “It [Android] is a numbers game. When you have multiple OEM’s [phone manufacturers] building multiple products in multiple product categories, it’s just a matter of time” before Android overtakes other smartphone platforms such as iPhone and BlackBerry.

It was as if little else about Google mattered anymore. That wasn’t really true, but it wasn’t a huge exaggeration either. In 2010, Android started the year with 7 million users. By year-end it had grown to 67 million and was adding three hundred thousand new customers a day. Android itself wasn’t making money yet, but it was heading there fast. More important, it was accelerating the revenue and profit growth of other Google applications such as search and YouTube, and it was getting more people to sign up for Google accounts and give Google their credit card information.

The more people used Android, the more Google searches they did and the more ads they clicked on. Google still made most of its money from searches on laptops and desktops. But everyone at the top of the company knew desktop ads wouldn’t be the dominant source of revenue forever. Soon, fewer and fewer people would be buying those devices, and more and more would be buying smartphones and other mobile gadgets with Internet access.

Too many cooks in the Iran nuclear kitchen

Last weekend, after years of failed negotiations, the “P5+1” nations — the five permanent members of the United Nations Security Council (the United States, Britain, France, Russia and China) plus Germany — finally appeared to be on the verge of a deal with Iran regarding curbs on its nuclear program.

All except France were ready to sign a stopgap agreement that would offer Iran limited sanctions relief in return for a freeze in its nuclear program. But Paris torpedoed the arrangement at the last moment — denigrating it as “a sucker’s deal.”

France’s torpedoing of the agreement appears less related to genuine nuclear proliferation concerns than with trying to curry favor with anti-Iranian countries — like Saudi Arabia and the United Arab Emirates – who commission and buy expensive French military, satellite and nuclear hardware.  The lesson in this latest failure is there ought to be a single point of contact with Iran endowed with executive authority over resolving the nuclear issue.

Yellen vs. the Fed critics

The confirmation hearing of Federal Reserve Chairwoman nominee Janet Yellen on Thursday will be an opportune moment for Fed critics to air their grievances.  There is plenty of fodder for disagreement and debate — ranging from the Fed’s supervisory track record, to the rules for tapering large-scale asset purchases, to the criteria for ending its zero-interest rate stance.

Yet, one sure criticism is sharply at odds with the facts: That the Fed’s crisis response was an insider affair, run by and for a handful of too-big-to-fail banks.

While the Fed’s actions in response to the 2008 financial crisis are certainly open to criticism, the creation and expansion of various credit and lending programs were aimed at calming the financial markets and maintaining the liquidity of specific financial instruments. It was not about befriending winners and giving the cold shoulder to losers.

Steven Cohen: The Gilded Age revisited

There he is in all his tarnished glory: Steven A. Cohen, arguably the most famous, and infamous, hedge fund manager in the United States. Maybe the world.

He lives in a 35,000-square foot Greenwich, Connecticut, mansion with an indoor skating rink, golf course and everything an exclusive school might offer. His New York City duplex in Bloomberg Tower is for sale at $115 million. He’s staying in a $23.4 million Greenwich Village maisonette, while his $38.8 million 8,250 square-foot house nearby is being renovated. Last summer he bought an East Hampton beach house for $60 million. He has another place there — 10 bedrooms and a spa — but it isn’t close enough to the water.

Cohen’s extensive art collection could fill a private museum. It includes Jeff Koons’ enormous yellow balloon dog sculpture and Pablo Picasso’s “Le Rêve.” Damien Hirst’s dead shark, preserved in formaldehyde, hangs from the ceiling in Cohen’s office. This may or may not be an intentional symbol of his methods of operation.

What we learned from the BlackBerry era

BlackBerry changed the world. It made wireless email a killer app that every salesperson and traveling executive absolutely needed to have to get their work done. It gave us devices with batteries that lasted a full week, connectivity that made email feel real-time even over very slow networks, and a user experience that everyone LOVED. And, for IT departments, BlackBerry established a standard of security that protected even the most sensitive information with comprehensive policy support from a central management console.

Great email and great security were the hallmarks of the BlackBerry solution and no one else in the first decade of this millennium even came close to matching them. The term “Crackberry” became so popular to describe the addictive nature of the service that it was selected as the 2006 Word-of-the-Year by Webster’s New World College Dictionary.

But the world changed.

Today, there is no shortage of pundits dissecting BlackBerry’s decline. My goal, however, is to step back and understand the broader implications of the BlackBerry story. Every CIO faces a tactical issue today of how and when to migrate from BlackBerry, but the strategy lessons and corresponding challenges are deeper and further reaching.

The election results no one’s talking about

Which is the most important result of Tuesday’s election?

A. A Republican governor won a landslide election in a blue state.

B. A Democrat was elected governor in a purple state during intense criticism of a new federal government program.

C. An outspoken liberal Democrat was elected mayor in a big city — where opposition parties had been in power for 20 years.

D. An education funding amendment lost in a mountain state.

If you said D, you’re correct.

On Tuesday, Amendment 66 was defeated in Colorado, with preliminary results suggesting a drubbing of two-to-one opposed. It would have improved education funding with slight tax increases and changed Colorado’s flat tax to a two-tiered, progressive structure.

Risky business: Talking to the Taliban

If one event crystallizes Pakistan’s helplessness in confronting its political future, it is the recent assassination-by-American-drone of Hakimullah Mehsud, erstwhile leader of the Pakistani Taliban.

Islamabad had only just acknowledged its plan to hold “peace talks” when Mehsud was killed. Mehsud — with a $5 million bounty on his head, and thousands of civilian deaths to his movement’s credit — was immediately eulogized as the key to peace in Pakistan.

Or so it had seemed to the wishful among Pakistan’s politicians. But the country’s labyrinthine military and political makeup and its often opposing foreign and domestic interests make it difficult to imagine how any Pakistani government can negotiate a deal that brings peace to a time of many terrors. If it is unclear what it means for Pakistan to negotiate its political compact with the Taliban, it is also unclear what it would take to make any deal stick.

What Democrats have going for them? Republicans

Democrats had one thing going for them in the election this week: Republicans. That kept President Barack Obama’s party from faring much worse.

Dissatisfaction with the economy is still very high. In the network exit polls, more than 80 percent of Virginia and New Jersey voters said they were worried about the nation’s economy over the next year.

The economy was the top issue in both states. New Jersey voters concerned about the economy voted 2 to 1 for Republican Governor Chris Christie — even though he was the incumbent. It isn’t his economy. It’s Obama’s economy. That’s the new rule in American politics: All politics is national.

from Nicholas Wapshott:

No, austerity did not work

There have been a lot of sighs of relief in Europe lately, where countries like Britain and Spain, long in recession, have finally started to grow. Not by much, nor for long. But such is the political imperative to suggest that all the misery of fiscally tight economic policies was worth the pain that there are tentative claims the worst is now over and, ipso facto, austerity worked.

Hold on a minute. Growth is good. Growth is what allows countries to pay down their national debt by increasing economic activity, putting the unemployed to work and making people prosperous enough to pay taxes. But gross domestic product growth alone is not enough to provide adequate sustained prosperity if it does not also lead to significant job growth.

Take Spain, which has just emerged from two years of recession by posting a third quarter growth rate of 0.1 percent. Technically the Spanish slump is over. But a glance at their job figures shows the country has a long way to go before it can genuinely say it has escaped the diminishing effects of austerity -- in the form of tight fiscal policies, public spending cuts and labor and entitlement reforms -- imposed indirectly by Germany through the European Union.

Will a minimum wage destroy German jobs?

Germany has once again become the world’s favorite whipping boy, roundly criticized over the past few days by the U.S. Treasury, a top International Monetary Fund official and the European Commission president, among others, for running record trade and current account surpluses that are supposedly detrimental to the European and global economy.

The arguments continue, with the Germans themselves saying that the surpluses are simply the happy result of the nation’s industrial competitiveness and don’t hurt anyone else. Lost in the debate, however, is what’s happening in Berlin right now. As Chancellor Angela Merkel seeks to form a new coalition government, she appears to be on the verge of throwing out some of the very policies that underpin the export boom of the past decade.

Most controversially, the new government to be formed is likely to introduce a minimum wage, a novelty for Germany, and a move that both symbolically and in reality would herald the end of the tough wage restraint that has characterized the past decade. A range of social policy changes, including a possible reduction in the retirement age, are also being discussed, as is higher government spending.

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