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Chapter 7 Telecommunications, the Internet, and Wireless Technology 319

marketplace. Apple already offers approximately among the smartphone manufacturers that Google
700,000 applications for their devices, and Apple works with. And Google’s previous attempts to sell
takes a 30 percent cut of all app sales. Applications hardware have been unsuccessful: their Nexus One
greatly enrich the experience of using a mobile smartphone, released in 2010, was widely consid-
device, and without them, the predictions for the ered to be a failure despite impressive technical
future of mobile Internet would not be nearly as capabilities.
bright. Whoever creates the most appealing set of Google has been particularly aggressive with
devices and applications will derive a significant moves such as the acquisition of Motorola’s phone
competitive advantage over rival companies. Right business because it is concerned about Apple’s
now, that company is Apple. preference for “closed,” proprietary standards on its
But the development of smartphones and mobile phones. Apple retains the final say over whether
Internet is still in its infancy. Google has acted or not its users can access various services on the
swiftly to enter the battle for mobile supremacy Web, and that includes services provided by Google.
while they can still “win.” More and more people are Google doesn’t want Apple to be able to block it
likely to switch to mobile computing as their primary from providing its services on iPhones, or any other
method of using the Internet, so it’s no surprise that smartphone. Apple is reliant on sales of its devices to
Google is aggressively following the eyeballs. Google remain profitable. It has had no problems with this
is as strong as the size of its advertising network. so far, but Google only needs to spread its advertis-
With the impending shift towards mobile computing ing networks onto these devices to make a profit. In
looming, it’s not certain that they’ll be able to main- fact, some analysts speculate that Google envisions
tain their dominant position in search. That’s why a future where mobile phones cost a fraction of what
the dominant online search company began develop- they do today, or are even free, requiring only the
ing its Android operating system, which is used on advertising revenue generated by the devices to turn
almost 60 percent of smartphones worldwide. Google a profit. Apple would struggle to remain competi-
offers Android for free to manufacturers of handsets tive in this environment. Apple has kept the garden
that run the operating system. Via Android, Google closed for a simple reason: you need an Apple device
hopes to control its own destiny in an increasingly to play there.
mobile world. Apple’s $1.05 billion victory in a patent lawsuit
Because Google provides Android at no cost against Samsung on August 24, 2012, could be a blow
to smartphone manufacturers, competitors have to Google. Samsung smartphones and tablets were
sought to weigh it down with patent claims and found to have violated a series of Apple patents pro-
other lawsuits. That’s part of the reason why Google tecting a number of designs and functions, including
made its biggest acquisition yet in August 2011, buy- the pinch-to-zoom gesture in the user interface. The
ing Motorola Mobility Holdings for $12.5 billion. verdict discourages other handset companies from
The deal gives Google 17,000 patents and another making devices that use Google’s Android operating
7,000 more in the pipeline that will help the com- system, and Android may be forced to make design
pany defend Android from these patent lawsuits. changes.
But buying Motorola’s phone business does more In 2012, Apple announced a mapping applica-
than just give Google patents. It also gives Google tion to rival Google Maps. Approximately half of
the ability to make its own cell phones and tablet Google Maps traffic comes from Apple devices, and
devices, which would be its most aggressive move that traffic generates valuable location data that
against Apple yet. helps to improve the service, holding great value for
Analysts were skeptical regarding whether or not marketers and advertisers. Apple has made several
Google would even try to enter this marketplace, smaller acquisitions in the past two years that have
let alone whether it could succeed in doing so. prepared it to compete with Google in this field, and
But in June 2012, Google released its Nexus 7 tab- Apple now has its sights set on the valuable loca-
let, developed by Asus, to rave reviews. The sleek tion data generated by Google Maps. Apple does
7-inch tablet is priced between $199 and $249, and not want Google gathering useful data about Apple
effectively competes with the iPad and Kindle Fire. users on their own devices.
Google is entering completely new territory. It has Microsoft hasn’t given up trying to establish a cloud
never sold devices before, the profit margins will and mobile presence. Its Office 2013 productivity suite
be much tighter than they are for their search busi- operates in the cloud as well as on the desktop, giving
ness, and it places Motorola in an awkward position users the option of saving documents to Microsoft’s

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