My Thoughts on Roger McNamee’s View of Google and Mobile Computing

A few readers have asked me to address Roger McNamara’s comments on CNBC, not to mention the drop in Google’s share price after earnings. I will split the response into several posts since it is the weekend.

Well, to begin with, I agree with his bullishness on tech and his premise that although it may not increase as a % of GDP in the near term, mobile computing has a lot of growth to run with. As for Google, it has expanded far beyond search and owns the most prominent and fastest growing mobile OS in the world, as well as controlling advertising on said platforms as well as the main video site. It is well positioned. As for the comment about nobody makes money from Android, well those entities that make money from Android disagree. I have outlined this in the first quarter, reference Apple Gears Up To Combat The Margin Compression That Apparently Only It, Google & Reggie Middleton Sees Coming Monday, February 14th, 2011

Android through nearly all price points, geographic markets and carrier platforms – therefore Apple has no choice. Apple has always thrived as a niche company, and entering a space that is being rapidly commoditized by Android is dangerous and at the very least guarantees margin compression. It is not as if money can’t be made in the space, but it is much easier to make money in the commoditized space when you don’t have to pay for the OS development, you know like the Android adopters. Witness the success of my historically favorite (at least for now) handset maker, HTC after they invested full on into Android and benefited from the commoditization of the high end smartphone…

The Android drives revenue/profit scenario is not endemic to just HTC. Notice Samsung, LG, Motorola, etc. – all have made a bundle on Android. Reference the carriers who sell more Android devices than anything else, and get kickbacks from revenue shares. I simply disagree with Mr. McNamara’s observations, as do these charts above.

In regards to Apple’s tablets taking over computing, that cannot happen with products that we have now. Apple’s tablets (and its most prominent competitors) are superb for content consumption (as long as said content is not Flash based), but it is poor in content creation relative to existing technology. This quite apparent when comparing them to full blown computers. I have always said that Microsoft is the biggest threat to Google’s ascendence in mobile computing because it has the cloud infrastructure, the mobile OS and hardware, and the hold on the desktop and enterprise (although the desktop is mature and waning). Think about it, if you can get the full functionality of your Windows desktop in a 10 inch, 2 lbs, touch friendly tablet in the very near future, why bother with stripped variants. Microsoft’s biggest impedance is itself. Over the last 10 years, management’s execution has been absolutely horrendous.

I challenge all to take their Apple iPads to their local big box retailers and compare it side by side with the Asus Windows Tablet 7.

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