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Schmidt also expresses frustration with patent wars; disdain for Windows Phone

When it comes to Eric Schmidt, former Google Inc. (GOOG) CEO and his company's arch-nemesis Apple, Inc. (AAPL), the ties that bind are almost as strong as the ties that separate.

I. Victims of Smartphone War are the Little Guys, Says Schmidt

During much of Mr. Schmidt's time atop the Google throne; he also served on Apple's board of directors.  The two companies had a fruitful relationship and Mr. Schmidt was close friends with late Apple CEO Steven P. Jobs.  That relationship fast deteriorated when Google decided to launch Android, a Linux based smartphone platform that would eventually come to heavily outsell Apple in the smartphone market in unit sales.  Mr. Jobs expressed a feeling of "betrayal" at the decision, which not only spoke to his zealous feelings of ownership of the smartphone market, but also his strange relationship with Google and Mr. Schmidt.

In an interview with the Wall Street Journal Mr. Schmidt speaks optimistically that the pair can work out their differences with respect to patent litigation, commenting:

[Google's relationship with Apple has] always been on and off.  Obviously, we would have preferred them to use our maps. They threw YouTube off the home screen [of iPhones and iPads]. I'm not quite sure why they did that.

[But] the adult way to run a business is to run it more like a country. They have disputes, yet they've actually been able to have huge trade with each other. They're not sending bombs at each other.

I think both Tim [Cook, Apple's CEO] and Larry [Page, Google's CEO], the sort of successors to Steve [Jobs] and me if you will, have an understanding of this state model. When they and their teams meet, they have just a long list of things to talk about.

Eric Schmidt
Former Google CEO Eric Schmidt is not concerned Android will be hurt by the patent wars.
[Image Source: The Sydney Morning Herald]

Mr. Schmidt says that both Apple and Google are "doing fine" and that neither side has been able to gain ground in the patent war, much like the entrenched empires of the First World War.  He says that the real "loser" in the patent wars are small startups, which might look to create an innovative news smartphone operating system as Android VP Andy Rubin did when his startup made what would later become Android back in the middle of the last decade.  With all the lawsuits and junk patents, Mr. Schmidt argues such "garage" innovation is simply impossible in today's legal climate.

II. Former CEO Addresses Criticism, Says Microsoft is no Threat

The Google executive admits that his company long lagged Apple in terms of financially compensating developers.  He remarks, "Google Play [Google's app store] and the monetization just started working well in the last year, maybe the last six months. The volume is indisputable, and with the volume comes the opportunity and the luxury of time."

As for the perennial question of whether Google will or should favor new acquisition Motorola Mobility over its third-party Android partners, Mr. Schmidt says that would be a "terrible mistake".  He says that when the deal was announced he personally flew to meet with executives at South Korea's Samsung Electronics Comp., Ltd. (KSC:005930) -- the world's largest smartphone maker and foremost Android adopter -- to assure them that there would be no favoritism.

As for Microsoft Corp.'s (MSFTWindows Phone; Mr. Schmidt was dismissive of the operating system.  He blasts, "I have not used it, but I think that Microsoft has not emerged as a trendsetter in this new model yet."

Eric Schmidt argues Microsoft's Windows Phone is no "trend setter".

Mr. Schmidt expressed hopes that current antitrust investigations into Google's involvement in various markets would wrap up.  He says he has no interest working for the Obama administration in a government post, saying Google has always been his "home".

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Interesting, very interesting
By Shadowself on 12/5/2012 1:15:59 PM , Rating: 5
First, Jobs' view of Google, and Eric in particular, soured after the advent of the iPhone. Google's initial concept of a "Google phone" and the OS on that phone were very much like RIM's devices of 2005/2006 era -- LONG in advance of the iPhone's release. Then Eric, as part of Apple's board, saw the iPhone prototypes. (Yes, after the initial phases Eric was firewalled from certain iOS device developments, but that was after he saw several early prototypes of several devices.) Within a short period thereafter Google's phone prototypes looked and operated much more like the iPhone concepts Eric was shown. This timeline is just fact. Jobs felt Eric "stole" those implementation aspects and thus his comments about the implementation of any Google software based phone as "stolen". Whether Google "stole" patentable aspects of the iPhone or not is now up to the courts. (I've already voiced my views that many of those aspects should not really be patentable in the first place, so I won't go into that.)

[Google's relationship with Apple has] always been on and off. Obviously, we would have preferred them to use our maps. They threw YouTube off the home screen [of iPhones and iPads]. I'm not quite sure why they did that.
This is interesting for two things: 1) Eric does not get into the simple fact that Google had turn by turn and voice navigation but either a) would not license it to Apple or b) demanded a ridiculous fee (depending upon who you talk two in those two camps). Thus to be competitive with Google's maps Apple was all but forced to do its own maps. 2) Eric very quickly skips to "they dropped YouTube too". A classic bit of quick misdirection. "Stop asking me about this. Go look at that!"

Finally, Eric is just sticking his head in the sand (or elsewhere) if he thinks Microsoft's phone offerings are no threat at all. Microsoft is shifting (slowly, as Microsoft almost always does) its phone platform. The new interface has some novel aspects that competitors should not ignore. Only time (and the market) will tell if Microsoft's platform will grow into a significant market share. There is definitely room for more than just two platforms. To think otherwise is just plain stupid.

RE: Interesting, very interesting
By invidious on 12/5/2012 1:35:50 PM , Rating: 3
Copying trade secrets that aren't well protected is not a crime and is not wrong. When Apple allowed the Google CEO to sit on their board they gave away their secrets. Obviously they didn't expect Google to get into the phone market, but legally that is irrelivant.

Copying is not a bad thing, it is a cornerstone of capitalism. It is essential to innovation to allow companies to copy and improve upon each other's work. Copyrights and patents need to be respected, and both Apple and Google have not been good about that.

RE: Interesting, very interesting
By Tony Swash on 12/5/12, Rating: -1
RE: Interesting, very interesting
By Rukkian on 12/5/2012 3:43:51 PM , Rating: 2
I would love to see the proof you have to show that
the Android strategy has been a total failure from the point of view of Google's business, it's still a massive cost centre
. I am not talking about them making more money off apple (as we have all heard from you numerous times), I want to see where you can show that they have lost money on android.

I am not saying you are incorrect, just would like to see your proof, as it does not seem correct from everything I have seen.

By Cheesew1z69 on 12/5/2012 3:53:25 PM , Rating: 5
He doesn't have proof, it's all in his head.

RE: Interesting, very interesting
By Boze on 12/5/2012 4:08:45 PM , Rating: 2
Unethical... but sadly not illegal.

By sprockkets on 12/5/2012 4:45:31 PM , Rating: 1
It IS illegal. The very fact that apple hasn't sued Google over it is proof enough. Heck, he even recused himself when details of the iphone were being discussed at meetings.

Why do you think he had to leave the board of apple? Hint: Cause if he didn't he'd be in trouble with the law, even if apple didn't care.

By BifurcatedBoat on 12/5/2012 5:17:49 PM , Rating: 5
If we are to get into the ethics of copying, then Apple wouldn't have a leg to stand on.

Starting with the company name, which Apple lifted from well... Apple. (It's confusing to talk about, since what's now Apple Corps was just Apple back then, while today's Apple was Apple Computer.)

So then Apple and MS both lifted their OS design from Xerox. They got away with it legally, but I guess we're supposedly talking about ethics.

Apple took most of their ideas from others as they were growing in a company, and in Steve's own words, his company was shameless about it.

Even the iPhone design itself, as revealed in the Apple/Samsung trial was Apple's attempt to copy what they thought Sony was making, but without the benefit of a picture to use as a basis point.

So a company is going to talk about the evils of copying, it should be a company that doesn't do it themselves, wouldn't you think? Although, that might be hard to find, since almost all innovations are based on something that came before, and sometimes the improvements are pretty minor.

RE: Interesting, very interesting
By bug77 on 12/5/2012 5:53:13 PM , Rating: 3
...the Android strategy has been a total failure...

Total failure? Having millions of additional devices to show ads on must be a real death-blow to Google's core business.

By CubicleDilbert on 12/13/2012 1:33:18 PM , Rating: 2
Copying trade secrets has always been one od the driving forces of human nature and business. I agree with you.
In the 1850s England was by far the most technologically advanced nation in the world. They kept everything for themselves, sanctioned every bit of information transfer.

So continental Europeans started to work in England to find out their secrets such as production processes, materials, patents and so on.

While England did continue their slow way, Europeans exploited everything in continental markets and quickly surpassed England. Then and only then England began to market their machines and equipment to other nations. But it was already too late. Machines are Made in Germany. Qulity is Made in Germany. That was the fact 50 years later.
One key advantage was that continental Europe didn't care much about patents and scientific ownership. In England it was mostly reserved for the aristocratic upper class. In France, Germany and Italy those trade and science secrets were wide spread immediately among all workers, business men etc.
Competition at its best.

And where is England now and where is Germany?

Apple had a few ideas but after some time their development stalled. Others take over and based on old ideas they improve stuff. That's competitive evolution.

If Apple doesn't change, they go the way of The Wright Brothers. The brothers invented the airplane, got a US patent and kept it all to themselves. In Europe it was replicated and dramatically improved. Wright brothers made history, but others made the business.

By othercents on 12/5/2012 3:03:54 PM , Rating: 1
This is somewhat a chicken and egg thing going on since based on the 2006 prototype drawing we don't see the UI only a mockup of one possible device. The speculation was that it would be similar to RIM, but one of the complaints of RIM was that it wasn't touchscreen vs the Windows Mobile Phone. So RIM like with a touchscreen would be the optimal description. Was Apple making a platform that would work with many device designs?

Now, how much could have Eric given to his designers that wasn't already common knowledge? Remember Sony already had the Nishibori Design in 2006 and there were other designs from Nokia including the N95 unveiled in 2006. Eric didn't join the board until August 2006 and Google might have prototypes that predate that time of a similar design. Even then does Apple own all rectangle with round edge smartphone designs? Other than physical design are all the other aspects of iPhone that similar because Eric saw a prototype or just smart development? IE. Bounce graphic?

Did Eric actually attend those meetings where iPhone design and prototype was being discussed? Per Steve Jobs, Eric was excusing himself when there was a conflict of interest.

Based on statements from Eric they new beforehand that there would be conflicts:

There are also probably documented cases where prior to introducing anything iPhone related to the board Eric excused himself, but we don't have this information. All we know is that Eric has not been personally sued for stealing aspects of the iPhone design and would be if there was a direct case. If he did steal designs then wouldn't multitouch be the one aspect he would steal? This design didn't come until the 2.0 version of Android and would definitely be one stolen portion of iOS that came after iPhone was released.

The rest?? I don't know, but there isn't enough evidence.


RE: Interesting, very interesting
By nikon133 on 12/5/2012 4:07:46 PM , Rating: 4
I think ES is acting from the PR angle, not realistic market analysis angle.

Based on that, of course he will "miss" to mention things like voice navigation on iOS, and will try to dismiss any emerging competition. He'd gladly dismiss iOS platform as well, but iOS success is more than good enough to put such claim beyond redemption.

But I agree with you completely - dismissing MS for anything is really short-sighted. I'm not saying that WP8 will succeed, but I'm saying that WP8 has potential to, and MS has resources to make it happen. Not to mention user base that can be offered integration benefits hard to ignore.

I'm looking at buying WP8 device after new iPhone (but much more iOS) failed to excite me, and I am really looking forward to get rid of iTunes.

RE: Interesting, very interesting
By aharris02 on 12/6/2012 12:27:30 PM , Rating: 2
Wait, a coherent, logical comment on DailyTech? What is going on around here?

Good observations and well-said. That's refreshing.

Also, no mention today of the news that Apple is bringing some computing manufacturing back to the US? I know you're probably busy still trying to figure out how to spin it to make Apple look bad, but get to it already!

RE: Interesting, very interesting
By aharris02 on 12/6/2012 12:38:04 PM , Rating: 2
And it seems as I typed this, you posted it. Woo!

I have not used it....
By GPig on 12/5/2012 1:41:03 PM , Rating: 2
That is the sign of one arrogant executive. If you work in technology you should make it your business to know the competition. Microsoft may not be a dominant player now but they certainly were... and they're looking like they're starting to do well with WP8 (by the way Lumia 920's are selling).

If Android were the small player today in a world dominated by Apple and Microsoft, do you think it would stand a chance? I think the answer to that is a resounding no. They got lucky with timing.

RE: I have not used it....
By Master Kenobi on 12/5/2012 4:51:39 PM , Rating: 2
It's also starting to backfire with the large ununified ecosystem for Android. They really need to reign in the Android market and get some level of unification, as it stands the versions are forking all over the place.

RE: I have not used it....
By amanojaku on 12/5/2012 5:04:55 PM , Rating: 3
Here's what I don't get about the Android forking argument. MS is capable of making all versions of Windows work on nearly everyone's hardware. Actually, everyone is capable of making their hardware work for all versions of Windows. Why can't Google do the same for Android?

For that matter, why can't Apple do the same for iOS, and why can't MS do the same for Windows Phone? What's so special about a smartphone OS that differs from a desktop or server OS?

RE: I have not used it....
By Master Kenobi on 12/5/2012 5:59:06 PM , Rating: 2
In reality, nothing. However, we do need to look at the market forces of the times.

For Microsoft to win the original PC race they had to make their software run on pretty much anything, allowing anyone to roll their own or buy a PC from any of 50 different vendors. For years the PC market was largely seen as a hobby and people were working hard to outdo each other. The major players all liked to tinker and tweak, and components were very much do it yourself for anything other than the core processing piece. As the PC market evolved Microsoft was wise not to tie their software to specific hardware as the hardware and software markets advance along completely different paths, trying to keep them in lock step is impossible. All they needed to do was make sure Windows could run on almost anything, and provide an ecosystem they controlled that allowed for anyone to develop on without major overhead costs. They did an excellent job at doing just that, the dominance of Windows to this day is a direct result of that.

Now let's look at phones. Phones from the early days have always been considered disposable. You buy the phone, it is relatively inexpensive, and when it no longer works, or you want new features, you throw the old one out and buy a new one. Cell phones are an evolution of pagers, which also had no upgrade ability short of the occasional firmware flash for defects. They were throw away devices that could simply be replaced every few years as new models were developed. Back then they were more specialized from a hardware and software standpoint so it made some measure of sense. Eventually cell phones peaked and the features tapered off, until PDA's were thrown into the mix, causing the introduction of the "smartphone". The problem is that PDA's, while custom, were based on the idea of being a handheld computer, not a pager. The hardware was more general and the software merely an OS rather than a complete product, as third party vendors could develop software that could be used as well.

The modern smartphone market, and to a lesser extent regular cell phones still operate as if there were merely proprietary hardware specific pager style devices. The difference now is that smart phones are literally just a handheld computer, running in most cases the exact same hardware you can find in a laptop or desktop, just scaled down. Google has capitalized on that with Android, being the Windows of the mobile market. An OS that can run on pretty much any mobile hardware, and serve as a standard platform for applications to be developed on. The difference is that Google isn't maintaining tight control over the OS, and allowing Android to upgrade itself on its own. They instead rely on the phone manufacturers, which still see them as throw away pagers, to test, certify, and distribute new revisions of Android for their devices. Where as Microsoft would allow windows to run an installation on anything with basic computer components, Google has so far not done the same with Android, effectively allowing carriers and manufacturers to dictate. This leads pretty much every phone in a "orphaned" state since new models are released every 6 months and the old ones are simply forgotten.

Amazon is making strides with the Kindle line in this respect, but they are using a custom fork of Android to do it with. Google really needs to assert some muscle in the market and get the carriers to stop screwing around. Microsoft isn't popular enough, Apple can't supply enough, so Google easily fills in the largest chunk of the market. Carriers may fight them on it, but Google could strong arm them into allowing users to upgrade their phones.

RE: I have not used it....
By publicspace on 12/5/2012 8:02:24 PM , Rating: 2
I don't see google doing that:

planned obselesence (that lightbulb documentary?) - cell phone manufacturers don't make income off their software, they make it off their hardware.

Cyanogenmod is what you're referring to, but it will be several more years before it is as easy as Ubuntu to install.

The fact that Android is open source means that it will continue to fork, which is good imo, because eventually you will have a group making something that is superior, and free, than the bloatware that manufacturers and carriers add to their phones. Eventually new business models based on actual service instead of BS will reign superior, might be a few decades from now though.

RE: I have not used it....
By Master Kenobi on 12/6/2012 10:22:13 AM , Rating: 2
The downside is that forking also delays any chance to consolidate the android market. The longer it continues, the longer an opportunity exists for another player to swoop in and fill the gap.

Please stop trying to turn DT into a tech tabloid
By invidious on 12/5/2012 1:18:50 PM , Rating: 2
Schmidt didn't dismiss WP8 or say anything negative about it. He stated the fact that it is not a major player to be concerned with yet, which is accurate. Which is not a put down or a prediction that they will not become a major player in the future.

By TakinYourPoints on 12/5/2012 2:09:03 PM , Rating: 5
"Stop"? DT is a tech tabloid. Anything written straight up is ignored, anything with sensational headlines is met with lots of comments and in-fighting. This place wouldn't really get ad hits otherwise, its the same deal as Semiaccurate, HOCP, most tech sites really. Anandtech and Ars are two of the few exceptions that can get away with lots of readers while giving good in-depth coverage and balanced editorials.

By Ramstark on 12/5/2012 8:16:13 PM , Rating: 3
"I have not used it, but I think that Microsoft has not emerged as a trendsetter in this new model yet."

Actually, that is saying something dissmisive AND biased. WinPhone 8 may not have a HUGE market share now, but it started a trend about GUI improvement and optimization over the burnt "I HAVE A SUPER STRONG SMARTPHONE WITH 8 CORES" expensive and futile previous trend...

Microsoft is a serious threat
By epollyon on 12/6/2012 3:08:21 AM , Rating: 1
Eric is talking shit. Microsoft is doing it right and will, god-willing, squeeze android out of the market. Whats the problem with android? its java. Java sucks, especially on mobile. Also, Google needs tighter controls on hardware and version control. I sense there is an android overhaul coming...

RE: Microsoft is a serious threat
By jnemesh on 12/6/2012 11:41:29 AM , Rating: 2
Last I checked Android has 75% of the global smartphone market and MS has 3.5%. You are SERIOUSLY deluded if you think MS is squeezing ANYONE out of ANYTHING here!

Windows Fone
By Argon18 on 12/5/12, Rating: -1
RE: Windows Fone
By Pirks on 12/5/2012 1:06:59 PM , Rating: 3
Your moronic trolling does not change the fact that WP8 bests Android in UI quality/speed and bests iOS in hardware selection. The only thing that's missing is a few useless apps like Instagram. Which is compensated by better integration with MS WinServer/Exchange/Office shops which is the vast majority of current enterprises. Keep posting your BS, I love your desperation, you remind me of Tony ;)

RE: Windows Fone
By Labotomizer on 12/5/2012 1:08:08 PM , Rating: 2
I think he spelled it wrong. It's supposed to be "M$ Windoze Fone" because, well, that's both clever AND original.

RE: Windows Fone
By Argon18 on 12/5/12, Rating: -1
RE: Windows Fone
By Tony Swash on 12/5/12, Rating: -1
RE: Windows Fone
By elleehswon on 12/5/2012 8:12:32 PM , Rating: 1
don't forget how awesome wp8 is at unexpected, random reboots.

RE: Windows Fone
By Breakfast Susej on 12/5/12, Rating: -1
RE: Windows Fone
By Argon18 on 12/5/12, Rating: -1
RE: Windows Fone
By nikon133 on 12/5/2012 4:20:50 PM , Rating: 1
Of course, simple fact that Windows 8 is selling better than Windows 7 in the same timeframe since their respective releases doesn't mean anything.

Much as I recall, dorky guy was always much more popular that uptight fake-cool arrogant Mac prick. But you do sound like you would rather look after that guy.

At the end, I think your parents should limit your computer time; you obviously have too much of it, for your age, and you are not using it good at all.

RE: Windows Fone
By Stephen! on 12/5/2012 5:38:16 PM , Rating: 2
Windows Fone, Kin, Zone, Surface RT, Windows Eight, it's one failure after another out of Redmond

True to some extent, with Kin and Zune, although it still remains to be seen how Windows Phone, Surface and Windows Eight will fare.

RE: Windows Fone
By Ramstark on 12/5/2012 8:13:26 PM , Rating: 1
Oh! Look at you! Following every Microsoft Post on DT to troll it...
You know what? No one cares or reads your posts anymore...
Goodbye, have a nice day!

RE: Windows Fone
By elleehswon on 12/5/2012 8:16:42 PM , Rating: 3
remember when Microsoft responded to the commercials with 95% of the PC market share?

RE: Windows Fone
By jnemesh on 12/6/2012 11:45:55 AM , Rating: 1
Agreed, Microsoft is apparently making every effort to drive users away from their dominant platform! Windows Phone is an embarrassment...I have no idea how they got this thing even released! And to have their #1 partner, Nokia, claim the Lumia 900 is "the first phone out of beta testing", only to have it become INSTANTLY obsolete has to hurt too!

I remember a conversation I had with a Microsoft employee recently at a bus stop. I asked her if she used Windows Phone. She said, no, she uses an iPhone, and will be issued a Windows Phone 8 device, but she will only use it as a 2nd device. If even MS employees being FORCED to use WP8 refuse to use it as a primary device, what hope do they think they have of convincing others to use it?

Microsoft is doomed if they keep pushing "it's not Metro" on everyone. I, for one, refuse to buy ANY Microsoft product from here on out!

RE: Windows Fone
By InsGadget on 12/7/2012 4:29:02 PM , Rating: 2
I, for one, refuse to buy ANY Microsoft product from here on out!


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