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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!

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook

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