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Former CEO defends Google using Caribbean tax shelter

While Q3 smartphone sales numbers are slightly deceptive as the much-anticipated Apple, Inc. (AAPLiPhone 5 was yet to launch, it's hard to deny that Google Inc. (GOOG) brightly outpaced its rival in unit sales, with Google's Android taking 72 percent of the market, versus a mere 14 percent for Apple.  In a new interview, former Google CEO Eric Schmidt says that equated to 1.3 million Android smartphones activated a day, a key to Google outselling its rival 5-to-1.

I. Google v. Apple == Microsoft v. Apple Computer?

He compares his company's war against Apple to Microsoft Corp.'s (MSFT) successful campaign against Apple Computer back in the 1980s and 1990s.  He remarks to Bloomberg, "This is a huge platform change; this is of the scale of 20 years ago -- Microsoft versus Apple.  We’re winning that war pretty clearly now."

To Eric Schmidt, the sales triumph is vindication of Google's decision to give away Android to third party OEMs, versus Apple's policy of zealously possessive in-house efforts.  Comments Mr. Schmidt, "The core strategy is to make a bigger pie.  We will end up with a not perfectly controlled and not perfectly managed bigger pie by virtue of open systems."

Eric Schmidt
Former Google CEO Eric Schmidt claims Apple is repeating its own painful history.
[Image Source: The Sydney Morning Herald]

As for his company's and the general economy's outlook, he says he sees signs for optimism in the Chinese recovery.  But he warns that the so-called "fiscal cliff" -- a series of automatic tax increases and spending cuts -- could kill a similar emerging recovery in the U.S.

He warns, "It will be tragic for the country if the sum of the government can’t resolve this.  You can think of what’s going on as one set of special interests versus another, and a big fight and they all have to feel like they’ve been heard."

He sees Europe as another soft spot, saying that region will struggle to recover as southern nations like Spain, Italy, and Greece dangle on the edge of financial insolvency.

II. Schmidt on Gov't Regulation, Taxes

Mr. Schmidt defends his company's decision to shuffle $9.8B USD to a shell company in Bermuda to escape $2B USD in taxes from countries like the U.S., UK, France, and Australia.  

He comments, "We pay lots of taxes; we pay them in the legally prescribed ways.  I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.  It’s called capitalism.  We are proudly capitalistic. I’m not confused about this."

Gimme Shelter
Schmidt says nothing's wrong with Google using a tax shelter. [Image Source: Hook Worldwide]

On the topic of spectrum crunch, which AT&T, Inc. (T) and others have bemoaned, Mr. Schmidt says it is a real problem, but that smart antennas may be able to help.  He comments, "[True] all the modeling says the existing strategy will run out of cellular bandwidth in 2016 or 2017.  [But] today you get dedicated bandwidth on your phone, and your phone doesn’t say, ’Ah ha! I can go over here or over up here.’ Smart radios can do that."

Google+ was also plugged by the former chief executive, which calls a "viable competitor to Facebook", thanks to its 100 million active users.

Source: Bloomberg



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Buddy Jesus thumbs up!
By messele on 12/14/2012 1:33:23 AM , Rating: -1
Eric manages a vast user base with a spyware operating system that he has to give away for free which is then manipulated into products with no OS upgrade path.

Yeah man, nice work!




RE: Buddy Jesus thumbs up!
By retrospooty on 12/14/2012 8:39:19 AM , Rating: 3
And yet even free it manages to be far better than IOS.


RE: Buddy Jesus thumbs up!
By nafhan on 12/14/2012 10:32:46 AM , Rating: 1
So, you consider iOS and WP8 to both be "spyware OS's", right? They report similar data back to their respective corporate overlords.

With Android, you can kill most of the "spying" by not associating your device with a Google account and removing Google services. Not sure how hard that is to do with iOS or WP8.


RE: Buddy Jesus thumbs up!
By Fritzr on 12/16/2012 12:00:30 AM , Rating: 1
Unlike iOS where you pay a premium price for a device with a limited upgrade path or WPx where you pay a midrange price for a device with a limited upgrade path? Myself I will go with a cheap phone that does what I need. If that includes an upgrade path AND the software upgrade actually improves the phone, that's a bonus. There is a reason that "If it ain't broke don't fix it" is a cliche.

Buy the device for what it can do. Not for what the salesman promises you will be available when your 2 year contract expires and you are advised to get a new phone to take advantage of the fact that you pay the installment payments for the upgrade even if you decide not to get it. (T-Mobile's new plans being a rare exception)

...Actually iPhones have been running out of upgrades shortly after those contract expirations :P

iPhone #1 Released 06/29/07 : Last OS update 02/02/10 (iPhone)
iPhone #2 Released 07/11/08 : Last OS update 11/22/10 (iPhone 3G)
iPhone #3 Released 06/17/09 : This and later are supported by current OS.
iPhone #3 (3GS) upgrade is v5.x & 6.x with missing features
iPhone #4 (4) upgrade is v5.x & 6.x with missing features
iPhone #5 (4S) upgrade is V6.x with missing features
iPad & iPod Touch show a similar history with final upgrades missing many features. It is early days for Apple TV, but the Gen 1 version is iOS 4.x only. Gen 2 & Gen 3 are on iOS 5.x with 6.x in Beta.

Yes Apple has an excellent history of "long" term support.


"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer














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