Friday, July 27, 2012

Samsung extends lead over Apple in Q2 phone shipments


Samsung bested Apple in phone shipments in the second quarter. But that may change when the next iPhone arrives later this year.

Samsung has widened its lead over Apple in mobile phone shipments in the second quarter, said IDC.
The global mobile phone market grew only 1 percent year over year in the second quarter of 2012, IDC said Thursday. Samsung and Apple shipped almost half of the world's smartphones.
Samsung and Apple have more than doubled their combined market share over the past two years, IDC said.
"Samsung employs a 'shotgun' strategy wherein many models are created that cover a wide range of market segments. Apple, in contrast, offers a small number of high-profile models," said Kevin Restivo, an IDC analyst, explaining how different their strategies are.
Samsung's strategy, at the moment, is winning, said IDC.
In addition to the launching its flagship Galaxy S III, Samsung saw success with its smartphone/tablet hybrid device, the Galaxy Note, IDC said.
(Credit: IDC)
This allowed Samsung to top the 50 million unit mark and reached a new quarterly smartphone shipment record in a single quarter.
But the new iPhone is coming. "What remains to be seen is how the company's smartphones will fare against Apple's next-generation iPhone expected later this year," IDC said.
Apple, on the other hand, posted "an expected sequential decline last quarter, similar to years past," according to IDC.
"The quarter-over-quarter shipment decline came six months after it unveiled its latest iPhone. The decline is not unusual as iPhone shipment volume is highest in the first two quarters after its release."
Nokia, HTC, and ZTE were ranked 3,4, and 5 respectively.

Is Google headed toward an Android Nexus PC?

In this edition of Ask Maggie, CNET's Marguerite Reardon discusses whether Google will use the Android mobile OS or browser-based Chrome OS to take on Apple and Microsoft in computing, and she explains why it's still important to check the coverage of your wireless provider before you sign up for a contract.



Google's Android operating system for mobile devices has gained significant traction in the market. Will Google follow this success up by pushing the OS into more sophisticated computing devices? Or will it use its browser based-OS Chrome to take on Apple and Microsoft in the PC software market?
These are the questions I tackle in this edition of Ask Maggie. I also offer some perspective on why it's still important to choose a wireless based on network performance and reliability.
Googles big strategic decision: Android or Chrome
Dear Maggie,
I was at Google I/O this year, and I saw a lot of developers using Macs. As a hardcore Google/Android fan, this bothered me. I was wondering if you think Google is going to move into the PC operating system market with its own suave version of Android OS and take on Microsoft Windows and Apple Mac OS that way? If an Android PC comes out, I'll be the first to buy it. So is there any chance of a Nexus PC coming in the near future? Please tell me there is!
Yours truly,
G-man
Dear G-man,
This is a great question. The short answer is that I wouldn't hold my breath for a Nexus PC.
To dig deeper into this topic, I went straight to the experts. I sent your question via e-mail to CNET's OS-guru Stephen Shankland. And I asked Seth Rosenblatt CNET Reviews' expert on all things software to help me answer your question.
Sundar Pichai, Google's senior vice president in charge of Chrome and Apps, speaking at Google I/O.
Sundar Pichai, Google's senior vice president in charge of Chrome and Apps, speaking at Google I/O.
(Credit: Stephen Shankland/CNET)
The three of us attended Google I/O this year as well. And we were having a conversation during I/O about this very issue. How long will Google continue to develop the Android mobile OS and the Chrome OS separately? Will the two ever collide? Will one software OS eventually fade away?
Here's what Stephen had to say:

Facebook: 1 billion 'things' shared via Open Graph daily


It won't be long now before Facebook co-founder and CEO Mark Zuckerberg says 10 billion "things" are shared on Facebook every day.

Facebook's "like" sign
(Credit: Facebook)
There was one big thing that was missed in all the hype surrounding Facebook's earnings report today: Open Graph. Announced at f8 2011, the new class of social apps is responsible for all the "frictionless sharing" you've been seeing on the social network lately. During the investors call today, Facebook co-founder and CEO Zuckerberg unveiled that every day, almost 1 billion pieces of content are shared on Facebook via Open Graph.
I would estimate this is coming from some 5,000 Open Graph apps (back in March, Facebook had 3,000). Because Open Graph essentially means automatic sharing on your Timeline, as well as your Facebook friends' Ticker and News Feed, many apps have seen explosive growth

Windows 8 fear and uncertainty kicks in

Is Windows 8 really the makings of a fiasco? True or not, get ready to hear this more and more as the Windows 8 general release approaches.



Surface: one salient symbol of Microsoft's future. Is the company courting disaster?
Surface: one salient symbol of Microsoft's future. Is the company courting disaster?
(Credit: Microsoft)
Windows 8 FUD is starting to hit the fan.
That would be fear, uncertainty, and doubt. As in, "I think that Windows 8 is kind of a catastrophe for everybody in the PC space."
That was said yesterday by Gabe Newell, a former Microsoft employee and managing director of Valve Software, which makes games such as Half-Life and created the Steam gaming platform for Windows and Apple's OS X.
Newell's company is now moving Steam to Linux. Thus the comment, "we're trying to make sure that Linux thrives" from Newell (in the same story linked above) before his Windows 8 critique.
You could almost mistake all of the fuss for the fall presidential election, not the general release of Windows 8. "Windows 8 is treason! Linux will win the future!" (or substitute Android or OS X for Linux).
That said, Microsoft is in a hard place.
One, PC makers are no doubt reconsidering -- either casually or seriously -- their commitment to Windows because of the Microsoft-branded Surface tablet due to arrive around the same time as Windows 8 (more on that below).
Two, there is a growing chorus of critics that despise the Metro interface. (I'm not one of them.)
Three, Metro and the Windows Store -- that is, the way users will install apps -- could make Windows less open, as IDC analyst Jay Chou pointed out to me today.
And Microsoft didn't help matters when it stated in its annual report filed today with Securities and Exchange Commission that "our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."
No way around it, that's a prickly statement when it's coming directly from Microsoft.
So, will the FUD stick? It will probably get worse as we get closer to the general release. When Microsoft takes a hard turn to a new operating system, pundits pounce and users revolt (just read some of the comments attached to the Building Windows 8 blogs).
What makes it different this time is the Surface factor and Microsoft's need, apparently, to adopt Apple's and Google's strategies, as Venkatesh Rao writes in a Forbes blog.
Google "is winning using Microsoft's original winning...strategy" (by using an open OS layer of the stack, commodity hardware), he writes. "Google is out-Microsofting Microsoft."

Samsung to reinstate the Galaxy S3's search function


Samsung's Galaxy S3.
(Credit: Samsung)
Never fear, a fix is supposedly near. Samsung confirmed today that the recent "stability update"on the Galaxy S3 that rendered the on-device search function useless was going to be repaired immediately, according to the BBC.
"The most recent software upgrade for the Galaxy S3 in the UK included the inadvertent removal of the universal search function," the company said in a statement, according to the BBC. "Samsung will provide the correct software upgrade within the next few days."
Reports of the bunk update surfaced earlier this month when S3 owners found out that they couldn't use the local search function for the Web, contacts, apps, and other information. They were given no warning that this would happen when they downloaded the software, according to the BBC. The "stability update" reportedly only affected international versions of the phone.

Presenting Rafe Needleman's Outie Awards

As Editor at Large Rafe Needleman prepares to leave CNET for the startup world, he indulges in a little navel-gazing over the stories that meant the most to him.







It has been a fantastic run, but it's time for me to try something new, so I'm leaving CNET. This is my last post for this great company, at least in my current role as Editor at Large.
Instead of boring everyone with the usual departure platitudes or a history of illustrious achievements, I thought I'd give out a few awards to companies, products, and ideas that I covered for CNET, ideas that have stayed with me long after I wrote about them. So here they are: The Rafe Needleman I'm Outta Here Awards. The Outies. There are 10, of course.
If you're wondering where to find me next: Evernote. I'm going to be a developer advocate for this great company, which, if you've followed my work over the years, you know I really believe in. I'll also be writing -- with editorial independence, they tell me -- about new tech concepts that I see, best ideas for entrepreneurs (from my new vantage point), and productivity. Read more on the Evernote blog. You can e-mail me at rafe@evernote.com, and follow me on Twitter, orFacebook, or Google+.
And now, for the first -- and hopefully last -- time ever...
1. Best customer experience: Apple
I am not a fanboy. I am not a fanboy. I am not a fanboy. Maybe if I say it enough you'll eventually believe it. But even when the Apple products I buy fail me completely (which is often), I still love the company, because its customer service and repair experience is so painless. That's right: Apple hardware is horribly unreliable. And I keep buying it. Good job, Apple. I hate myself.
2. Best online retailer: Everyone's refurb and outlet store
Unless you like paying for packaging, you don't have to pay full price for many tech hardware items: laptops, TVs, DVRs, you name it. Buy refurbished units. Usually they're just as good as brand-new items, look just as shiny, and come with the same warranty. They might be half a spec out of date. It's worth it.
3. Worst pervasive technology: 3D TV
These are my awards, so I get to throw darts as I want, and 3D is one bubble I'd like to pop. Yes, it's amazing. For most of you. But for some of us, all 3D TV and movies do is give us headaches.
On the plus side, the non-3D showings of 3D movies are hardly ever crowded.
4. Best new idea for e-mail: Self-deleting messages
Unread e-mails are barnacles. They stick around in your in-box, just clogging things up, taking up space, and possibly slowing things down. And many e-mails, especially commercial messages from companies you do business with, are pointless after a short period of time. So why do they stick around? They don't have to.
5. The simplicity award: Trello
Simple wins. Sure, there are apps and services and gadgets that do everything. But we are all busy. We are overloaded with multiple ways to do things, options to consider, and other cognitive noise. That's why the most successful products these days strip down the cruft and focus on the elemental experience. I can think of many examples: Sparrow (recently acquired by Google); PathInstagramGroupiter (my review). But one Web app -- still relatively unknown -- sticks with me as having a brilliantly simple and fluid interface for what is usually a cluttered and unpleasant thing to deal with: Task management. The app is Trello. I recommend it.
6. Most anticipated product (by me): Space Monkey
Sometimes, bizarrely, complicated solutions to simple problems do have a certain elegance. Especially when this complexity leads to increased robustness. Want an example? Evolution.
My favorite example of a complex solution to a simple problem is Space Monkey, an upcoming product that will offer cloud storage with more speed than Dropbox, dramatically better prices, and potentially more data safety -- or so the founders say. How? By creating a mesh of storage access points, with some of the points being hardware that resides on customers' local networks. Intellectually, I love the idea behind this product. I am eager to see if it really delivers.
See also another wacky storage play: Bitcasa
7. Best thing the government has done for startups: The JOBS Act
For the most part, the U.S. government has kept its hands off the Internet and out of technology. The bigger the tech economy gets, though, the more intervention we get. And sometimes it's actually in the right direction. The JOBS Act makes it easier for startups to raise money from the general public ("crowdfunding"), not just from rich tech investors. I covered the story in some depth and am aware of the imperfections in its new laws, but overall it's a very positive step that could help small teams with creative ideas get them off the ground.
What I'm waiting for now: A legal revolution that really makes sense of patents. Not holding my breath on that one.
8. Government overreach award: California's smartphone sales tax
With tax rules like this, how is it possible California is in the revenue hole it is? Here's what I'm talking about: When you buy a smartphone in this state, even if it's subsidized by the mobile carrier down to zero dollars, you have to pay sales tax for the full retail sales price, a price you cannot negotiate for or control. I had some tax wonks try to explain to me why that's fair, but it still sounds like state-sponsored robbery.
9. Best bargain app: Pretty much all of them
You have to be insane to pay $50 for a simple utility for OS X, right? The whole operating system costs less than that. But Sharemouse, which just lets you share a keyboard and a mouse between two side-by-side computers, is actually not overpriced, even at $24.95 per computer (and you need at least two licenses for it to work). True, I still won't buy it, but the economics of software are unique. What I was forced to learn after an argument with the creator of this little utility is that software pricing is perfectly elastic: Charge more, you sell fewer licenses. Charge less, sell more. Total sales revenue: Constant. That's just cool.
However, sell more units and you have to support more users, and that gets expensive. Those $1.99 apps we like can kill their publishers. It can actually make better business sense to price some consumers out of your product, even if, as it is with software, the cost of distributing the app to each new user is nearly zero. The sad conclusion, for everyone except for economics professors? Read the story I wrote.
Finally,
10. The boy was he wrong award: Rafe Needleman
Right before the iPad came out, in 2009, I wrote what I thought was a logical and realistic treatise on why tablets wouldn't sell. Oops. To make matters worse, I predicted that theCrunchPad (later called the JooJoo, and after that just "the lovely glass serving tray in Rafe's office") could actually sell better than an Apple tablet if it undercut Apple's price by a few hundred bucks.
I am not proud of this prediction. I just hope the arguments I put forth were thought-provoking and entertaining.
I'm also delighted I was wrong, because the iPad is a staggeringly great product. For me, this tablet has changed my relationship with media and games, much for the better. It's also leading yet another revolution in technology design. It's great to watch. And write about. But smartly, next time.

So thanks, CNET, for a fun ride. Thanks, readers, for reading. It's all a writer wants. For now, I'm outta here.

U.K. court grants Apple reprieve on Samsung 'copy' case, for now

A week after Apple was told by a U.K. judge that it must publicly admit Samsung did not copy the iPad, Apple is granted a stay on the ruling -- for now.



Samsung Galaxy Tab
Apple lawyers walked away from a U.K. court and breathed a sigh of relief following a judge's decision to grant a stay on an earlier ruling forcing the Cupertino, Calif.-based company to publicly state Samsung had not copied the iPad's design.
A London court said today that Apple will not have to immediately place the notice on its Web site, reports Bloomberg, giving the iPad maker enough time to lodge an appeal in October.
U.K. High Court Judge Colin Birss ruled in an earlier case on July 18 that Samsung did not infringe the iPad's design patents because the rival Samsung Galaxy Tab was not as "cool" as Apple's shiny rectangle.

Is Twitter up to the Olympic challenge?


Twitter has an Olympic-size headache on its hands.
The microblogging site is making a push to be a bigger part of live events -- especially the London Games -- but had trouble keeping its feeds up and running on the eve of one of its biggest.
Twitter CEO Dick Costolo told The Wall Street Journal this week that the service is trying to "more closely tie the shared experience on Twitter to the actual event that is happening," essentially increasing its presence associated with the event. That goal is reflected in a partnership Twitter has formed with NBCUniversal to act as an "official narrator" of sorts for the game.
The microblogging site is hoping to attract a wider audience with the creation of a single page to corral the millions of tweets expected to be sent by athletes, fans, and TV personalities during the Olympics in London. The San Francisco-based company hopes that the partnership, which will include on-air promotion of the page by the TV network, will give it a chance to show that it can be a serious moneymaker; major brands such as General Electric and Procter & Gamble have reportedly bought ads to promote their association with the Games.
The International Olympic Committee, which has also launched an athlete-centric Twitter feed of its own, has called the London Games the "most social and tech-savvy Olympics ever." Analysts tell the Daily Mail that they expect the 100-meter men's final -- the most popular of the track events -- to set a record in terms of number of tweets per second. (The current record of 15,358 tweets per second was achieved in Euro 2012 as Spain scored its fourth goal.)
But little more than 24 hours before the opening ceremonies of the Olympics -- altogether, perhaps the biggest event of the year -- Twitter experiences twin data center failures that left millions of users tweetless for about two hours.
In an "infrastructural double-whammy," parallel systems went down at nearly the same time, defeating the purpose of having a redundant center to act as a backup. At this time, it appears Twitter is still in the dark about the outage's cause.
Mazen Rawashdeh, Twitter's vice president of engineering, made an ominous reference to the Olympics -- one that he probably didn't mean, since the Games are Twitter's chance to shine in the spotlight.
"I wish I could say that today's outage could be explained by the Olympics or even a cascading bug," Rawashdeh said in a company blog post explaining the outage. "Instead, it was due to this infrastructural double-whammy. We are investing aggressively in our systems to avoid this situation in the future."
CNET has contacted Twitter to see what extra steps it might be taking before the opening ceremonies of the Olympics in London tomorrow and will update this report when we learn more.
Well, Twitter, this is where you wanted to be. Are you up to the challenge? As the saying goes, the world is watching.

Windows 8 fear and uncertainty kicks in

Is Windows 8 really the makings of a fiasco? True or not, get ready to hear this more and more as the Windows 8 general release approaches.



Surface: one salient symbol of Microsoft's future. Is the company courting disaster?
Surface: one salient symbol of Microsoft's future. Is the company courting disaster?
(Credit: Microsoft)
Windows 8 FUD is starting to hit the fan.
That would be fear, uncertainty, and doubt. As in, "I think that Windows 8 is kind of a catastrophe for everybody in the PC space."
That was said yesterday by Gabe Newell, a former Microsoft employee and managing director of Valve Software, which makes games such as Half-Life and created the Steam gaming platform for Windows and Apple's OS X.
Newell's company is now moving Steam to Linux. Thus the comment, "we're trying to make sure that Linux thrives" from Newell (in the same story linked above) before his Windows 8 critique.
You could almost mistake all of the fuss for the fall presidential election, not the general release of Windows 8. "Windows 8 is treason! Linux will win the future!" (or substitute Android or OS X for Linux).
That said, Microsoft is in a hard place.
One, PC makers are no doubt reconsidering -- either casually or seriously -- their commitment to Windows because of the Microsoft-branded Surface tablet due to arrive around the same time as Windows 8 (more on that below).
Two, there is a growing chorus of critics that despise the Metro interface. (I'm not one of them.)
Three, Metro and the Windows Store -- that is, the way users will install apps -- could make Windows less open, as IDC analyst Jay Chou pointed out to me today.
And Microsoft didn't help matters when it stated in its annual report filed today with Securities and Exchange Commission that "our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."
No way around it, that's a prickly statement when it's coming directly from Microsoft.
So, will the FUD stick? It will probably get worse as we get closer to the general release. When Microsoft takes a hard turn to a new operating system, pundits pounce and users revolt (just read some of the comments attached to the Building Windows 8 blogs).
What makes it different this time is the Surface factor and Microsoft's need, apparently, to adopt Apple's and Google's strategies, as Venkatesh Rao writes in a Forbes blog.
Google "is winning using Microsoft's original winning...strategy" (by using an open OS layer of the stack, commodity hardware), he writes. "Google is out-Microsofting Microsoft."

Zuckerberg to Wall Street: No need to unfriend us yet

Wall Street analysts wanted more details than Facebook's top team would share. Management's response: Trust us.



Mark Zuckerberg with COO Sheryl Sandberg
(Credit: Dan Farber)
On Facebook's conference call with analysts today, CEO Mark Zuckerberg and his top lieutenants repeatedly stressed that they plan to take their time rolling out more ads on mobile devices to avoid angering users.
And in doing so, they are angering Wall Street.
After Facebook posted unspectacular results for its second quarter -- its first report as a public company -- management offered few details about what to expect in coming months.
The absence of specificity came as a disappointment to Facebook watchers. Citigroup's Mark Mahaney said that while the results shouldn't be viewed either "as dramatically good or bad," he said that key questions remained -- in particular, the future of Facebook's mobile monetization as well as the future of Facebook's user engagement.
But the little that Facebook did say proved unsettling. While Facebook continues to grow its user base and average revenue per user (ARPU), most of that growth is outside the U.S., where the company makes far less money on each user than it does in North America. Another worry for investors: COO David Ebersman said that ad impressions are down overall, largely because more users are accessing Facebook on mobile devices.
The result was brutal: Facebook stock, which fell more than 8 percent in regular trading, skidded another 11 percent after hours, leaving a share of Facebook at just below $24 a share. That's a roughly 37 percent drop from the $38 dollars a share offering price set for its May IPO.

Such is the bind that the newly-public Facebook has put itself in. Investors -- burned by the company's ugly IPO and subsequent lousy stock performance -- wanted a clear road map pointing where Facebook is going as it tries to squeeze more money out of its 955 million users.
Not surprisingly, Zuckerberg wasn't playing along. For Facebook watchers, he offered more evidence that this was a CEO marching to his own drummer, more interested in product than on pleasing the short-term focus of myriad Wall Street suits.
"I don't have any more plans that I'm going to share with you about our product road map," the 28-year-old CEO and founder said during the call.
What followed was almost kabuki-like. Again and again, analysts wanted to know more about Facebook's efforts making money from mobile. The answer, given in different ways from Zuckerberg -- as well as COO Sheryl Sandberg and Ebersman -- was that Facebook was making progress but that it's being methodical and taking its time to make sure it gets it right.
"We're not TV. We're not search. We're a new medium," Sandberg said at one point, a colorful quote that may not mollify the skeptics who just want to see stronger growth.
In the near-term, Facebook is counting on the power of social ads on mobile phones, called Sponsored Stories. These are ads that show up on News Feeds of a brand's fans and their friends.
Sponsored Stories in the News Feed are the "cornerstone of our mobile strategy," said Sandberg, who pointed out that they're also the most relevant for advertisers.
And on paper, at least, the potential is huge. Facebook disclosed that around 543 million people use its mobile services and that those folks are 20 percent more likely than desktop users to be active consumers of various services on the site. What's more, there is evidence that socialads are more effective than desktop ads, but, as the execs pointed out, it is still early. Facebook only began letting advertisers buy mobile-only sponsored stories in June.
Here was an area where Sandberg did share some numbers not in the press release. By the end of June, she said, sponsored stories in News Feeds were generating more than $1 million a day, with half of that coming from mobile. But while she said that Facebook planned a bigger push behind sponsored stories in 2012, nobody should expect an overnight success.
"We're still in the early days of building our monetization engine," she said.
With about $10.2 billion in its vaults, Facebook can afford to take the long view. Even as the pressure steps up in coming months.

Apple's iPhone margins hit 58 percent, nearly double iPad's

The company posts gross margins of between 49 percent and 58 percent on U.S. iPhone sales, compared to 23 percent to 32 percent for its iPad, according to a court filing.

Although Apple's iPad stole the show in the company's latest earnings report, its iPhone is the breadwinner.
Between April 2010 and March 2012, Apple was able to secure gross margins of 49 percent to 58 percent on U.S. iPhone sales, according to Reuters, which obtained the data from court documents unsealed yesterday and filed in the U.S. District Court for the Northern District of California. Apple's iPad, on the other hand, generated gross margins of 23 percent to 32 percent between October 2010 and March 2012.
Apple does not provide gross margin figures on individual products, deciding instead to share it on a companywide level. However, the company has revealed many more details about its business in court filings, including how it generates such healthy profits.

Google shows ISPs how to build a superfast network

As some broadband providers grumble about the cost of network upgrades and threaten data caps on subscribers, Google shows them, through its Kansas City Google Fiber project, how to offer subscribers 1Gbps broadband service at an affordable price.



Google is showing the cable companies and telecommunications providers how a broadband network should be built.
On Thursday, the company took the wraps off its new Google Fiber and Google Fiber TV services, which through a fiber connection directly to the home, delivers broadband speeds of 1Gbps on both the upload and download links. It also announced its new Google Fiber TV service that offers a vast array of high quality HD video content broadcast to TVs and is also available on demand.
The services that Google is delivering to lucky residents of Kansas City, Mo., and Kansas City, Kansas, is leaps and bounds above what they can get currently through providers, such as AT&T's U-verse service or Time Warner Cable. But it's also much more advanced than what the average American is able to access from any cable operator or telco broadband provider in the country. And Google is offering it at prices that beat the local and even national competition.
In fact, Google will be delivering speeds that are more than 100 times faster than most broadband users get today. And on the TV side, the company has included enhancements, such as doubling the number of TV shows that can be recorded by a DVR at one time, plus it offers more than 500 hours of storage for very high quality HD video.
Google hasn't said yet whether it will deploy a fiber network in any other cities. The company is focused on Kansas right now. But it's clear that the deployment is strategic for Google. Even though most users today don't need Internet access at 1Gbps, Google is showing what's possible. And the company hopes that applications and uses for the ultra fast network will evolve to fill the pipe.
But the network itself is also a way to show the rest of the broadband industry how they should be building their own networks to offer much faster speeds, which in the long run benefits Google's advertising and search businesses. And it offers Google data that it can use to nudge cable operators and phone companies to be more aggressive in upgrading networks and offering services at lower prices.
"This is a strategic business for Google," Kevin Lo, general manager for Google Access, said in a phone interview from Kansas City. "And on a national level, this is about innovation and access to an abundance of technology. There is a bottleneck right now in residential access where people are only getting speeds of 5 Mbps."
And even though he didn't directly say it, he made the point that the Google Fiber network can be seen as a challenge to what broadband providers have offered in the past.
"The last time we doubled the speed of broadband a whole new market evolved and spurred tremendous growth in the Internet," he said. "We don't want incremental change. Offering you a 10 Mbps service and edging it to 50 Mbps and then 100 Mbps, that's not what drives real innovation. We need to do something in a big way that will take a material step in performance."
What Google can teach broadband operators
Google's chief financial officer, Patrick Pichette, described during the presentation introducing Google Fiber how computing power thanks to Moore's Law has grown through the years doubling every 18 months. And he showed how the cost of network storage has fallen dramatically, paving the way for cloud-based services such as the ones offered by Google. But network access speeds have remained relatively flat over the past several years. The result has been only incremental changes in the speed of services that are offered to consumers.
"We saw a doubling of speeds for Internet access in the early years as we went from 14 kbps to 28 kbps," said. "But then after the cable modem showed up, we've seen little progress in access."
Pichette also pointed out that even though speeds have only increased incrementally on a per megabit basis, Americans are still paying more for Internet access than consumers in other countries.
And this is where Google is also showing existing operators a thing or two. Google is offering 100 times faster speeds on a service that is less than half the cost of the fastest Internet services available in the country today.
The 1Gbps broadband-only service is only $70 and also includes 1 Terabyte of data storage. This compares to Verizon's Fios service, which charges $205 for a 300 Mbps service with 65 Mbps uploads. Like Google, Verizon also delivers its broadband service over a fiber connection linked directly to the home. But unlike Google it doesn't offer these faster speeds with symmetrical bandwidth speeds.
When packaged with its TV service, Google's services are also priced affordably. And they beat the offerings from local competitors, such as Time Warner Cable. For $120 a month, Kansas City residents can get the 1Gbps broadband service and the Google Fiber TV service plus 1 Terabyte of data in Google's cloud storage service Google Drive.Google is even throwing in the $200 Google Android Nexus 7 tablet at no additional cost, so that users can use the Android App to control the TV service and even watch TV on their tablet.
And Google is giving away basic broadband service with speeds up to 5Mbps downstream and 1Mbps upstream for free for the next seven years, so long as users pay the $300 cost of hooking the fiber up to their home.
Time Warner Cable, Google's biggest competitor in this market, offers a 50 Mbps Internet service for an introductory price of $80 a month. And its total package with TV service and home phone service included is $200 a month.