GoogleGazer

Neither Microsoft’s abandonment of its offer to acquire Yahoo nor Google’s investment in the new Clearwire WiMAX initiative happened in a vacuum. This week, Google announced that it was partnering with Sprint, Clearwire, Intel, Comcast, Time Warner, and Bright House Networks in a transaction valued at over $10 billion. Google has committed $500 million of pocket change (at year-end 2007 it still had $14 billion in cash and marketable securities and generates over $13 million in new after tax income every day). Upon completion of the proposed deal, Sprint, the nation’s No. 3 wireless carrier which is plunking down $5 billion, will own the largest stake in the new company, with about 51 percent equity ownership. Existing Clearwire shareholders will own about 27 percent of the venture. The new strategic investors, as a group, will be acquiring about 22 percent of the new Clearwire for their $3.2 billion combined investment.

Google’s contribution of some “lunch money” to Clearwire is officially to promote openness; however, it’s widely believed that it made the investment to ensure that Clearwire adopts its Android open-source mobile platform technology, as Google sorely needed a major carrier to seriously commit to Android. Clearwire said in a statement that it “will support Google’s Android operating system software in its future voice and data devices that it provides to its retail customers.” This is known as “pay to play;” it is a path well trodden by IBM and Microsoft in the “good old days,” i.e., each in its hey day.

Google also said it “will provide search and applications to the network’s users, and will work with Clearwire to offer additional services and applications”. According to Google, “this will include jointly creating an open Internet protocol to work with mobile broadband devices (including Android-powered devices) and implementing other open network practices and policies.”

Meanwhile, Microsoft has claimed that it is no longer interested in a transaction with Yahoo, supposedly because of Yahoo’s entangling alliance with Google, while it seems that the two-week experiment of Yahoo using Google’s AdSense network for selling ads is not likely to be continued. Perhaps Yahoo just used Google as a stalking horse to get Microsoft off its own back. Perhaps Steve Ballmer got too much pushback from his own people, and found a graceful way out of a transaction that was ego-based, but was not going to bring value to Microsoft’s shareholders to justify the lofty price. Bill Gates publicly backed his stance.

So, to sum up, competition is alive and well in techland, with each of Google and Microsoft continuing to try and grab as much of the other’s territory as it can, and both of them are on a hell bent for leather land grab for their [un]fair piece of the wide open spaces of mobile technology.

The implications of Google’s and Microsoft’s actions will not be apparent for some time, and meantime, investors and IT managers have many decisions to make. Full-employment for analysts is guaranteed for the foreseeable future, as investors and Enterprises consider the complex choices to make.

(Hat’s off to Michael Gartenberg, Vice President and Research Director of JupiterResearch for his insightful discussion with me on these topics; the foregoing is my opinion, however, and most certainly doesn’t bind either Michael or JupiterResearch).

Filed under: Clearwire, Google, Jupiter Research Tagged: | Android, Bright House Networks, Clearwire, Comcast, competition, Google, IBM, Intel, JupiterResearch, Michael Gartenberg, Sprint, Time Warner, WiMAX, Yahoo