Open Letter To RIMM And Google
The Market Ticker ® - Commentary on The Capital Markets
Posted 2012-01-24 10:34
by Karl Denninger
in Company Specific
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Open Letter To RIMM And Google
 

In development of something brought forward on the forum and in my (and others) comments on my previous article...

There is a unique opportunity facing both RIMM and Google.

RIMM has QNX.  Many are unaware of what QNX actually is.  But those of us who have used it, and worked with it in the embedded space, are very aware of it.  It is a hard real-time, small, compact and efficient POSIX-compliant kernel.  It is everything that Linux and BSD is not in terms of efficiency and suitability for things that must interface with events -- whether that be a radio, a microwave oven or a user's finger on a screen.

Google has Android.  Android is a mess internally, but very popular.  It runs on more and more of the world's cellphones.  In addition Google has Chrome, it has its cloudsourced business and personal applications, and it has Gmail.

So here's the concept:  Google buys RIMM.

Ok, I know, why?

Easy.  Google gains QNX.  QNX becomes the base of the Google operating system, replacing Linux.  Android remains open source and forks at the kernel level, being either Linux (for those who do not wish to pay) or QNX (for those who do.)  The latter get materially lower power consumption and higher performance.

Then Google rolls the unified design out to all devices -- desktop, hybrid, tablet and phone.  The desktop system is not free, but it's hella-cheaper than Windows.  And it runs circles around it on the same hardware, being a tenth of the size and much more efficient.

One environment, every device, consistent user interface.  Your desktop can run APKs.  Your tablet can run native Google apps.  Chrome is the browser but the system is not entirely browser-based -- it runs real applications too.  Your phone can run all of these worlds, provided you want to -- and sometimes you do.  Some modern phones have an HDMI output and Android can accept a bluetooth keyboard and an IR "presentation director" simply requires an IR receiver port on the phone.  Now at a business presentation you don't need to haul around anything other than the cord to plug into the projector at the client's end, or you can just bring the tablet -- all are in-sync and the same presentations and environment work everywhere.

Oh yeah, and the greater efficiency means you get true "all day" battery life out of that thin-and-light laptop with performance levels currently resulting in 3-hour batteries durations.

Oh my.

If Google does this Microsoft gets a chainsaw up the back door and Apple can't hope to match it.  Apple's has the tri-mode environment but supports no storage on two of the three devices, nor does it have the off-machine output capacity, while Google's is both open ecosystem and supports storage with devices that handle HDMI output right now.

Does storage matter?  You bet it does.  That microSD card slot is a big deal and so is the ability to handle USB storage devices. Both plug into your laptop or desktop machine in seconds and is a hell of a lot faster than an "over the air" interface of any sort, not to mention that it can't run out of room since you can swap it.  It can also be encrypted for security purposes and in the corporate world this matters a lot.

Yes, this idea sounds crazy, and perhaps it is.  But an open ecosystem with high security and yet ubiquitous availability across a user's electronic space is the holy grail that everyone has shot at for the last three decades, and yet nobody has achieved.

Part of the reason is that power budgets are a bitch and in the mobile space they cripple you.  Linux is a nice operating system and so is BSD; I have run FreeBSD for nearly two decades and worked with Linux since Linus released it.  But neither is truly suitable for small, handheld, battery-powered devices, even though both Android and iOS try to prove otherwise.  The 3-hour battery life on your cellphone when in use says they both failed.

QNX, on the other hand, was designed as a real-time, small-kernel, power and resource-efficient operating environment.  It's the missing piece, and being POSIX-compliant dropping it in is not a re-write of the entire Android environment -- it's a drop-in of the underlying operating system support.

Do it Google.  You have the cash to do this transaction today, you have the ability, you have the vision and we all know you want to play The Brain and "take over the world."

The difference between Google in this case and the others in the space is that Google, combined with RIMM, can pull it off.

Disclosure: Yes, I own some RIMM.

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User Info Open Letter To RIMM And Google in forum [Market-Ticker]
Drench
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And also kill GSPYW. Because nobody likes that crap.

Asimov
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Quote:
Do it Google. You have the cash to do this transaction today, you have the ability, you have the vision and we all know you want to play The Brain and "take over the world."


Seconded!

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It's justifiably immoral to deal morally with an immoral entity.
If you trade based on what other people say, you will lose money. Especially what I say. I won't be held responsible. Festina lente.
Peterm99
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I believe that Google's reputation as a trustworthy company has become tarnished because of past behavior, e.g., massive data collection about users, collaboration with repressive regimes, etc.

Wouldn't the fact that many people perceive Google to be the champion of data-miners and accumulator of all sorts of ostensibly private/personal information cause many current RIMM users to seek other devices? Or would you expect the number that would drop "Google-RIMM" to be relatively small?

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Genesis
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In a device-centric world where you have secure storage and transport it doesn't matter. The point of such a model is that you don't have to use the "cloud" resources.

It gives you the choice, yet it also gives you the unified environment across ALL your devices.

It's what nobody else has, yet everyone has tried to do.

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What part of "shall not be infringed" was unclear?
Attilahooper
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Quote:
Android remains open source and forks at the kernel level


Let me get this straight. The user can choose to install android or QNX on their device, with(QNX) or without(droid) royalty. Is the idea to have the apps be cross platform ? or just compatible ?

I totally get the advantage to the embedded sys power advantage.

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Asimov
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Attila: Not quite. Android would either be qnx based or linux based. Linux would be free but qnx would have all it's advantages.

Apps would work the same on either and would be totally cross platform (if you mean mobile->desktop.)

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It's justifiably immoral to deal morally with an immoral entity.
If you trade based on what other people say, you will lose money. Especially what I say. I won't be held responsible. Festina lente.
Genesis
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Correct. ABI compatible at the APK level (since that's Java) and at the architecture (e.g. ARM .vs. Intel) level for native binary.

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I don't care if it makes sense -- only if it makes money. -- Me
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What part of "shall not be infringed" was unclear?
Arpwatch
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I just remember the QNX on a floppy demo disk being incredibly awesome when it was first released in 1999 or so. It is still pretty impressive.


Probably safe, but download and try at your own risk as this isn't a QNX site (if you even still have a floppy drive and floppies):

http://qnx.projektas.lt/qnxdemo/qnx_demo....
Uwe
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So Google should pay ~$10B to get QNX???

How much did RIMM pay for it less than 2 years ago?

-Uwe-


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Asimov
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Uwe: You're looking at it wrong. They're not buying QNX. They're buying massive chunks of microsoft AND apple for rimm prices.

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It's justifiably immoral to deal morally with an immoral entity.
If you trade based on what other people say, you will lose money. Especially what I say. I won't be held responsible. Festina lente.
Genesis
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They're also buying the entire user base.

The company is selling at HALF ITS SALES.

Figure they pay 0.75/sales, or a 50% premium to today's price (which the board would go to jail for if they refused the offer as they're fiduciaries)

The company has revenue per share of $38 and $2.50/share in cash on the balance sheet. Paying $22-23 is a no-brainer for the customer base -- QNX just happens to be the sweetener that makes the deal work and they're basically getting it for free.

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I don't care if it makes sense -- only if it makes money. -- Me
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What part of "shall not be infringed" was unclear?
Splashdown
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I think Google would have no doubt jumped all over RIMM down here if wasn't for the fact they already popped on Motorola's handset division for $12.5B six months ago. Let's face it, RIMM was too expensive then.

That said, it seems that the Motorola/Google deal is running into some headwinds in Europe courts. If that's true, maybe Google backs out of Motorola and make a bid for RIMM.

Genesis
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I thought the Motorola deal was stupid.

This one isn't.

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I don't care if it makes sense -- only if it makes money. -- Me
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What part of "shall not be infringed" was unclear?
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The RIMM/Google deal looks good on paper, so obviously regulators would strike it down.

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There are many, many embedded RTOS systems around. One listing is found at:
http://en.wikipedia.org/wiki/List_of_rea....

As part of a ham radio hobby, I was much a heavy user of OS-9.

About half my career has been working in operating systems and communications S/W. Its easy to go to an embedded/realtime tradeshow and see lots of demonstrations of neat embedded realtime systems.

I have to ask the question, whats so special about QNX?
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RIMM might decide that it is better for them not to sell the company. If Android apps can easily be made to run (and run better) on RIMM gear, that's a pretty good negotiating position to be in. The risk to Google is that once developers start releasing their apps on Blackberry, there would be a move away from Android the OS, leaving Google with a loss of market share.

If RIMM can pull this off, the potential payoff is enormous, so I understand why they are hesitant at selling out at bargain basement prices.

<tin>
I simply do not understand why this profitable company is being attacked so viciously in the media, and basically shorted in the hole, below book value. Unless of course the idea is to give the ability for one of the other players (AAPL, GOOG who probably already figured this out too) to grab RIMM at firesale prices. </tin>

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Obseedian
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An other strategy for RIMM is to simply license the completed QNX mobile environment to 3rd parties. They could keep the Blackberry network to themselves (on the new OS) to make the US govt and business community happy. This way you get the best of both worlds. GOOG would be instantly skull****ed and AAPL would have difficulty competing against devices with half the power usage on the "coolness" factor alone.

Disclosure: Yeah, I own some RIMM

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Dazedncornfused
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Back in the bad old days of Trumpet Winsock and Win3.1 and the Minuet DOS web browser, QNX published a sample of its operating system and the Voyager web browser, to be installed on a self contained and bootable high density 3.5" floppy disk, running on an 80386. It was amazingly great and I used it for years. It spurred me to start using Linux.

I finally bought a smartphone, a Nokia C6-01. Yeah yeah, I know it's Symbian but the connectivity is handy. Bluetooth keyboards and file transfers with Bluetooth enabled computers, Wifi connectivity with any SAMBA connected drive, I use Skype more than the cell towers, it does it all smoothly. Smooth web browsing and does my Google mail. $200 with a 32Gb SD chip, unlocked. It's mine! Even though Nokia set the bar high with this one with the user interface, I imagine QNX would only be better. Yes, it did update to Anna.

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Obseedian
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Oh BTW: Playbook can already run Android apps on the new version of the OS. Here are the instructions on how to do it. A lot of the apps have already been converted by the user community.

http://crackberry.com/how-sideload-andro....

I might actually pick up a playbook just to play around with it, but I see every ****ing Best Buy and Future Shop is out of stock.

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Otiswild
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It'll be interesting to see how much Apple bids, though I bet in the end it goes to an overpaying MS or HP. Or perhaps even Samsung!
Goforbroke
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From today ....
Quote:
Google Inc. has hired another in-house patent expert as the search engine battles rivals in the ongoing smartphone patent wars.

Allen Lo, former associate counsel at Juniper Networks Inc., is starting a new job Monday as deputy general counsel at Google, he announced Wednesday while speaking at an IP conference at Stanford Law School. He'll be in charge of patent litigation and patent acquisitions.
http://www.law.com/jsp/cc/PubArticleCC.j....

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Docj
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Great piece, Karl - it was awesome even before the Pinky and The Brain reference!

Disclosure: I have no dog in this fight.

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Amiga. This is my (very dated) recollections of QNX...
http://www.trollaxor.com/2005/06/how-qnx....
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It sounds to me like the market is enamoured with AAPL and can't see RIMM. But, I would suspect Wall Street is full of AAPL and still selling out. This sounds more like a blind man buying a lawn mower and there are 2 models, a 24 inch self propelled and a smaller push mower. The Iphone is a kids toy and does really neat things, but is limited for business. The smart phone started out as a business machine and became a kids toy. The Iphone is the new waste of time for kids. If I knew I would start looking at my phone all day, I would never buy anything better than this $20 POC I bought to tide me over while thinking what I want to do for service before I re-up on a contract. I live in a rough world, so another $20 phone is in my future due to the fact I don't buy insurance and will bet the smart phone I get lasts at most 6 months.

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