Google has been very clear about the way applications, particularly mobile ones, will go. Downloads and siloed app stores will prevail for the period when connections remain slow and patchy, but as cellphones morph into always-on, portable PCs, our software will migrate to the browser, to web apps, streamed content and the cloud.
As the individual weight of walled-in platforms like App Store and its own Android Market is weakened by an inherently multi-OS approach, Google sees a significant shift in the software balance of power. But will the search giant inevitably reap the benefits? Its Chrome browser and Chrome OS are bold contenders, but have many rivals, and while advertising has dominated web profit models to date, Google’s stranglehold over other revenue sources such as in-app purchasing or social/location services is far less assured.
As the carriers, Amazon, Apple and Facebook all fight to monetize the new-look mobile web, Google has fired one of its boldest shots, but one that could throw a roadblock in the path of the open web standard which underpins the whole browser/cloud vision, HTML5.
Google has dropped support for the H.264 technology for video encoding in its Chrome browser, in an aggressive challenge to Apple and Microsoft in the battle to define the new web. It has increasingly focused on WebM, its own alternative to H.264, which it sees as proprietary (how can it be when it’s a standard with about 45 contributors), but has not previously dared to sideline it altogether. On its Chromium blog, product manager Mike Jazayeri wrote: ‘We are changing Chrome’s HTML5 video support to make it consistent with the codecs already supported by the open Chromium project. Specifically, we are supporting the WebM (VP8) and Theora video codecs, and will consider adding support for other high quality open codecs in the future. Though H.264 plays an important role in video, as our goal is to enable open innovation, support for the codec will be removed and our resources directed towards completely open codec technologies.’
This sets Google against Microsoft, which supports H.264 as the default video codec in its IE9 browser, and also Apple, which only supports H.264. Famously, Apple does not willingly support Adobe Flash, the main technology for browser-based video until HTML5 really takes hold. That could be happening more rapidly than expected though. Nokia and LG, among others, have made major commitments to HTML5 support in their new generation smartphones and AT&T recently announced a developer program, predicting that the majority of its high end handsets will support the technology in the second half of this year. It sees this as an opportunity to focus on multi OS apps strategies and escape the tyranny of the standalone stores (for which, read its dependence on Apple, whose chains are less silken now Verizon has got in on the act).
AT&T’s VP of data products, Mark Collins, told FierceMobileContent that HTML5 will help content and services to be created once and then run unchanged across multiple operating systems. Collins said in the interview: “We will monetize it through carrier billing and other business models, like the Amazon model. Take it direct to consumer and also supply the infrastructure and open the network for other APIs and make money that way.”
This highlights what is at stake in HTML5 ‘ in a multi-OS world, the current power bases shift and there is a new opportunity for firms that have played second fiddle in the download era, like many cellcos, to enhance their role. That, in turn, threatens others, and Google has a particularly delicate balancing act between the success of its old-style mobile platform, Android, and the need to stamp its mark on the open web. Its priority is to see off Apple and Microsoft. Other challengers for the profits of the new browser can be made into allies, notably carriers and many retailers and service providers. In the mobile OS world, Google is making good progress in weakening the two powerhouses with which no compromise is possible. Now it needs to do the same in the browser, and it has chosen the video codec as its weapon ‘ recognizing the importance of video services to monetizing the web.
Google is using the broad uptake it expects from releasing WebM technology into open source, to create a new power base and challenge an entrenched standard like H.264, which is covered by patents and licensed commercially (by the MPEG LA patent pool). WebM is based on the V8 video codec acquired with On2, and the open source Theora audio codec. Not that the lines are clear ‘ V8, now WebM, is late to the party, and Apple CEO Steve Jobs, in an email exchange with the Free Software Foundation, recently said that open source codecs would soon be sued over patent infringement anyway. ‘All video codecs are covered by patents. A patent pool is being assembled to go after Theora and other open source codecs now. An open standard is different from being royalty free or open source.’
Among the browser makers, Apple Safari and Microsoft IE9 support the MPEG LA standard for HTML5 video, while Firefox and Opera do not support H.264 at all, even after MPEG LA said it would extend royalty-free licensing for free web video until 2016 (but charges for including the technology in commercial products). But H.264, despite its performance advantages, is built into virtually every graphics processing unit, and new browsers can take advantage of hardware acceleration to improve responsiveness and battery life. It is not a costly technology to license and its customers get the right to use the huge portfolio of patents administered by MPEG LA, which provides protection against litigation. This last point is one frequently used by Microsoft to defend the closed, but legally protected, technologies it favors ‘ hence its patent lawsuits against Android, which are designed emphasize the greater safety of WP7.
Google’s latest action seems destined to force its rivals’ legal hands, bringing the issues cited by Jobs into the courts. This could achieve some clarity in the long run, but would result in years of disputes which could delay investment in HTML5, to the benefit of Adobe Flash, still the dominant method of supporting web video. Adobe is a close ally of Google, even though its plug-in technology is more closed and commercial than H.264. So Google’s new plan seems to be to accept that Flash will remain dominant on mobile platforms for a while longer, long enough to build critical mass behind Chrome and Chrome OS, sufficient to bring the world flocking to WebM. At that stage, Google could have consolidated its position as chief driver of the open web and the way that is monetized.
That position will also be strengthened if Google can finally achieve success in social location, and succeed with its rumored mobile payments system. Here it will need to outmanoeuvre Facebook, PayPal and others, a task that will make the politics of patent pools and codecs look like a game. And then there is Amazon. The giant retailer may not create standards or even play in the standards wars, but it has unrivalled ability to generate real business out of the web. As AT&T talks about multi-OS app stores, Amazon is the real threat to Apple and Google with its own new shopfront, which starts with Android but is likely to extend to all major OSs and HTML5. It already has vast customer reach, brand awareness, web-based revenues and payment/CRM structures, and the Kindle ebooks initiative will prove just a dress rehearsal for far wider activities in the burgeoning market for multiscreen digital content. Yes, Google must continue to wrongfoot Apple and Microsoft with tactics like WebM, but it must keep its wary eye constantly on Amazon.