Back Soon; Quick Comment on Google’s Chinese Problem

I have been preoccupied with professional concerns most of this week, but I will be return shortly.

The conflict between Google and China is interesting, but it’s one element in a bigger picture that has more to do with Chinese nationalism and mercantilism than with espionage. I am not saying that Google didn’t take a principled stand against the Chinese government, but I am suggesting that it was easier for Google to take that stand against the backdrop of a Chinese market that systematically favors a domestic search vendor over foreign players.

It’s no coincidence that Google has done well in search in nearly every other geographic market it has targeted worldwide. What’s different about China? The answer to that question has major implications that reverberate well beyond Google’s purview.

HP Engineering Exodus?

LIke many people, I hear rumors occasionally. The challenge is in determining whether the source and substance of the rumor can be trusted.

If you’re dealing with a familiar source, you’re in a relatively good position to assess the veracity of what you’re being told. When that’s not the case, you’re in uncharted waters, left to navigate without a GPS or a compass — and sometimes without even a paddle. It’s in those cases that you invoke deduction and intuition.

There’s a rumor I’ve been hearing lately about engineering defections at HP’s American operations. I don’t have granularity on the numbers involved, where or in what departments the exodus is occurring, or how widespread the flight might be.

At first, I dismissed the rumor. Given the state of the economy, I wondered, where would these migrating engineers go? Still, at the top of the food chain, somebody always needs a good engineer. The best would find new employers.

But why would it be happening?

Well, under the rule of Carly Fiorina and now Mark Hurd, HP has become less the redoubt of the engineer. Under Fiorina, marketers were ascendant, and under Hurd we’ve witnessed the rise of beancounters and operational technocrats. It’s not the company of the eponymous founders, and the HP Way is as likely to be a street address as a company ethos.

Then, if you’ll remember, there was the recent Glassdoor.com survey, listing the best and worse of technology-industry employers. HP ranked as one of the lowest-rated technology companies for which to work, and Mark Hurd was not viewed favorably by HP employees.

In 2008, Hurd gave a talk bemoaning the deteriorating pool of technical talent in the USA. Said Hurd:

“In this country, we have a problem. The source of this country’s greatness has been its technical talent . . . But you have to go where the tech talent is, and right now the tech talent is in Asia.”

“We often can’t keep [engineers] in the country even after they’ve graduated from U.S. universities like Stanford.”

Hurd said that only 40 percent of HP’s then-40,000 engineers were based in the US. Previously (he did not specify an earlier date), HP employed about two thirds of its engineering staff domestically, according to the HP CEO.

The evidence suggests that HP was having an engineering problem in its home market. In his 2008 talk, Hurd rationalized HP’s engineering offshoring. It isn’t a stretch to suppose that HP’s American engineers might wish to seek employment at a company more committed to their job security.

Finally, HP recently announced the acquisition of 3Com, formerly an icon of American computer networking that has remade itself into a Chinese company with an American history. Most of 3Com’s engineering is done in China. When the deal was announced, I wondered whether HPs ProCure engineers might be the ultimate losers.

I don’t have hard data to confirm the rumor about engineers leaving HP. If the rumor were to be confirmed, though, it wouldn’t come as a shock.

Will Google Waver in Its Commitment to White Spaces?

I am excited about the potential for unlicensed white spaces, unused broadcast spectrum serving as a buffer between television channels. As a lowly user, I see its enormous potential as a high-bandwidth successor to unlicensed Wi-Fi.

My enthusiasm for white spaces probably isn’t shared by the wireless operators, though. Having largely vanquished the commercial threat once posed by Wi-Fi, they aren’t eager to see another chunk of unlicensed spectrum impinge on their profit margins and business plans.

Not sharing the biases and business models of the carriers, Google’s disposition toward white spaces is more expansive.

While speaking at a session of the Churchill Club in Menlo Park, Calif., Vint Cert, an Internet progenitor who now serves as a vice president and chief Internet evangelist at Google, said his company would like to see white spaces unlicensed. He also said technology exists today to enable use of white spaces.

Google recently offered to run a white-spaces database. Such a database, which could have several providers, is required to ensure that devices do not cause interference with nearby signals used for TV broadcasts. Google — along with Microsoft, HP, Motorola, Dell, and others — is a member of the White Spaces Database Group, which works on technical specifications for the database.

An early member of the White Spaces Coalition, an industry consortium that promoted the delivery of high-speed broadband Internet access over white spaces, Google also sponsored a campaign called “Free the Airwaves,” which touted white spaces as unlicensed spectrum that could be used like Wi-Fi.

As a Google product manager wrote on a company blog in the summer of 2008:

At its core, Free The Airwaves is a call to action for everyday users. You don’t need to be a telecommunications expert to understand that freeing the “white spaces” has the potential to transform wireless Internet as we know it. When you visit the site, you’ll be invited to film a video response explaining what increased Internet access could mean for you, to sign a petition to the FCC, to contact your elected officials, to spread the word, and more.

When it comes to opening these airwaves, we believe the public interest is clear. But we also want to be transparent about our involvement: Google has a clear business interest in expanding access to the web. There’s no doubt that if these airwaves are opened up to unlicensed use, more people will be using the Internet. That’s certainly good for Google (not to mention many of our industry peers) but we also think that it’s good for consumers.

As Google presses forward to establish carrier relationships for its Nexus One smartphone, we should watch closely to see whether its commitment weakens to white spaces as a complement or successor to Wi-Fi.

By the way, white spaces are mentioned only incidentally in the InfoWorld article on Vint Cert’s remarks to the Churchill Club. He talks about other issues, too, including the need for data-portability standards in cloud computing.

Google Dismissive of Microsoft as Mobile Rival

When it comes to the world of smartphones, the mainstream business press likes to fixate on an imaginary zero-sum death match between Apple’s iPhone and Google Android-based handsets, including Google’s very own Nexus One.

On the surface, it seems a great story. You have Apple’s enormously successful iPhone serving as the protagonist, setting the benchmark as the “one to beat.” Journalists and market watchers have been searching tirelessly for an “iPhone killer,” somebody to take the fight to Apple and complete the narrative. The Apple antagonist they’ve found, it seems, is Google.

Never mind that the story doesn’t make sense, that it’s more hype than substance. That doesn’t matter. What matters is being able to trot out a hoary narrative mythology – hey, it’s Apollo Creed versus Rocky, Coke versus Pepsi — perspective and reality be damned. If the storyline puts bums in the seats or readers on the site, it will endure.

It’s sad, really, because there’s an even better smarphone story, one that’s just as compelling but anchored firmly in the real world. It involves Google on one side, yes, but its adversary isn’t Apple. No, across the smartphone ring from Google, girding for a battle to win the votes of the judges – represented, in this context, by handset OEMs – is none other than Microsoft.

Yes, Microsoft.

It isn’t that Google and Microsoft are fighting for mobile-market dominance. Microsoft fell out of that contest a long time ago. It’s well behind the likes of Apple, RIM, and Nokia, and it is rapidly losing ground to newcomer Google.

Still, Microsoft and Google are destined to fight fiercely against one another for the affections of the handset vendors who don’t have mobile-operating systems of their own. These vendors – Motorola, Samsung, HTC, Sony Ericsson and the like – license their mobile software, from Microsoft historically and now, increasingly, from Google.

All of which makes Google’s decision to release a handset of its own somewhat perplexing. Crusty marketing types like to say you can’t suck and blow at the same time. But Google – in licensing Android to handset vendors while effectively competing against most of them (HTC partially excepted) with an Android-based handset of its own – is doing just that.

Microsoft is drawing attention to Google’s contradictory approach. In a Bloomberg story, Robbie Bach, the president of Microsoft’s Entertainment and Devices Division, argued that Google will have difficulty attracting partners to its mobile platform after introducing its own Nexus One handset.

Bach reasoned that because Google now sells its own phone, handset makers are likely to be concerned that their software partner might favor its own handset over theirs. Such a scenario, he deduced, would drive Android licensees out of Google’s embrace, presumably into Microsoft’s welcoming arms.

Said Microsoft’s Bach of Google’s conflicted game plan:

“Doing both in the way they are trying to do both is actually very, very difficult. Google’s announcement sends a signal where they’re going to place their commitment. That will create some opportunities for us and we’ll pursue them.”

Microsoft needs all the help it can get. Its Windows Mobile operating system has been a nearly unmitigated disaster, serving to put out a welcome mat and open the door for Google’s Android-based appeals to Microsoft’s stable of handset-vendor licensees. If Microsoft had done its job, Google wouldn’t be enjoying the marketing opportunity it’s now exploiting with Android and Nexus One.

Google, for its part, tells us not to believe our lying eyes. Notwithstanding appearances, Google says all is peace and love around the Android campfire. Said Katie Watson, a Google spokeswoman:

“It’s not our objective to compete with our partners. Our expectation is that the Nexus One will push the entire mobile ecosystem forward, driving greater innovation and consumer choice. We look forward to working with other hardware manufacturers to bring more Google-branded devices to market.”

In other words, there’s nothing to see here.

But that probably will sound like marketing pabulum to Android’s licensees. It’s all well and good for Google to say that Nexus One “will push the entire mobile ecosystem forward,” but, as the legendary Alan Partridge once said to a Geordie, “that’s just noise.” Google can be in league with its partners or working against them. And, if it chooses the latter course, you wonder how long they’ll remain Google’s partners.

Michael Gartnernberg, an analyst with market-research firm Interpet LLC, explains Google’s mobile dilemma:

“No one has ever succeeded in selling their own device while trying to license to partners simultaneously. As much as Google can say it’s not a Google phone, the phone says Google on it. They’re going to have to convince their licensees they’re not in competition with them.”

Gartenberg would be right, of course, if the mobile universe were unfolding as it should. But it isn’t – and the problem is Microsoft.

My supposition is that Google is breaking with convention partly because it can. At least in the mobile space, Google doesn’t respect Microsoft. It looks at the sad state of Windows Mobile, and it figures that Microsoft doesn’t offer handset vendors a viable alternative to Android. It’s arrogant and cocky of Google – and it’s entirely dismissive of Microsoft – but that seems to be the position Google has taken.

Google thinks it can have its cake and eat it, too – serving handset OEMs slices of Android while putting some aside for the Nexus One – because it believes its licensees aren’t about to visit the cake shop in Redmond.

It’s too bad Microsoft doesn’t appear capable of proving Google wrong.

Mystery Surrounds Acquisitions by Motorola’s Home and Networks Mobility Business

In November, the Wall Street Journal published an article quoting sources who said Motorola was preparing to sell its home and networks mobility business for as much as $5 billion.

Since then, as noted by Billing and OSS World, Motorola has not been behaving as though it’s inclined to sell the business, which is its largest. To the contrary, Motorola has gone on an acquisitive tear, buying three small companies that are being folded into the group.

The latest purchase involves SecureM, LLC and its wholly owned subsidiaries, which together operate as SecureMedia, a developer of software-based digital rights management (DRM) and security systems for IP video distribution and management. SecureMedia develops and markets software systems for securing the distribution of digital entertainment over multiple platforms to multiple devices, including set-top boxes, wireless handsets, PCs, and portable entertainment devices. Its products are apparently approved by all major film studios and TV broadcasters.

Quoted in a press release announcing the acquisition, John Burke, senior vice president of Motorola Home & Networks Mobility business, said the following:

“Motorola continues to invest in our video infrastructure solutions as our customers evolve their networks to handle the explosion in consumer demand for video. SecureMedia has superior expertise in IP-based video security and digital rights management — critical capabilities for the emerging Internet Era of Television, where video content is mobilized across the three screens of TV, mobile phone and PC.”

As with the two preceding acquisitions — of Israel-based BitBand, involved in content-delivery networking and IPTV, and RadioFrame Networks’ iDEN business — terms were not disclosed. Doubtless these were not bank-breaking transactions, but one wonders how they are consistent with Motorola’s reported desire to sell the business into which they are being integrated.

It’s certainly possible, as I mentioned in a previous blog post, that Motorola might intend to sell the business in pieces, with part of it to be sold earlier to one buyer and the rest to be kept or sold later to a different acquirer.

The report that appeared in the Wall Street Journal was relatively detailed, with sources providing the identities of prospective acquirers and the names of the investment banks, J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., said to be advising Motorola on the sale. I suspect there was some fire behind the smoke, but it’s difficult to know whether we’re dealing with a cigar stub in a wastebasket or a five-alarm blaze.

One presumes there’s some method behind the ostensible madness, so stay tuned.

Google Energy Open to Interpretation

Google isn’t on the cusp of entering the electricity business, but in forming Google Energy, a Delaware-based subsidiary, and requesting regulatory permission to buy and sell electricity on the wholesale market, the search giant has signaled more than a hobbyist’s interest in the energy industry.

The official story from Google headquarters is that Google Energy has sought regulatory approval from the Federal Energy Regulatory Commission (FERC), the agency with oversight over the power grid, because of the parent company’s desire to have flexibility in pursuing its corporate goal of carbon neutrality.

Quoted by Martin LaMonica of CNET News’ Green Tech, Google spokesperson Niki Fenwick explained:

“Right now, we can’t buy affordable, utility-scale, renewable energy in our markets. We want to buy the highest quality, most affordable renewable energy wherever we can and use the green credits.”

I don’t doubt this is Google’s near-term objective. In the long run, well, anything is possible, even Google as an energy purveyor.

Google retains a longstanding interest in energy-efficient computing, particularly in its immense data centers, where savings from reduced energy consumption have the potential to deliver favorable results to the bottom line. With a 1.6-megawatt solar installation at its headquarters in Mountain View, Calif., Google already produces energy to support its operations. Clearly, as its application to FERC attests, it would like to do more, on its own and through the purchase of low-cost, utility-grade electricity on the open market.

In this context, Google’s corporate goal is carbon neutrality. If it attains that objective, though, would Google consider something more ambitious, taking it into the realm of serving the energy requirements of others?

At this point, Google says it doesn’t have “concrete plans” for its energy subsidiary, but that it wants “the ability to buy and sell electricity in case it becomes part of our portfolio.”

That could happen, as Katie Fehrenbacher writes at earth2tech. She cites a New York Times interview with Bill Weihl, Google’s energy guru (yes, that’s what he’s called), who admits to ambiguity about what the future holds for his employer.

Will Google’s Sweetened Bid for On2 Close the Deal?

Here and elsewhere, On2 shareholders dissatisfied with Google’s takeover offer for the video-compression company have campaigned against the proposed acquisition.

They’ve actually done more than that, alleging improper and untoward conduct by On2 principals and board members, some of whom were deemed to have gotten too cozy with Google and not open enough to offers from other potential acquirers.

It has been an ugly episode, for On2 and for Google, which never misses an opportunity to burnish its self-proclaimed corporate image as a non evildoer. While it hasn’t been established that Google perpetrated any dubious deeds in the context of its pursuit of On2, the ensuing charges and countercharges were unedifying. It could have gone better, and perhaps it would have done if Google had made a higher offer at the onset.

Figuring that late is better than never, Google has decided to sweeten its bid for On2. In what it described today as its “final offer,” Google proposes to give On2 stockholders an extra 15 cents in cash for every On2 share they hold, plus the originally proposed exchange of 0.001 shares of Google Class A common stock for each share of On2 stock.

Said On2 and Google in a statement:

“By increasing the consideration offered to On2’s stockholders by an additional $0.15 per share in cash, On2’s stockholders will receive additional value for their On2 common stock that Google and On2 believe better reflects the value that On2’s stockholders would have received had the acquisition closed closer to the time of its announcement in August 2009. This increase in the consideration that Google is offering to On2’s stockholders constitutes Google’s final offer.”

With the modified terms in effect, the deal would be worth about $134 million, up 20 percent on an initial arrangement valued at about $107.4 million. A large number of On2 shareholders weren’t happy with that offer — or how it came about — and they rebuffed it forcefully, compelling the company to twice postpone a shareholder meeting designed to confer official approval on the deal.

The company’s board, which has approved of the sale to Google all along, recommends acceptance of the revised bid. Shareholders will have an opportunity to pass judgment on the deal at a meeting on February 17.

Will they be favorably disposed to the sweetened offer? Will this meeting, unlike the other ones, actually take place? I’d like to hear directly from On2 shareholders, especially those — and there were many of them — who were opposed to the initial bid.

Valley’s Commercial-Property “Bloodbath” Symptom of More Serious Malady

The sorry state of Silicon Valley’s commercial real estate is a symptom of a more serious malady.

Quoting commercial-property numbers from CB Richard Ellis Group Inc., Bloomberg reports that more than 43 million square feet (4 million square meters) of office space — the equivalent of 15 Empire State Buildings — stood vacant in Silicon Valley at the end of the third quarter, the most in almost five years. It is the biggest office-property glut to afflict the peninsula since the dot-com bust.

Bloomberg reports that about 21 percent of Silicon Valley’s Class A office space is vacant, as is 20 percent of low-rise “flex” (research and development) space, which can be used for offices or manufacturing, according to CB Richard Ellis.

Given the Valley’s persistently high unemployment rate — holding at about 12 percent — and the generally weak state of the broader economy, the situation is not expected to improve any time soon. With layoffs mounting at some of the Valley’s largest employers, a steady flow of jobs being transferred overseas, and a paucity of venture-backed startup companies to pick up the slack, the market dynamics don’t favor those who own and manage the area’s office buildings.

Foreclosures of commercial property are expected to double in 2010, and job growth isn’t anticipated to increase until 2012, according to some projections. Meanwhile, Valley companies that remain in business are unwilling to pay sticker-price rents, using the abundant supply of space as negotiating leverage for sharp discounts.

I suppose it’s good news for those seeking space. On the whole, though, the data suggests the Valley is in frail health. Unemployment is way up, commercial-property values are about to go way down, the traditional IT industry has tottered into slow-growth maturity and seemingly endless cost-cutting, the VC community has been decimated, and the social-networking upstarts depend (to a certain extent) on robust consumer spending that is unlikely to materialize in the near term.

The hope is that new industries can supersede information technology as the Valley’s growth engine. That could happen. Cleantech startups are drawing an increasing percentage of overall investment dollars, and the long-term prospects for that sector are bolstered by geopolitical as well as economic imperatives.

But it will take time. As the title of this blog proclaims (and has done for some time), we are witnessing twilight in the valley of the nerds.

Explaining Cisco’s Slowing Pace of Acquisitions

In terms of making acquisitions of venture-backed companies, Cisco led all other industry behemoths during the lachrymose decade known as the “oughts.”

According to a post at the Wall Street Journal’s Venture Capital Dispatch, quoting figures compiled by Dow Jones’ VentureSource, Cisco acquired 48 venture-backed companies from 2000 through 2009. Also reaching the medal podium for acquisitions were IBM, which closed 35 such transactions, and Microsoft, which consummated 30 deals.

In recent years, particularly the last two, Cisco’s acquisitive pace has slackened considerably. The networking giant made only two purchases of VC-backed startups in both 2008 and 2009. This past year, in fact, Cisco wasn’t among the foremost acquirers of VC-backed companies. Instead, Oracle finished at the head of the 2009 table, with five deals; EMC bought four companies to rank second.

You might wonder, as did I: Why is Cisco slowing down? I think several factors are at play.

For one thing, there aren’t as many compelling VC-based startup companies entering Cisco’s ecosystem as there were a few years ago. In general, VC backing for early-stage IT startups has fallen off the charts, and the same holds for startup companies in networking and many of the “market adjacencies” of most interest to Cisco. The lake has been fished, and nobody is restocking it with healthy specimens.

Related to that first point is the fact that the IT industry, including the networking segment, has matured. It’s moved into a slower-growth stage, replete with consolidation and fewer leading players. In its core markets, Cisco runs the numbers and often concludes that the right business decision involves building rather than buying. That wasn’t always the case, as amateur historians of networking’s heyday will tell you.

The slow growth, maturation, and consolidation in Cisco’s legacy markets of enterprise and carrier switching and routing have driven it toward a major diversification effort, with some of the forays into new spaces seeming more adjacent than others. Some of these new markets will bring Cisco back into acquisitive fervor, but it hasn’t happened yet, perhaps because Cisco hasn’t fully committed to some of them. (An area where I think you’ll see Cisco eventually make some interesting purchases is smart-grid technologies.)

Cisco’s acquisition juggernaut has slowed for another reason, too. If you examine the composition and distribution of Cisco’s vast cash reserves, you’ll discover — as I have discussed previously — that most of the money is located overseas. If that foreign cash were repatriated, Cisco would have to pay taxes on it. With the US government refusing to relent on that point, Cisco has chosen to leave the money overseas. As a result, that cash cannot be used for domestic acquisitions. If Cisco wishes to use those funds, rather than stock, to consummate deals, it must identify, pursue, and execute transactions in foreign markets.

Effectively, because of its cash allocation and the increasing reluctance of prospective takeover candidates to accept stock in lieu of hard cash, Cisco is geographically constrained in making deals over a certain size. Given Cisco’s tax strategies and the growing internationalization of its business, the ratio of foreign-to-domestic cash reserves isn’t likely to change markedly. Cisco will spin more cash through quarter-to-quarter operations, but most of it will land in the foreign pool.

At least in the near term, for the reasons adduced above, I don’t foresee Cisco returning to its acquisitive frenzies of the late 90s or the early to mid oughts, when it took advantage of the dot-com implosion to consolidate power through strategic acquisitions. Cisco remains a big, old dog, but it is being forced to learn some new tricks.

Android Versus iPhone: The Illusory Cage Match

Earlier today, in a post regarding Apple’s acquisition of mobile-advertising company Quattro Wireless, I touched on the different approaches and objectives that Apple and Google bring to the smartphone marketplace.

As I mentioned, it’s fashionable to see Google’s Android-based handset, not to mention the handsets of its Android-based partners, as a cage-match warrior in mortal combat with Apple’s iPhone. It’s a facile metaphor, though, and it doesn’t help us gain a deeper understanding of the actual dynamics at play.

In truth, Apple and Google might have products and services that compete, but they are not in a zero-sum struggle for survival. Not even close. To the contrary, closer inspection reveals that Apple and Google have different approaches, philosophies, and objectives in the mobile world.

Apple wants to make money from everything it does. It closely manages and controls practically every aspect of the iPhone experience, and it wants to generate margin from the device sale, from application downloads at the AppStore, and from content downloads at iTunes. It would like to get a piece of advertising revenue, too, which is why it bought Quattro.

Google, on the other hand, is focused overwhelmingly on extending its advertising empire to smartphones. It will push text ads, displays ads, and any other ads that make sense in a mobile context. To do so, it has come to the conclusion that it needs its own mobile platform, which is where Android enters the picture.

Now, if you consider these two very different companies and their distinct perspectives on the mobile market, you can easily envision circumstances in which Apple and Google each prosper in their respective spheres of influence.

That’s just what Bill Gurley has done over at abovethecrowd.com. In a cogent, eminently readable piece that advances logically and patiently to its conclusion, Gurley explains why Apple and Google aren’t on a path toward mutually assured destruction, despite what the hyperventilation and sensationalism of some commentators might lead you to believe.

Gurley begins by examining the claim from a Morgan Stanley analyst that “Apple is playing is to become the Microsoft of the smartphone market.” By end of his post, he’s refuted that assertion, contending instead that Google is aiming for that distinction.

All of which leads to the obvious question: Where does that leave Microsoft? As I’ve explained before, to the extent that there is a so-called smartphone war, Microsoft has suffered the greatest losses. Google has pillaged Windows Mobile handset licensees and left Microsoft with one last chance, represented by Windows Mobile 7, to redeem itself.

Some reports suggest that Windows Mobile 7 will not ship until the fourth quarter of 2010. That could be a case of far too little, far too late.

ESPN to Go 3D

I wrote yesterday about the marketing push behind 3D television. Understandably, consumers, even in the best of times (which these are not), will be reluctant to part with their hard-earned cash for a 3D television set unless they have a reasonable expectation of being able to use it for the enjoyment of 3D content.

For that to happen, consumers would have to make investments in 3D Blu-ray players, and they’d want 3D movie titles, delivered by DVD or over the Internet, from the film industry. They’ll also want to see support for 3D content coming from television channels and networks, as well as from their cable and satellite providers. Presuming that’s made available, consumers also might have to purchase new 3D set-top boxes.

Essentially, for 3D to become an attractive proposition in the living room, all the vendors in the ecosystem must work together to provide a compelling, seamless experience to the consumer — from hardware and content availability to content distribution and delivery.

Then, of course, they’ll have to hope the consumer is willing to tolerate the inconvenience of having to wear 3D glasses to partake of the in-home spectacle. That’s the last hurdle, and perhaps the biggest one. Even so, I wouldn’t want to underestimate any of the other challenges. If 3D is destined to become a cash cow for all the industry players in the food chain, everything must come together in perfect synchrony. Anything less will result in failure.

Fortunately for the nascent industry, ESPN is jumping aboard the bandwagon. 3D movies have obvious appeal to a mass audience, but sports entertainment is a huge business in its own right. What’s more, most major sports events — football, soccer, basketball, hockey, baseball — could arguably benefit from the 3D treatment. Having accurate depth perception, much less protrusive visual effects, would enhance viewing enjoyment of, let’s say, the World Cup soccer tournament.

ESPN obviously agrees. It is one of the organizations, to which I alluded in yesterday’s post, that has done extensive research into consumer acceptance of 3D television. It now has decided to launch ESPN 3D, which will provide at least 85 live 3D events in a one-year span, starting on June 11 with the broadcast of a World Cup soccer match between South Africa and Mexico.

Other soccer games likely to be part of the broadcast mix, as will Summer X Games (extreme sports), NBA games, college basketball, and college football. ESPN will not provide reruns of sporting events. When there are no live events to show in 3D, the channel will remain dark.

Will 85 (or slightly more) live events be enough to make the channel a commercial success? Will they be sufficient to motivate consumers to take the plunge on 3D home entertainment?

One wonders about how the channel will be priced for subscribers, and about how many cable and satellite providers will pick it up and on what terms. Consumers will be sensitive about paying a subscription charge for a channel that’s available on a part-time basis, as well as one that carries only some content in which they might have strong interest. After all, it’s a rare bird who’s interested in World Cup soccer, X Games, the NBA, and college sports.

According to a USA Today news item, ESPN expects deals with distributors will be in place prior to the channel’s launch. It’s not only availability that will matter, though, but also the terms of that availability. It will be interesting to see how ESPN shares risk with, and potentially defrays costs for, its distribution partners, who might be reluctant to pick up the channel without a reasonable expectation of success.

As the USA Today article mentions, 3D broadcasts cost more than high-definition productions. You need two cameras (or specialized 3D cameras) rather that one, for instance, and you have think about whether camera placement should be different for a 3D production than for conventional sports coverage. The USA Today article notes that broadcasters might require a separate set of announcers for 3D productions, but I’m not sure I agree. It should be possible to use a single set of announcers in the broadcast booth, presuming there’s enough space for the additional camera equipment.

One interesting aspect to this story is that ESPN is committing to the 3D network only through June 2011. At the end of one full year of operation, ESPN will decide whether and how to extend the service.

Will ESPN keep the service going? It all depends on how it’s received in its first year. If I were forced to make a wager on the outcome, I’d say ESPN 3D doesn’t get renewed.

I’m not sure 3D home entertainment is ready for prime time, and I’m not confident that cash-strapped American consumers have the disposal income to upgrade from the HD gear they’re just now beginning to enjoy on a regular basis.

Apple’s Uncharacteristic Acquisitions Speak Volumes

Although Apple has nearly as much cash on hand as Cisco Systems, it is not a company known for acquisition-fueled growth. Instead, Apple has grown organically, through its own research-and-development initiatives. Apple has a flat, lean corporate structure and unique corporate culture, both of which militate against acquisitions.

Lately, though, Apple has been going against form. In December, it bought Lala, a digital-music service, for an undisclosed sum. A year earlier, it bought PA Semi, a designer of low-power microchips, for a reported $278 million.

Admittedly, that’s not a blazing pace of acquisitive activity. Still, while some companies are more casual with their acquisition strategies, Apple only pursues such deals as a last resort. When Apple buys a company, you know it’s because the folks in Cupertino felt they had absolutely no chance of building a viable alternative within a reasonable timeframe. You also know that Apple must have genuinely and strongly believed it needed to play in a particular space.

All of which brings us to today’s news, brought initially to light by AllThingsDigital. According to Kara Swisher, Apple will acquire Quattro Wireless, a mobile-advertising company, for approximately $275 million.

Launched in 2006, Quattro had received about $28 million in aggregate venture-capital investment from Highland Capital Partners and GlobeSpan Capital. Based in Waltham, Mass., Quattro was on a revenue run rate of $50 million, according to the Boston Globe. Quattro has about 150 employees, who are expected to remain in Waltham.

The Boston Globe reports that the deal closed before the end of 2009. It says Quattro is expected to notify its partners and customers of the transaction today, though there’s no word on when Apple will make a formal announcement.

In the wake of this deal, many observers will immediately point to the increasingly adversarial relationship between Apple and Google, formerly on friendlier terms, even with cross-pollination at the board level. While that’s an aspect of the story that bears notice, it’s also important to maintain a broader perspective, to resist seeing everything that happens in the industry as a cartoonish cage match between bloodthirsty foes.

Yes, Google recent announced an agreement to buy AdMob for $750 million, outbidding Apple in the process. Now Apple has responded by acquiring Quattro, an AdMob competitor.

However, Apple didn’t bid for AdMob or acquire Quattro because of a vendetta with Google. Apple doesn’t do acquisitions on a whim, and it doesn’t pursue them just to keep a property away from a competitor. Apple pursued both deals for reasons of its own, reasons having far more to do with its own strategic plan than with a preoccupation with Google.

Still, both companies see the same opportunities in mobile advertising. Each company has its own strengths it can leverage. For Google, the predominant player in search advertising, mobile advertising is the next frontier. It developed its Android mobile operating system as a platform for that push. For Apple, mobile advertising is an untapped source of potentially rich revenue in mobile communications and entertainment, realms in which it has established market leadership with its iPhones, iPods, iTunes, and AppStore.

While Apple and Google have intersected in competition, they’ve taken very different paths, with very different motivations and rationales, in reaching this juncture.