SPENCER MICHELS: This is Eric Schmidt and Andy Rubin at Google. Let's start with Eric. What you announced the other day was described in various articles and so forth that I read as a package or an operating system or some software. What is it?
ERIC SCHMIDT, Chief Executive Officer, Google: Well we think that the problem with most people's mobile phones is that they're not powerful enough. You can't get all the rich aspects of the Web on your phone and so we built, with Andy's help, an operating system, a platform, whatever you want to call it, that runs inside your phone, that makes it do everything a personal computer can do on your phone.
SPENCER MICHELS: Well can I go and buy it and put it on my phone? How is it going to work?
ERIC SCHMIDT: What we did is we have announced the software, but now the hardware people, the phone companies and the manufacturers have to take that software and they have to put it inside of their phones so that it all looks to you like one seamless experience.
SPENCER MICHELS: So you are going to give or lease the software to these other companies?
ERIC SCHMIDT: Well we license it, but we license it in such a way that it's really a gift. Our license is so liberal that you, as a handset manufacturer, as a phone manufacturer, can take this and do whatever you think best for your customers.
SPENCER MICHELS: Andy, do you agree with all those terms - platforms, software, package, etc?
ANDY RUBIN, Director of Mobile Platforms, Google: Absolutely. You can think of it like the foundation of your house. It's the plumbing, it's the concrete, that's the first thing they do when they build a house. And then what type of house you build on top of that foundation? That's up to the developer.
SPENCER MICHELS: The developer meaning...
ANDY RUBIN: Meaning the person that's writing applications for a phone, or the person who's actually hammering nails building your house.
SPENCER MICHELS: So you're talking about applications. What kind of applications are you talking about? What do you do once you have this software in your phone?
ANDY RUBIN: So if you have a very powerful platform, it's like the foundation of your house and that platform has a lot of features and functionality, like accessing the internet. And then developers are free to develop on top of it whatever their passion is.
SPENCER MICHELS: And what is some of the things that could go on this phone?
ANDY RUBIN: You could have internet style applications. We see a lot of innovation happening on the internet. It happens very quickly. That innovation hasn't been so quick to happen on cell phones. So I guess by having a very sophisticated platform it'll enable that internet-style innovation on cell phones.
SPENCER MICHELS: Eric, what makes this different than the kind of phone that for example Microsoft is working on?
ERIC SCHMIDT: Those phones can do some of it, but they don't do all of it, and more importantly they're not standard. They're all specialized. So our offering, Android, if everyone uses it, people will be able to build the same application and have it run on personal computer, on Macintosh, and on a phone. The fact that they get to go to hundreds of millions of people means that software developers will love to deliver this platform.
SPENCER MICHELS: Now you say you're almost giving this away, why?
ERIC SCHMIDT: We're giving Android away because we benefit when the Web is better. We benefit when more people are using the internet, especially on mobile devices. And we benefit because when more people use Google, more people use Google search and every once in a while those people will use our ads. So eventually we think an Android mobile user is pretty likely to use Google advertising and our studies indicate that mobile ads are going to be worth a lot more than the traditional ads that we sell.
SPENCER MICHELS: Why?
ERIC SCHMIDT: The easiest example to think about is how personal your phone is. Everyone here, everyone in our audience has a mobile phone, very hard to get away from them. That phone is with them, it knows where they are. Imagine how we can use that information to provide a more targeted ad, if it were appropriate.
SPENCER MICHELS: And in designing this, Andy, are ads in your mind as well? Or is this just strictly an exercise in engineering?
ANDY RUBIN: I think it's a little bit of both. I think that we need a platform that's powerful enough to give it access. This is about access. And remember our business started out on the internet and we're bringing it to mobile. So this platform has to be capable of accessing the internet.
SPENCER MICHELS: You use the word "open" many times in terms of this software. What does that mean and how does it apply?
ANDY RUBIN: Something that's "open" allows both the industry and eventually the consumer to have choice. Something that's "closed" comes from one place and it's what we call "single source". Something that's open, a lot of people contribute to it and a lot of people can use it.
SPENCER MICHELS: Eric, I know you're on the board of Apple, but Apple is pretty closed with their products. They don't want everybody else going on top of their systems. Why do you want to go the other way with this?
ERIC SCHMIDT: Well Apple has a very different strategy, and one which makes sense to Apple. From a Google perspective, we benefit when everyone is using the internet in the most broad way possible because that means more people are using the internet, more people doing search, more people doing advertisements. So from our perspective, the broadest possible strategy is one which is open and the most flexible.
SPENCER MICHELS: So when it's open you benefit because more people are using the internet...
ERIC SCHMIDT: Let's imagine if television were closed. And you had to have three different televisions each with a three or four major networks. And you were constantly changing one dial and going to the other and you couldn't remember which channel was which. That's a bad outcome. It's much better to have a platform which everyone can use, no matter which television they're using and whichever program will run on it. The same is true for applications. It's fundamentally a better choice if everyone finds a common platform which they can extend, which makes sense to them where they can offer their special value added but it fundamentally allows people to build from one platform.
SPENCER MICHELS: Implied in what you're saying is the phone companies, AT&T and Sprint, Nextel and so forth are kind of controlling something that you want to have more open.
ERIC SCHMIDT: We have been concerned for some time with the concentration in the wireless space around a small number of carriers who don't give people enough choices. What we want to make sure is that you can go to a store, take any phone and connect it to any wireless network. That's not true today. It makes sense to us that in a proper functioning model, or market, you'd be able to take any particular device, any particular application and connect it to one of these networks. And of course you'd have to pay for that connectivity and use it appropriately. If the networks become completely closed, which we hope they won't, then the next start-up coming out of Stanford or Berkeley might not be able to connect their new invention into these large networks and that will be hurtful to customers.
SPENCER MICHELS: Andy, can you tell me what technical or scientific development made what you're doing possible?
ANDY RUBIN: Well basically we're freeing the user from their desktop PC. We're cutting the wires and we're allowing them to get up from their home or get up from their office and come into the real world. What's enabled, that is essentially Moore's Law. And that is the cost of processing technology is going down and down over time. So today our cell phones are about as powerful as your personal computer was six years ago. But you're carrying [them] around with you everyday, you spend 8 to 10 hours with them, run on batteries and of course they're connected to the broadband network.
SPENCER MICHELS: You must have thought of this, but to try to do what you can do on a computer on a tiny little thing and you're fingers are bigger than the buttons seems like a difficult task for those of us over 40. How do you deal with that? Why do you think you'd be able to persuade the population to use this little device when it's sort of hard to use?
ANDY RUBIN: Partly because people are using those little devices and they're cramming those thumbs, which haven't changed in size in 10,000 years, they're cramming those little thumbs and texting each other and so forth. The phone industry has proven that people will use powerful device that fits in their hand, and that they will learn how to use small keyboards or specialized keyboards. People will learn how to use all of those because the convenience of having all of that in your hand is so powerful.
SPENCER MICHELS: Is that something you thought about Andy? I mean your parents or older friends, can they kind of manipulate these little phones?
ANDY RUBIN: You know what makes me think about it, when I ride the subway or when I ride the bus or I'm in Tokyo, and I see kids just going at their cell phone like crazy, they're going to grow up and they're going to grow up rewired to do that for the rest of their life.
SPENCER MICHELS: I mean is there an attempt to get to the older part of the market? The ones who aren't kids?
ANDY RUBIN: I think it's up to the user to decide how they want to use the technology. For me, personally I'm 44, I enjoy learning from what you know the younger generation is doing on the internet and other areas and I like bringing some of that into my life. So I think you know I [have] a very optimistic view on technology so it could actually get me really excited and it makes me feel younger to be a part of it.
ERIC SCHMIDT: I would encourage you not to stereotype the users of these mobile devices. Older users use e-mail all the time. There's every reason to believe that they would like a powerful electronic mail device. They use instant messaging with their children and grandchildren. They take pictures from camera phones which unless they press a button they're trapped in a camera phone forever. All of those are tools and technologies which Android helps open, and make more available to everyone.
SPENCER MICHELS: Does Google think it might get into the hardware business and actually make a phone?
ERIC SCHMIDT: Well right now we're just announcing the software that we think would make a great Google phone. We've not announced, and have no current plans, to announce a Google phone piece of hardware. But there are plenty of partners who are busy building interesting kinds of hardware that would use this new operating system that we've announced.
SPENCER MICHELS: I talked to an industry analyst a week or so ago, Andrew Seybold, and this is what he said and I'm kind of curious as to how you would answer it. "Google's view of the wireless world is an extension of the Internet. And as much as I respect Google, the wireless industry can't be an extension of the Internet because wireless bandwidth is finite. It's a fixed resource and a shared bandwidth. The more people who use it in a given area the less data speed they have, so you can't take the Internet model and just move it to the wireless world. You have to change that model a little bit as you move forward." Is that fair criticism?
ERIC SCHMIDT: That's exactly the same criticism that was said about the wired Internet 15 years ago. That somehow the wired Internet would not scale, would not grow, that we would not learn how to build applications that could work for example in shared what are called hybrid fiber coax networks which you have at your home. The fact of the matter is that the industry can solve these problems and solves them very well. I completely disagree of the characterization that somehow the wireless network is going to be any different than the wired network. People want to use the Internet and they want to use it at home and in their office and when they're on the go and when they're on the airplanes. And they want to use the same powerful applications whether it's a personal device that they're carrying or on their desktop or at the beach.
SPENCER MICHELS: People want to use all the water they want to use, but there isn't enough water, so some people don't have enough water to water their lawns. That doesn't mean it's there.
ERIC SCHMIDT: Technology is different and the technology can create things out of nothing. The fact of the matter is that there's enormous spectrum becoming available through licensing programs, better radio design, faster computers, and so forth that in the next five or 10 years most of us will be carrying around devices that could speak on networks that are faster than the networks we currently use.
SPENCER MICHELS: Do you agree with the boss?
ANDY RUBIN: Absolutely. This is Moore's Law for wireless, or Moore's Law for spectrum. You know when we're on the wired Internet, in my day we had dial-up modems. Then we got DSL, then we got broadband, we're in the megabit speeds. Same thing happened to wireless. Remember those old analog phones where you'd get a dropped call every mile you traveled? Now we have digital phones, we have newer modulations that are helping us pack, densely pack, more calls in a single channel. And I'm just very optimistic that we'll have newer modulations throughout time that'll just get us faster and faster in the broadband areas.
SPENCER MICHELS: So Seybold saying that the bandwidth is finite, is it relevant?
ANDY RUBIN: Technology doesn't stand still.
SPENCER MICHELS: But bandwidth, if something is finite, that's all there is of it.
ANDY RUBIN: We just have to find better ways to make use of it.
SPENCER MICHELS: And there's no question that objection is not a serious hindrance to what you're doing...
ERIC SCHMIDT: All of these systems have a limit to them. We are nowhere near the wireless bandwidth limits. All of the analysis says that the wireless data explosion, the bandwidth explosion is at the beginning with new technologies around radios, new ways in which batteries use radios and compression and your phone so that you can have a television experience on your phone, a computer experience on your phone, and occasionally you'll even make a phone call.
ANDY RUBIN: So one of the things that really frustrated us when we created this system was when a developer is creating a program for his phone, he has the sole responsibility of creating that entire program all the way to what you see on the screen. One of the things that's amazing about the internet is people can leverage each other's work. So when a developer on the Internet develops a map application, and another developer comes along and decides to put on available apartment buildings for rent, you know in San Francisco, it creates a new application that nobody ever thought of. So we're bringing that concept to cell phones. We call that a "mobile mash-up". Where one developer has developed an application on the phone that does one thing and another developer can come along and take advantage of the application and create a whole, completely new hybrid application.
SPENCER MICHELS: Why is that any different than what I could do on a computer right now? On a PC?
ANDY RUBIN: Well that is exactly the point. Today, you can do it on the PC and you can do it on the Internet, and you can't do that on a cell phone and this platform changes that and enables more Internet and PC style creativity to happen on cell phones.
SPENCER MICHELS: Are you essentially taking the internet and transferring it to a cell phone? Doesn't that already exist? Isn't that what the iPhone does?
ANDY RUBIN: Historically we've seen more and more of the internet coming to cell phones, but it's still a piecemeal experience. When you sit down at your desktop PC you have certain expectations, we need to basically satisfy those expectations in a mobile world and this technology platform enables that.
ERIC SCHMIDT: An example of the kind of application that should be possible on a mobile phone involves the combination of location systems and social networks. My phone is personal. It also knows where it is. So it should be possible for me to say to all my friends, 'Here I am and where are you and where do we meet up and where can we go and where can we have lunch together' and do it in a completely seamless way. It's something that you probably wouldn't do on your PC because you're traveling or you're at lunch with your other friends. Because the mobile phone is so personal you can build whole generations of applications to know who you are and to know where you are and to do interesting things that you care about.
SPENCER MICHELS: Sounds kind of scary to me. And it sounds like it might be hard to manipulate that phone to make it do that. Is that true?
ANDY RUBIN: Well, if it's a successful application your friends will tell you to use it because they want you to be a part of their network. If you don't like to use it, you won't.
SPENCER MICHELS: So the phone that you actually got, that you are going to show us as an example, what can it do?
ANDY RUBIN: So one of the things that we do inside of Google here is when we create a software platform like this, we like to get as many people inside of Google using it so we're proving that we've created something valuable.
ERIC SCHMIDT: We call this the "dog food" principle. You eat your own dog food.
ANDY RUBIN: So we're just about ready to "dog food" the Android platform inside of Google.
SPENCER MICHELS: So how does it work?
ANDY RUBIN: I'm very happy with the outcome. We've been very focused on making it very useable - improving the user experience for the consumer to make sure that it's very easy to use for a young person, an old person, everybody has the same experience on it and I'm very pleased with what we've seen so far.
SPENCER MICHELS: Good. Thanks.