Thoughts on the tech industry bailout

I presume the big topic of discussion at the CTIA conference this week is going to be the government's emergency bailout package for the tech industry. I was surprised this morning when US Treasury Secretary Tim Geithner replaced RIM CEO Mike Lazaridis at the CTIA keynote to announce the package, and ever since I've been scrambling to sort through all the details. A lot of it's still fuzzy, but here's what I've been able to figure out so far:

--The largest single element in the bailout seems to be the $20 billion in subsidies for Motorola. I think the biggest shock here was President Obama's decision to replace Moto's co-CEO Greg Brown with Steve Wozniak. "We tried to get Steve Jobs, but he demanded control over the Seventh Fleet as compensation," Geithner explained. "So we went for the closest substitute we could find. Besides, Woz was available since he just got kicked off Dancing with the Stars."

Geithner said the subsidies to Motorola were originally designed to protect high-paying phone manufacturing jobs in the United States, but then the government discovered that those were all outsourced to China a decade ago. So the government settled on a requirement that the guy who glues the bat-wing logos onto Motorola's phones has to be an American citizen. He has already been hired, his name is Joey Carbonic, he lives in Wenonah, Illinois, and the crowd at CTIA gave him a nice ovation when he was introduced during Geithner's keynote.

There's a rumor at the show that the government also agreed to buy 500,000 unsold ROKR handsets and give them free to poor countries as a gesture of friendship, but that was denied by a government official who spoke to me off the record. "We're trying to get people in those countries to like us," he explained.

--In the spirit of the forced mergers between failing banks, Geithner announced the combination of Sun, Sprint, AOL, and 3Com. Called 3Sprun and combining the best of all four companies, the new firm will specialize in Java-based 56kbps wireless modems.

--I haven't been able to confirm this yet, but Palm has apparently been offered $2 billion in loans if it adapts the Pre to run on biomass power and merges within 30 days with either Black & Decker, Digg, or SonyEricsson. Ironically, reports from Stockholm say that the Swedish government has offered SonyEricsson 20 billion kronor if it merges with Airbus Industrie, so we may get a three-way deal that would see Treos built into the seat backs of every A380.

--Geithner also said $40 billion in grants have been reserved for use by Yahoo and/or Microsoft. "We like to plan ahead," he explained.

Those are just the highlights. There are apparently a lot more deals being arranged, with venture capitalists and members of Congress competing to get subsidies for various firms. The most intriguing rumor so far is the plan to provide three Twitter accounts to every American as part of the stimulus package, to produce the illusion that the country's population has suddenly tripled. And then there's Cisco's buyout of Six Flags to advance the creation of networked roller coasters (hey, it makes at least as much sense as their purchase of Pure Digital).

I don't know how those will turn out, but things are certainly going to get more and more interesting now that the government has decided that the free market can't be trusted to run the tech industry.

By now you've probably realized that this is April 1, and like the extended iPhone survey last year (link), the Spitr announcement in 2007 (link), and the Google-Sprint merger in 2006 (link), nothing I wrote above is true.

I hope.


matthew said...

great article, since you mentioned twitter I thought you might like to know this other related news

not sure if you saw this in the news, but a major newspapers is now moving to publish with twitter

also, twitter is coming out with a new device

Anonymous said...

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I needed that laugh this morning!
Great site, great article, keep up the great work.

Phil said...


Its funny because it sounds like it smells.