Not everyone thinks that Google’s $12.5 billion purchase of Motorola Mobility was a master stroke:
So I should be looking at Google’s purchase of Motorola Mobility as a brilliant move yet I am not. Instead, I am looking at this deal as a real opportunity for Apple (AAPL), Research In Motion (RIMM) and Hewlett-Packard (HPQ), all of which have their own operating systems for cell phones and/or tablets and all of which watched in horror as Google entered the market and soon gobbled up more than 40% of the wireless device market with Android.
But this is the downside for Google.
It can say, all day long, that Motorola Mobility will stay as a separate division and that Android will remain open and available for all to use, but that does not mean that those who have already stepped up to Android believe Google. The current Android landscape includes Samsung, LG, HTC, and scores of other phone and tablet companies, all of which believed that Google would continue to provide Android for them and they would all fight it out in the marketplace, each with their own special enhancements to their version of Android.
That’s certainly one argument.
I can only wonder what business the people at Google think that they are in? I think that they are in a service business: they search the Internet for people and provide enhanced visibility for their paying customers. The people at Google apparently think they are in the intellectual property business. I’m skeptical.
I’m even more skeptical that they’re in the hardware business. Yes, Google is now a very big company. But it’s a big company with little or no experience with supply chains or logistics or hardware design or production or negotiating production contracts or any of the thousands of other details.
What is their passion? I can’t imagine that it’s pads or cellphones.
As I write this I sit and look at my own smartphone, a Motorola Droid 2 Global. Will this be the penultimate generation of this phone?
I was also a little perplexed by this move, but just for the sake of argument: while Android now commands an impressive market share, its actual revenues remain puny:
http://searchenginewatch.com/article/2050037/Android-Ad-Revenue-Forecast-to-Top-1-Billion-in-2012. Given the size of the market, $1 billion in ad revenues is just terrible performance.
Combine that with the even more lackluster performance of Android Market, and the increasing risk of painful lawsuit settlements, & the potential for Android to be anything other than a loss leader looks pretty grim. They need a different business model.
I find myself wondering if this spells the end of the open-software movement.
Don’t forget about MeeGo!
Actually I think it spells the start of the open hardware movement. Google can design and release open source hardware, backed by a nice patent portfolio. Anyone can use the design so long as Android is the OS, and Google is the default search engine. Google can then stay out of the low margin manufacturing biz except for a reference phone / tablet every year aimed at developers and capitalize on web revenues from umpteen hardware suckers, er companies.
Android needs to be more closed. When we talk to app developers they’re all sick of Android. Android fractures with each new device, so in effect there are dozens of Androids and writing an app for one does not guarantee it works on another. A second complaint has been the quality of Android apps — way too many examples of phony, even criminal apps, apps designed solely for stealing your data for example. Finally developers tell me disgustedly that Android users don’t pay for anything.
So the building consensus seems to be: build your app for Apple, and if you have some leftover cash and don’t care how your product looks or works, knock out an Android version. We wouldn’t bother with Android at all except for the fact that Apple doesn’t reach as far into foreign markets.
It’s not all bad. Android is the only one that will let you test on an actual phone without becoming a member and paying a fee for instance. Doing anything audio related or compiling natively for efficiency is a giant pain in the rear.
I see some formalization of hardware designs coming though with this Mot purchase and tablets are already pretty much the same hardware-wise.
Yeah, hard to say what the thinking is here. I had thought Google wanted to me the Microsoft of mobile OS’s, but if they’re going to try to compete in the hardware market they may end up being more like IBM.
I don’t know jack squat about these technologies, so I’ll just echo Dave’s sentiments from a theoretical point of view. Stray from your core competency at your own peril. Many skeletons along the business highway from doing this……
Google designs and builds their own datacenter servers, and has for some time, so there’s a fair amount of hardware expertise in the company already.
http://news.cnet.com/8301-1001_3-10209580-92.html