Google’s proposed $12.5 billion acquisition of Motorola Mobility throws up the big question ….
* First and foremost, buying cellphone, set-top boxes and tablet vendor Motorola Mobility for $12.5 billion (a 63% premium over Friday’s closing price) is a tacit admission by Google that ultimately Apple’s closed model of controlling all aspects of the smartphone experience (hardware, software and AppStore) is superior.
All but the diehard Fandroids would acknowledge that the iPhone or iPad user experience is far superior to Android be it in the user interface, availability of apps, security or developer support for the platform. We’re on our second iPhone and first iPad (V.2) for the most part have no complaints. Reviews of Android devices have rarely approached anywhere near the gushing praise its primary rivals, the iPhone or iPad.
It’s true that Google’s Android software has made considerable inroads in the smartphone market with 150 million devices and 550,000 activations a day. But when multiple vendors are peddling Android and the widgetry is cheaper than the iPhone, then 150-million doesn’t look that earth-shattering a number as it does on first blush.
* Second, Motorola has amassed a huge cache of patents, an area that Google has found itself to be at a disadvantage vis-a-vis Apple and Microsoft. Motorola has 17,000 patents and 7,500 patent applications.
Android vendors have already seen lawsuits from Apple, Microsoft and Oracle. From Google’s perspective, the patent outlook must have seemed pretty grim. With the acquisition, Google has muscled up on patents and provide a tough challenge to any rival in the court-room. Google executives made no secret today about their intention to protect the Android ecosystem.
* Third, the problem of fragmentation of Android must have been high on the minds of Google executives. While it’s true that fragmentation never occurred with Windows despite multiple PC vendors selling it, with Android there are two layers – manufacturer and carrier – before the gadget reaches consumers’ hands adding to the complexity of rolling out features, pushing updates, security fixes and getting more software developers on board to build apps for the Android platform.
* Fourth, the deal gives Google’s mobile ad programs a big boost by providing a huge captive base of phones to play with. With so much captive real estate available, the sky is the limit for what Google can do with it. For instance, Chrome can be the default browser, and easy access buttons for Google Local Pages/Place Pages can be offered on the Motorola phones.
* Fifth, Google can now be the default search engine on hundreds of millions of phones and tablets.
* Sixth, Motorola’s set-top boxes provide an entree for Google to launch a renewed push into the TV market where its success to date has been limited.
* Just Kidding: Finally, Google wanted to make desi boy and Motorola Mobility CEO Sanjay Jha richer by $90 million (thanks to Jha’s severance agreement). 😉
Android OEMs Screwed
If we were Android licensees HTC, Samsung, Sony Ericsson and LG Electronics today, we’d be looking for long, sturdy ropes.
After forking out $12.5 billion, it’d be mighty cavalier on Google’s part toward its shareholders not to screw rival Android vendors and provide preferential treatment to Motorola vis-a-vis Android. The only question is, not if but how soon is it gonna happen. Of course, today all of them pretended to be one happy Android family in order not to spoil the party.
Wonder how many people remember that Apple’s Mac cloning program did not last long.
We’d venture to say the writing is clearly on the wall for HTC, Samsung, Sony Ericsson and LG.
Do they have strong options?
No, unless they want to jump on the failed Windows mobile bandwagon.
Android OEMs are well and truly screwed, caught between the Scylla of Google on one side and the Charybdis of the iPhone on the other side.
On the flip side, for Google integrating 19,000 new employees can’t be easy although Motorola Mobility is supposed to operate as a separate unit.
Second, Google has little experience peddling hardware apart from the Google Appliance it used to offer a few years back.
Third, Motorola’s hardware (phones, cable modems and set-top devices) is a low-margin business and Google will find it hard to raise them to the level of Apple’s fat margins given that technology is only one aspect of a consumer device. The ooh-aah factor that Apple has managed to achieve with all its devices be they iPhone, iPad or the new Mac AirBooks is very hard to replicate unless you clone Steve Jobs.
Whether Google wins or Apple manages to stay ahead, interesting times are certainly ahead and we could at last see real competition for the iPhone/iPad and their fat margins.
And competition is always a good thing for consumers.