Home Articles Is Googorola a bid to challenge Apple?

Is Googorola a bid to challenge Apple?

0

There’s been a flurry of shy interpretations, punditry and, yes, speculation, too, since Google agreed to buy Motorola Mobility, the handset maker, for $12.5 billion.

Some see the deal as a defensive play that secures Motorola’s treasure trove of patents as Google protects its mobile Android operating system from lawsuits. Some others see in the deal a threat to other mobile makers who build phones based on the Android.

And, yes, most importantly, some speculate that this might represent Google’s biggest move to challenge Apple, which has set the gold standard for cellphones (iPhone) and tablet computers (iPad). After all, who doesn’t recognize the ambition of the search giant?

In this light, the Motorola acquisition presents the strongest means at Google’s disposal to challenge Apple, especially in the post-Steve Jobs era that has suddenly been brought upon us. Besides, the hugely lucrative television market still is up for grabs because Apple TV has yet to make an impact.

Indeed, it would not surprise me if the subtext of this acquisition is to revive Motorola and restore it to its former exalted position in the U.S., a position it has lost to Apple over the past few years.

Can Google pull it off?

Motorola Mobility has a meagre 2.5% share of the global handset market. Still, Google is getting a much more focused and streamlined business in Motorola Mobility, comparing to the tottering erstwhile Motorola, a goliath that was split into two units. Motorola Mobility’s portfolio of some 17,000 patents and another 7,000 patents pending globally is merely the icing on the cake for Google, after it lost a bid to acquire Nortel’s IP assets to a consortium including Apple, RIM, and Microsoft.

To challenge Apple, Google needs top-flight hardware skills, an area in which it is a novice. Hardware is the keystone for a concerted “extended home” push. Importantly, the goodwill captured by Motorola’s brand extends into the connected home in the form of its successful set-top box business. With the Google TV platform still struggling to find favour with both OEMs and consumers, there is a clear incentive for Google to drive home the benefits of a more integrated approach to multi-screen content, applications and other services.

Certainly, the future expansion of Google’s core advertising business depends a lot on taking its message not only wider but also in deepening the level of engagement with consumers. If that also means that Google gains a foothold in the high-margin market for “smart” hardware so much the better. Besides, Google’s hardware initiative will add a degree of diversification to the company, protecting it against a downturn or increased competition in online advertising.

More Android or better Android?

With the Motorola Mobility acquisition, Google has also taken the risk of alienating other Android phone makers. In an investor conference call following the deal’s announcement, the company sought to reassure doubters, saying the top five Android licensees – presumably Samsung, HTC, LG, Huawei, and Sony Ericsson – support Google’s acquisition. Nonetheless, there is a chance that Google may deter some Android licensees from committing more deeply to the operating system. The increasingly expansionist Samsung, perhaps, could be the most likely to break ranks, especially because it has its own Bada platform.

That’s a calculated gamble on Google’s part and, perhaps, it knows something we don’t as to those vendors’ future plans. The real question is: Will Google’s action drive those same licensees not only away from Android but also into the hands of other platform providers?

This seems less likely to us, at least at the time of writing. After all, the main alternative to Android, Microsoft’s Windows Phone, is barely different from Android. Like Google, Microsoft also sees its mobile OS as a Trojan horse for its consumer services, and more broadly its consumer-related interests, including advertising. So, it would be a case of “out of the frying pan and into the fire” for most Android licensees if they were to take this approach. OEMs may have way too much to lose in abandoning Android, although there’s nothing to stop companies such as Sony Ericsson from double-sourcing. Indeed, there may now be more compelling reasons to do so.

Tony Cripps is a principal analyst at Ovum, a business and technology consulting firm. Previously, he worked for many years as a technology journalist with a special interest in emerging mobile technologies. Ovum’s research draws upon over 400,000 interviews a year with decision-makers in business and technology, telecoms and sourcing. Ovum is part of the Datamonitor group.

Get unlimited access to our FREE business tools…

Need to raise capital? Want to become a more persuasive presenter? Want to master social media? Is it time to overhaul your website? Unlock the library to get free access to free cheat sheets and business tools. Click here for free business tools.