Wednesday, August 17, 2011

Google's Motorola Mobility purchase--Who wins, who loses?

Author: Riley Alexander, MD, MBA

The big news this week in the world of mobile was Google purchasing Motorola Mobility--the mobile division of Motorola that handles phones and tablets. This is a big step in the mobile wars being it means Google is actually, full-fledged in the hardware game now. They have dabbled in "curating" or "designing" phones a la the Nexus series, but those were still put together by manufacturing partners (HTC and Samsung) who eventually put out nearly identical phones under their own brand. Now though, Google ha, under its wing, an established player in the mobile arena--so who wins from this and who loses? These thoughts are merely my musings so take them with a grain of salt, but this is what I see from the deal.


--Google. Primarily for the reasons I insinuated above. But to elaborate, Google has never been strong with hardware and all their efforts have been somewhat lacking up to this point. With Motorola's expertise in the field, Google can pour its resources into manufacturing and design to help the Motorola combat and keep up with Apple. With the severe fragmentation facing Android, Google needs a place that can embody some sense of design and product unity. This gives it its best chance yet.

Of course, the big ace in the sleeve of this purchase was Motorola's healthy patent portfolio. This isn't real exciting, but the mobile world is in the midst of a patent war and Android is in the crosshairs. This patent battling has kind of gotten out of hand, but this should help Google even the field a little bit. If you want to read an opinion on how out of hand this gotten, Gizmodo has this.

--Motorola. Their handset and tablet business was completely reliant on Android and they had done well with it. Motorola was able to turn its Mobility division around from the dumps of a couple of years ago to a serious part of the market and divest of it for some very good money. A win for the company as a whole.

--Microsoft. This is my longshot in this category, but it's going to give away my losers--all Android manufacturers not named Motorola. With Google in control of Motorola, it's hard not to believe that Motorola will eventually get some kind of special treatment. If so, this may push other manufacturers over to Windows Phone 7 and may give the fledgeling mobile OS a much larger presence in the market if this does occur. Microsoft seems to be in a much better position than HP with WebOS to capitalize on any bad blood that brews between Google and its manufacturers to increase Windows Phone 7's exposure and help turn it into a real contender in the marketplace. With its significant experience in enterprise, it may even give them a leg up on ailing RIM/BlackBerry in that segment of the market--one much more up for grabs than the consumer market dominated by Apple and Android.

The Losers:

--HTC, Samsung, LG, etc. Basically all Android manufacturers not named Motorola. Google has claimed that they will not change business as usual, but I don't see this happening 1 or 2 years down the road. One of the biggest problems with Android right now is the OS fragmentation. The Google flagship devices (the Nexuses) have benefitted from OS updates at the time of release. Other manufacturers phones cannot even come close to saying this with very sporadic, unpredictable releases. In addition, these other manufacturers tend to overlay stock Android with their own "skins," e.g. HTC Sense, that for the most part detract from the core Android experience. It's hard not for me to imagine Google not, at least eventually, significantly favoring Motorola-branded phones (or even calling them Google phones) in the future once the acquisition phase has settled. With its own manufacturing and design teams in-house, one can easily picture Google taking a page from Apple's book with iOS-- making Android an OS with with a more consistent user-experience and reliable, timely updates. This cannot be good for the other manufacturers of Android. Only time will tell here, but having the parent-company of the software your mobile devices depend upon competing against you has to be a scary business partnership.

Where's Apple in all this? Waiting around to see if Google can now design a phone or tablet whose hardware lives up to their software accomplishments.

About the author:

Dr. Riley Alexander is a pathology resident at Indiana University School of Medicine, blog "addict" and avid follower of technology. His primary interests revolve around how technology, especially mobile, will create increased efficiency, enhanced physician education and better delivery of care in the medical field. Dr. Alexander is a graduate of Indiana University School of Medicine with a combined MD/MBA, in partnership with IU's Kelley School of Business. Due to this, he is also very interested in management, healthcare policy and non-clinical aspects of the medical field and enjoys exploring non-clinical opportunities for medical students, residents and physicians. He completed his undergraduate education at IU-Bloomington.

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