Subscribe to this feed via RSSWhen I found out that Motorola Mobile possessed 24,000 patents it made sense that Google would purchase them after losing the Nortel patents. It’s obvious this will help protect Android from the Apple and Microsoft law suits, but many believe Google also wants to utilize Motorola Mobile’s hardware business. This would allow Google to compete directly with Apple in the integrated hardware/software business. If true, I think this is because although Android is seeing an increase in market share Google has nothing to show for it monetarily.
Before the iPhone Google was worth $100 billion more than Apple, and valued twice as much as them. Now, after four years, while Google’s market cap stayed the same Apple has went ahead. iPhone revenue has increased, contributing to an insanely high market cap, which has Apple as the most valued company in the world (at more than 335 billion). Although Android is on 43% of smartphones, the Android operating system is free (Google does not charge a licensing fee), which means it doesn’t add to Google’s bottom line. Android’s share rose from 0% to over 40% over time but this meant barely little growth for their revenue.
The difference is that Apple makes their phones. Google does not. Google’s Android “software” is dominating the market, but Apple makes a lot more money than Google in the smartphone business. Ultimately Google needs to start taking advantage of Android’s market share dominance and entering into the hardware/software business would be a reasonable way to do this, but competing head to head with Apple in “this way” could be extremely hard. The hardware business is a different beast, and even companies who specialize in hardware development with product presence haven’t been able to challenge Apple.
Google’s biggest hurdle will be “winning the consumer”. Yes they have an exploding market share of android powered smartphones, but those consumers buy smartphones made by HTC, Sony, and LG etc. Within these brands certain Android smartphones sale better than others because it was those brands who “won the consumer”. Google has never had to build products and convince consumers to purchase them. Apple already has this down to a science and they are one of the best marketing companies in the world. Apple understands form factor, physical user experience, retail psychology, supply chain, strategic pricing. Google can definitely learn these, but not from the Motorola Mobile unit they just bought. Not to mention that every other hardware developing company has had time to study Apple’s methods for years, and still have yet to compete.
This will be interesting.
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