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Does Google Really Want to Challenge Apple?

Mon, 08/15/2011 - 12:40pm
Andrew Berg

Will Google's acquisition of Motorola Mobility be the key to the Internet giant growing horns big enough to go head-to-head with Apple in the handset market? A lot of people say yes, but one wonders how or whether Google will use its new prize to those ends. Off-the-top speculation has been that Google will be content to sit back on those 17,000 newly-acquired patents and keep its nose out of things, which sounds less like a plan for attack and more like a defense strategy.

Google has been adamant that it will be business as usual for Android and Motorola, but Roger Entner, founder of Recon analytics and longtime industry analyst, says that a deal this big doesn't get done without significant changes in mind. Entner says the temptation for Google obviously will be to produce a more polished Android experience.

"They could do a much tighter integration, with the software and the hardware coming out in one step. When they're coming out with a tablet, it's actually with software that does it well," Enter says, while at the same time acknowledging that any indication that Motorola is getting preferential treatment could leave other OEMs like Samsung and HTC with a bad taste in their mouth. 

Widely published official comments from major Android OEMs on the deal focused primarily on the “protect the platform” angle:

“We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.”
- Peter Chou, CEO, HTC

“I welcome Google's commitment to defending Android and its partners.”
- Bert Nordberg, President & CEO, Sony Ericsson:

“We welcome Google's commitment to defending Android and its partners.”
- Jong-Seok Park, President & CEO, LG

Reading between the lines, one wonders whether the likes of LG and HTC are keeping their cards close to their vest as they wait to see how the partnership plays out once the deal is sealed. If Google makes the move to put Motorola ahead of everyone else in an all-out war against Apple, might Windows Phone 7 be the benefactor of OEMs defecting from Android?
  
Enter says yes, absolutely. "Windows Phone is the big winner in today's deal," he says.  

It seems like everything Google could stand to gain in the way of making better handsets through this partnership is potentially offset by the effects it will have on its relationships with other partner OEMs. Still, a better product is a better product, and Google has long been criticized for not being more proactive in reducing fragmentation. Could a good blueprint, or gold standard, arising from its work with Motorola solve all those problems, showing those other OEMs the way to a better Android experience?

Entner says that's a possibility, adding that if Google were to iron out some of Android's rough spots with Motorola and then publish those results for the entire community to use, it could be a boon for the whole ecosystem.

Still, taking on an entire manufacturing enterprise is a huge step for Google and there's nothing that says going hands on with Motorola would be any more successful than Motorola already has been on its own.

According to Nielsen's second-quarter 2011 numbers, fully 28 percent of all postpaid smartphone subscribers in the United States are using an iPhone. Motorola owns 11 percent of that population, behind first-place HTC at 14 percent. Market share percentages tend to rise and fall in lower single-digit percentage points from quarter to quarter, which means Motorola has a major uphill climb ahead of it to become America's favorite smartphone. Will Google really want to make the climb?

Avi Greengart, research director for consumer devices at Current Analysis, is skeptical, suggesting that the risks for Google of optimizing Android for Motorola handsets are far too great. "If Google goes into a full vertical model where it optimizes Android for Motorola’s handsets, then it will push away its other licensees, reducing the growth of the Android market overall," Greengart says. "That is literally the last thing Google wants... Google bought Motorola so that it could protect both itself and Android licensees from patent lawsuits and remove some of the IP cost of building an Android phone."

The expertise is clearly there on both the hardware side and the software side. What's unique in this situation is that fully capitalizing on that arrangement could be damaging to the platform itself.

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