The atmosphere in the current market is odd and unpredictable. Google´s Android mobile OS emerged and started
Google announced that the point of the transaction is to boost Android for mobile devices. Which are the main reasons that explain this move? Why Google decided to buy Motorola?
The atmosphere in the current market is odd and unpredictable. Google’s Android mobile OS emerged and started growing to an unexpected extent, comfortably exceeding Apple. In the last quarter, 50% of smartphones sold worldwide use Android, compared to 20% of IOS, the system of the iPhone and iPad.
But, which are the main reasons that explain this move? Why Google decided to buy Motorola?
- Patents: by buying Motorola, Google acquires around 17.000 patents. This will allow Google to defend against an avalanche of lawsuits to its Android software, used in more than 150 million mobile devices worldwide.
- Hardware division: Google needs a hardware division. Its own business, software and advertising, is much more profitable, but it is also volatile. Motorola has the know-how, the procedures and the engineering to manufacture devices. Google is now in a much more robust position than before. They have a wide spectrum of possibilities: smartphones, tablets, televisions connected to the web, etc.
- Knowledge of the mobile business: Google already tried to produce their own smartphones (Nexus) and the results were poor, not because of the quality of the phones but because of their lack of knowledge of the mobile business. Motorola will provide the expertise of 40 years in the business.
- Position in the market: Google is now placed in a new position in a battle where it competes at the same time with Microsoft, Facebook and Apple. Its already proven ability to seduce with services will now be reinforced with a hardware division.
The future will only tell if Google will respect Motorola’s culture or if they will try to inject their own. If they go for the second option then they would have only bought a package of patents. But if, instead, they allow Motorola to keep making what they do best, telecommunications engineer, they could have done one of the best transactions.
Nevertheless, this represents some risks for Google: leaving the familiar field of software manufacturing to venture in hardware, a business where competition is ruthless. Also this implies to manage manufacturing facilities, inventory, network operators and retailers.
In our opinion, one of the main risks Google faces is attempting against its own business if it alienates with those partners that helped Android to have the greater participation in the global market of OS for smartphones.
“Google is in the business of providing software to hardware manufacturers and buying one of those manufacturers won´t be received by the others in the best way”, said Charles Golvin, Analyst in Forrester Research. Companies such as HTC Corp and Samsung Electronics Co. that resorted to Android as a way of competing with Apple, probably will balance their bets by creating more devices using the operating system for mobile, Microsoft Corp.
Google announced that the point of the transaction is to boost Android for mobile devices. But only time will tell if this move brings successful results to Google and how the mobile map will be altered.
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