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Controlled Risk & Consolidation

Motorola Mobility gives Google a consistent hardware partner with which to evolve software and hardware directly for the first time. This should give future Motorola handsets first access to new Android firmware and will inevitably be the final nail in the coffin of its unloved Android skin Motoblur.

Google has been desperate to steer partners away from their customisation of Android because it dilutes and fragments the brand and now it has the muscle to enforce it. Motorola models will come with hardware specifically designed to get the best out of Android and partners will need to fall in line or fall by the wayside.


For rivals the patents are a powerful warning that Google is looking to cement its place as an established member of the smartphone market. The fact Google has revealed a $2.5bn break fee will be paid to Motorola Mobility should the deal not go through is evidence enough that Google means business. But there are pitfalls too…

Until now Google has played nice. Android is essentially open source, Android Marketplace lacks the rigorous policing of Apple's App Store and all partners were treated as equals. Now, to misquote George Orwell, Google continues to stress all partners remain equal, but one partner is more equal than others.

The knock-on effect could see the likes of HTC, Samsung, LG and Sony Ericsson diversify after being reminded how little control they actually have over the platform which dominates their handset businesses. This has happened before with Nokia's dominance of Symbian and any attempts to show Google who is boss could see Windows Phone reap the biggest rewards.
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Some have suggested Google may eventually sell off the Motorola handset business as a show of good faith, but that would seem naïve. On the one hand Google's new glut of patents will protect partners, but in exchange it will use its newfound hardware capabilities to exert a greater level of partner control. After all without Android many of these companies would have floundered, lacking a platform to challenge the closed systems of iOS, BlackBerry OS or even WebOS – yet recently they have been running riot so the takeover is a timely reminder of the hand that feeds them.

Ultimately the deal is likely to mark a further period of consolidation within the mobile phone sector. Apple's gargantuan profits are certainly a motivator to move to a combined hardware and software model and should Microsoft complete its long rumoured takeover of Nokia's phone division every major mobile platform will have sizeable factory production capabilities.

It may be ruthless, but Sun Tzu would be proud…

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