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A very interesting move by Google this morning, buying handset hardware maker Motorola for $12.5 billion.

Google deserves credit for a big, bold move.

But let’s be real: This deal could end up being a disaster.


Well, for starters, the deal creates major channel conflict: Google is now competing with its partners. And hardware manufacturing is an entirely different kind of business than Google’s core business. And hardware manufacturing is a crappy, low-margin commodity business. And Motorola is massive–Google has just increased the size of its company by 60%. And the deal appears to be purely a defensive move, not an offensive one. And so on.

Let’s have a look at some of the host of questions and challenges the deal raises, starting with the channel conflict:

How do HTC and Samsung, two of the leading Android-based smartphone makers, feel about the fact that their “partner” Google is now competing directly with them for hardware sales?

And we mean, how do they really feel, internally, not “what are they saying in public?” (The quotes Google has assembled from HTC, LG, et al, all appear to have been written by the same PR person–note the similarity in the language.)

The only reason Android (and Google) have any share of the mobile game, after all, is because hardware makers like HTC and Samsung adopted Google’s software platform. And now Google is stabbing them in the back.

By now, it’s probably too late for Samsung and HTC to switch to another platform, so they’ll have to smile and make the best of it. But still… having your software “partner” suddenly fire a missile down your throat  can’t feel too good.

And if Google-owned Motorola starts to gain share in the hardware business, the feeling (and tension) will only get worse.

Continue via THE TRUTH ABOUT THE GOOGLE-MOTOROLA DEAL: It Could End Up Being A Disaster.


Written by Kees Winkel

August 15, 2011 at 18:48

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