A little more than half way through Google’s webcast of its Q4 2013 Earnings Report, Stephen Ju of Credit Suisse posed the following question: “Hey Guys, So, I’ve always thought of Motorola as an asset for Google to push the agenda for both hardware, and software, and innovation to the OEMs, so how does the sale to Lenovo affect your ability to do that, and, also, was your ownership of Motorola ever an impediment to having a closer working relationship with any of the other OEMs, thanks” (quoted from the webcast, a link to which has been provided here).
I’m interested in the Motorola Mobility sale for the following reason: in my opinion the Moto G smart phone, with its sharply lower $179.00 retail price, amounted to the equivalent of a nuclear weapon in an otherwise conventional war for market share between Android OEMs.
I don’t think the market could support a nuclear-enabled Google. Prior to the sale of Motorola Mobility to Lenovo, Google simultaneously played the roles of merely another hardware OEM, and the parent company of what was once Android, Inc. I’m skeptical about the patience an aggressive competitor like Samsung would be willing to bring to the task of “peaceful coexistence” with Google in this dual role.
Bottom line: Sure, Google lost almost $8 Billion on its foray into mobile phone manufacturing with its purchase and sale of Motorola Mobility, but through this divestiture it regained an ostensibly neutral position in the wars between OEMs for Android platform market share. Better yet, it retained all of the valuable patents, which may transform the loss into a long term gain.
Patrick Pichette replied to Stephen Ju’s question, with a confused reply: “Well, the short answer is, you know, we believe this is a great transaction where everybody wins. I think that Motorola will, you know, in the mature handset is a terrific partner, and will provide scale, and continued momentum on what it has done very well, which is develop world class product.” (ibid) He did not directly answer the question. One can only think some of the confusion of his phraseology resulted from the need to reply very quickly to a question otherwise requiring a more complex and subtle response.
Another point worth noting about Patrick Pichette’s reply: In the next sentence he mentioned another Google acquisition with another very high price tag — Nest, Labs. One can only hope they know where they’re going with this one.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved