Tuesday, August 16, 2011

Google Motorola Deal, Protecting Google’s Future

Google is about advertising and influencing the purchasing process. This is where their value is and where they create their revenues. Android is and will be critical in advertising and purchasing decisions considering the smartphones increased importance in the retail environment and the growth of m-commerce. First and foremost this deal was about patent protection, protection of Android and protection of future revenues.

Google was facing pressures from Microsoft who were exacting a tax on their Android partners for Microsoft patents, charging HTC $5 per Android handset and possibly charging Samsung as much as $15 per Android handset. Google needed the patents to handle these and other patent infringement issues that have come up in Europe, as well as future patent infringement issues.

Google has to manage the Motorola relationship with a hand off approach and sell the manufacturing capabilities if it creates conflict with its other Android partners. In the end Google wants to promote overall adoption of Android to promote its position in search, advertising and purchasing.

Google wants to be a major part of the customer’s purchasing process and has all of the pieces: Google Deals, Google Places, Google + and Google Wallet. All of these are not major players in their perspective areas, but put together with support of discounts to create loyalty and a good user experience, these services can create a strong consumer pull. Google Wallet is an important component of this strategy. Having an OEM to install NFC chips and Google Wallet will give the company the distribution relationships to create momentum in the market. The Nexus handset and only one carrier’s support (Sprint) is not likely enough to create momentum. With Motorola Google can try an end run around ISIS and also gain some international acceptance of Google Wallet in countries where carriers do not have as strong a distribution position as the US.

Much of Google’s future as the center of consumer buying experience on the smartphone is riding on Android and it had to protect its position in this very competitive smartphone market.

1 comment:

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