Google’s buyout of Motorola – Winners and Losers

My company socialnuggets scoured through social media data to see who the winners and losers were in Google’s acquisition of Motorola. Some of them are very obvious. Motorola and Microsoft in the winners section, and Android OEMs such as HTC, Samsung and LG in the losers section. However, it is unclear whether Apple, Nokia, RIM and Mobile operators are winners or losers in this race. Here are some of our thoughts. Please add your comments:

Clear Winners

Motorola is a winner since it got an excessive premium over its current share price. Microsoft is a winner since all of Android licenses now want to at least invest some portion of their resources on Microsoft’s Windows Phone and its latest Mango version of Windows Phone is making progress in the market. PC Mag’s article has done a good job in explaining this.

But how will Nokia, RIM and Apple  fare from Googorola?

Clear Losers

Google’s Android, which has been gaining in popularity, may see some defensive moves from its OEMs such as HTC, Samsung and LG who feel threatened by Google- Motorola phone despite Google’s assurance to the contrary. Google is a loser since it has overpaid for a patent portfolio that may not have the same level of relevance today as when these patents were developed. To quote Dan Ravicher, the executive director of the Public Patent Foundation from this Huffington Post article” There’s a patent bubble — a lot of speculation and bidding up. This reminds me of the housing bubble, the dot-com bubble. Five years from now, people will realize that they have overbid.”

What about Apple, Nokia, RIM and others?

Is Apple a loser in this? If OEM’s jump the Android boat, Apple will see less competition from Android. In that case, Google will put its energy in Motorola phone and in creating an end-to-end experience like Apple which may be more of a threat to Apple in the long term.

Is it a win for RIM, the makers of Blackberry phones? RIM has been losing market share and this may accelerate it. However, it also has a rich set of patents which will now be overvalued like that of Motorola’s thereby helping increase the valuation of the company if someone were to acquire it.

Is it a win for Nokia? Nokia had a choice of betting on either Android or Windows Phone and it chose the later and now must be happy with its decision. If Google indeed becomes an end-to-end supplier that will put Nokia at a disadvantage. Like RIM, it also has a very rich patent portfolio that may be overvalued if Microsoft were to pull the trigger on buying Nokia.

This may reduce the choice for both the consumer and mobile operators and when that happens prices go up and innovation suffers. So no matter which company wins, the consumer loses.

Conclusion

With this deal of Google buying Motorola, Microsoft and Motorola seem to be clear winners while Google and most of Android OEMs seem to be clear losers. Apple may benefit or lose depending on how Google handles this acquisition. RIM and Nokia may benefit or lose depending on what Microsoft may decide to do. This may also affect consumer and mobile operator choices when it comes to smartphones.

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Mobile, Social & Cloud – How will these three trends of 2010 do in 2011? Part-I Mobile

Mobile Computing, Social Networking and Cloud Computing have been driving tech industry for 2010 and will likely continue to be the driver for this year. What differences, if any, will be felt in evolution of these trends this year. Here are some of my opinions and I sure would like to hear yours on these topics. Part-I of this blog deals with Mobile issues while Part-II will deal with Social Networking issues while Part-III will deal with Cloud Computing.

Mobile Computing Trends

The three big trends in Mobile Computing are:

• Android and Mobile Phones
• Tablets and iPad
• Apps Apps

Android and Mobile Phones

Android was the big news of 2010 and will continue its march into mobile dominance. However, as Android moves more into the mainstream, battery life, fragmentation, usability and app store issues will come in its way of total domination. Apple will innovate again this time improving speech interface and competing with Google on replacing our remotes, wallets and keys with mobile phone. In the mobile industry, the dominance for No.3 spot will be fought hard between Microsoft, Nokia and RIM. Who do you think will be the winner in the end?

Tablets and iPad

Tablet was the big news of 2010 but competition to iPad only arrives this year. Android may take the second spot and battle for third spot will be fought between HP’s Palmtop, RIM’s Playbook and a player we don’t know about yet? Having used iPad for the last few months, I think Tablets have the potential to replace laptops for many users. What are your experiences?

Apps Apps

Apps was the big news of 2010 with limited monetization but new business models will emerge making monetization easier. HTML5 will become viable for many content applications and start to become the trend of 2011. In fact, that is the only way Microsoft, Nokia and RIM can neutralize some of the momentum of Android and iOS applications. You can see over 70 conversations on Linkedin at http://linkd.in/h7hhr5 about this topic

Conclusion

Google’s Android and Apple’s iOS will continue its dominance for mobile phone and tablets but battle for No.3 spot will be fought between HP, Microsoft, Nokia and RIM.

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Android Market Share 28%, Google 10% and iPhone 21%. Should Google continue on its mobile path or change?

This week NPD released a report which had some encouraging report for Google’s Android which had 28% market share this quarter with iPhone’s 21% and Google’s Nexus One with 10% in the US. Finally, Android powered phones like Droid from Motorola and Droid Incredible from HTC are making inroads into Apple’s iPhone market because of the combined effect of good phones and a good network. Many iPhone enthusiasts will argue that these comparisons are not real since one phone is being pitted against 18 Android phones but that is the topic for a different blog.  The topic that I want to tackle in this blog is  – Can Android do even better and if so what should Google do before it is too late? I have owned and played with Nokia N series phones, Blackberry, Google’s G1, N1, Droid Incredible and iPhone.

Here are things I think Google should do if it wants to be a true leader in this space

1)   Reduce Fragmentation of Android

2)   Build phone for the masses and not just for tech savvy consumers

3)   Improve App Store Experience

4)   Leave hardware sales to OEMs

Reduce Fragmentation

Fragmentation = Too many versions, no defined minimum hardware spec, no defined minimum app set and incompatibilities across versions and vendors. Nokia is a prime example of a vendor whose customers and developers suffer everyday because of this issue while Apple enjoys almost zero fragmentation. Yes there is Linux but even that was organized by Redhat and couple of other vendors.

So, Google, please take a leadership role and put some discipline into various licensees, define and force some standards for the OEMs but maintain its open source, freely available advantages.

Build phone for the masses and not just for tech savvy consumers

I have used three generations of Android phones – G1, N1 and now HTC’s Incredible. Yes these phones are getting better with every release but Google needs to be improve Android’s usability for everyone. For doing most tasks, Android requires at least 2-3 times the number of clicks compared to an iPhone.  Being a tech savvy consumer, it didn’t take me long to get used to Android phone and get almost spoiled by the customization it offers.

So, Google, please hire some great UI folks who can mask the complexity for average user while keeping the customization advantages.

Improve App Store Experience

With the sales of Android going up, developers are happy and ready to look over many of the disadvantages of App Store. Monetization possibilities brings developers but actual easy monetization will keep them there. There are many forums just discussing issues after issues like mobile only availability, currency issues, poor discovery, lack of ability to send app links in blogs and others.

So, Google, please improve usability of App Store and make it easier to discover content and monetize while keeping control to the minimum.

Leave hardware sales to OEMs

After looking at what amazing additions HTC has done with its new Incredible phone and how OEMs have managed to make Android phones available through all operators in the US and abroad, it is high time Google abandons its own hardware sales and instead concentrate on doing the best in software that it is capable of. Yes, it should promote all OEMs and especially ones that are most innovative.

So, Google, please leave the hardware sales and manufacturing to your OEMs while you promote them and help them be successful.

Conclusion

Google has built an incredible software platform in Android which can be exploited fully by various handset manufacturers. Google should exercise some control in reducing fragmentation, improving usability, improving App store experience and leave hardware innovation to the handset vendors.

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Finally some good news from MWC 2009 — Can we now build $100M Mobile VAS companies?

One of the significant news from MWC 2009 (mobile world congress) was the culmination of rumors with official announcements of app stores. Now we have a long list of Application Stores including:

• Apple is the innovator and king of this and called it Apple App Store
• Google called its app store as Android App Market
• Nokia extended its service brand Ovi to Ovi application store
• Microsoft may call its service SkyMarket and its own service as My Mobile for Windows Mobile phones
• RIMM called it Blackberry Application Store Front
• Samsung for its smartphones created Samsung App Store

Why is this significant for the Mobile VAS (mobile value added services) market?

Until now, Mobile markets have suffered from 3Ds:

• Distribution
• Discovery
• Dollars or whatever Currency you prefer

Theses announcements solve two of the problems -  that of Distribution and Dollars.

With smartphone sales estimated at over 60M units in 2008, it is clear that software developers only working on smartphone now have access to a large market. Should VAS developers even bother with lower-end phones? We will tackle this in a later blog.

How did we reach the 60M units number – based on many articles and estimates with the best one from Eric Zeman at Information Week.  Here is the breakdown which may cause many arguments and surprise many:

• Apple shipped 14M in 2008
• Microsoft shipped 20M in 2008 – yes more than Apple
• Nokia shipped 18M in 2008 with N and E-Series counted as smartphone
• RIMM shipped close to 14M in 2008 of Blackberry Curve and up

With an average price of $20 per application/application pack for the life of smartphone, there is room for many $100M software companies in the mobile VAS space with focus only on smartphone. No need to have large expensive sales forces calling on many mobile operators worldwide as distribution is now possible from the app stores which in most cases give 70% of the revenue to software developers rather than 20-50% which operators are giving to the software developers. So what does this mean for Mobile Operators – relegation to being a dumb pipe or? Of course, it is different for different geographies – we will tackle that in a later blog.

Now comes the third problem something that has plagued most application stores including that of facebook, myspace and hi5. Yes that is the problem of discovery and this is where virality, usefulness and marketing becomes ever more important. We will tackle this in the next blog.

R. Paul Singh

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