“Why did Google Acquire Motorola Mobility? This deal will also offer
Google leverage against patent suits brought on by its competitors. This partnership will also give Motorola its first entrance into the OS front, where innovations in the mobile space have been occurring.”
Why did Google Acquire Motorola Mobility?
Google and Motorola just announced that Google will be acquiring Motorola Mobility, Inc. for
$12.5 billion. Google’s primary objective in this deal is to bring Motorola’s 17,000 mobile
patents in-house to defend it against the Apple/Microsoft-led consortium which is currently
demanding $15 in patent licensing fees for each Android handset sold. This deal will also offer
Google leverage against patent suits brought on by its competitors. This partnership will also
give Motorola its first entrance into the OS front, where innovations in the mobile space have
been occurring.
Google’s Growth in the Mobile Sector
Google hasn’t been shy about their ambitions in mobile: Google Android is the world’s mostused
smartphone operating system. Like Ansible, Google believes that mobile will be a bigger
category than conventional web. It didn’t take long for Google to address the OS fragmentation
issue by launching their own platform, stemming, in part from the difficulties of trying to get
Google Web apps like Gmail supported on countless different OS types. Taking control over the
OEM was the final piece left, and while Android has generated tremendous developer support
due to its flexibility, it has also given birth to the often critiqued variations within the Android
platform. This acquisition gives Google Apple-like control over the end-to-end user experience.
Google’s ability to balance OEM’s is where this all gets interesting. And, we believe in each
potential scenario the consumer will win.
Advantages
The best case scenario for Google is that it is able keep the other OEM’s happy and will manage
to get a more consistent look/feel between devices and consolidate the total number of
handsets, all while maintaining large volumes and improving the overall end-to-end consumer
experience. This ability to vertically integrate its mobile properties will allow Google the ability
to innovate its operating systems without waiting for mobile technologies to catch up; both can
be developed simultaneously.
An improved consumer experience will make Android an even more valuable platform for
advertisers, one that offers quality reach and scalability. This offering becomes even more
interesting as the Android platform spans across screens into tablets and potentially desktops
and set top boxes. More than a hardware play, this acquisition is meant to defend the Android
platform but will also force Apple and Microsoft to innovate quicker.
Until now, Motorola’s mobile capacities have been in the hardware space, while all of the latest innovations in mobile have been occurring in the OS space. By being a part of Google, Motorola as a brand will have the opportunity to be relevant and competitive again. It will also allow the company to focus on configuring its devices for just one OS type as opposed to various types.
Disadvantages
The worst case scenario for Google is that the OEM’s all jump ship for alternative platforms, making – most likely – Microsoft’s Windows Phone 7 a bigger contender, resulting in a 3-way race between Apple, Microsoft and Google. Although a 3-way race offers the potential consumer benefit of one more viable OS option, there are also potential risks.
With fewer stakeholders overall, and post initial flux in the market, we may see a lull in innovation, price competitiveness and variety across mobile devices and products. Its partnerships with companies such as Samsung will certainly change now that the deal has been announced, and while it has been claimed the Motorola Mobility unit will be kept separate from Google’s Android business unit – allowing Google to bid for Samsung business, for example – it makes financial sense to eventually integrate all of its mobile properties in the long run.
Next Steps for Advertisers
Advertisers will need to place their bets on three OS types: iOS, Android, and to a lesser extent, Windows. All other OS types are becoming increasingly irrelevant as they lose both share and scale.
In order to maximize their performance of mobile media investments, advertisers should, if they haven’t already, look deeply at their analytics and their campaigns setup. Advertisers should work with their digital media team or agencies to create a structured learning environment that breaks out spend by mobile OS. This will allow them to, in almost real time, react to shifts in volume, costs and performance of mobile targets.
Many advertisers may have one or few buckets of budget for “Mobile”. This can sometimes be for all mobile initiatives or parsed simply by web enabled phones and tablets. This all encompassing approach to running media across handhelds and tablet devices limits what an advertiser or marketer can gleam via analytics and what they can control from an optimization standpoint.
What advertisers should be looking to do now is distill the targeting down further to the OS level. In this way they can fluidly react to the changing environment of impression/click inventory levels that are happening, and will continue happen. As an added benefit, they can look at other performance indicators, like conversions, in a more granular and cost controlling way. The end result will ultimately be refreshed diminishing returns.
