Google has completed its $12.5 billion acquisition of Motorola, placing the company squarely into the mobile phone market.In an interview with BloombergBusinessweek, the new head of the Google handset business, Dennis Woodside, explained that his job will be to “deliver innovative hardware as a licensee of Android.”
Google also revealed that Regina Dugan, formerly of the defence Advanced Research Projects Agency, will be in charge of identifying and investing in cutting-edge hardware that can be integrated into Motorola mobile phones. “We are going to build a small, lean, Skunkworks-like group that is not afraid of failure,” she told BloombergBusinessweek.
This means that current Android handset makers like Samsung, HTC, LG, and Ericsson are facing a new, extremely well-capitalised competitor who will be pushing the envelope on hardware innovation.
Google claims that Motorola will not get early or preferential access to Android builds, and will compete only on hardware, but handset makers are understandably sceptical.
Android resellers have a number of paths available to them:
Build High-End Phones That Focus On Innovative Hardware
Android resellers — particularly Samsung, which has built the most successful Android business so far (see chart) — can increase their investment to build innovative high-end phones that compete with the new Google-Motorola line, as well as with Apple’s iPhone.
Phone makers might have an edge on hardware innovation like camera resolution, screen resolution, battery life, and new components like NFC chips. However, they should expect Google to acquire to build expertise and gain unique technology in these areas. A source familiar with Google’s thinking has said that Dennis Woodside has already started to look for startups who will help boost the new hardware business.
Handset makers could find it harder to compete with Google on software + services, but can still innovate with unique interface overlays (like HTC Sense) or bundled apps from partners in areas where Google is relatively weak, such as music (like the MOG service which HTC is buying).
Build Commodity Phones For Emerging Markets
Here, Android resellers face cutthroat competition not only from each other, and from Nokia’s worldwide business, but from low-end “bandit” or shanzai feature phones that are still flooding popular markets like China.
Motorola has had a thriving business in feature phones — until recently, it sold more feature phones every quarter than smartphones — but it appears that Google is less interested in this market, and will probably sell or de-emphasise this part of Motorola’s business.
Embrace Alternative Platforms Like Windows Phone And Mozilla Gecko
Microsoft is investing heavily in its Windows Phone platform, and a lot of Android resellers — including Samsung and HTC — are already Windows Phone partners. However, Microsoft’s deep partnership with Nokia might give these companies pause, as there’s reason to suspect that Microsoft will give Nokia preferential access to technology, and Microsoft has committed to a significant comarketing budget as well.
Samsung already has its own mobile platform, Bada, and HP has open-sourced WebOS and hopes to build support. Research In Motion might be
Most intriguing, a source in the mobile industry tells us that a lot of handset makers are taking a serious look at Gecko, the HTML5-based mobile platform being pushed by Mozilla, the makers of the popular open-source Firefox Web browser.
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