Anorak News | Google Buys Motorola In Biggest Gamble To Date

Google Buys Motorola In Biggest Gamble To Date

by | 15th, August 2011

GOOGLE buys Motorola… Or at least, Google buys the mobile phones division of Motorola.

Google has made its largest-ever acquisition, and biggest corporate gamble, by splashing out $12.5bn for Motorola’s phone division, Motorola Mobility. The deal puts Google into the hardware business in a serious way – and into direct competition with licensees of its Android operating system, who woke up this morning thinking they were Google’s business partners.

There’s two bits to this: the first is exactly what is mentioned there. That all those companies that were basing phones on the Android operating system now have the originator of that operating system competing directly with them.

That just isn’t likely to be a pretty market in the near future.

The second is that this is, by far, Google’s biggest corporate gamble. Google has never been in the hardware business so that’s part of it. But much more importantly, Google’s never really sold anything at all except for advertising. And they don’t really sell that either: they’ve constructed a piece of software that does.

This is the bit about Google that’s so difficult to get your mind around. Sure, we see (and possibly even use) the search engine, GMail, Chrome, but don’t forget these are all free. Pretty much the only thing that brings revenue into Google is the Adwords (and banner advertising through Doubleclick etc) system. And flogging off space on a near monopoly piece of software is very different indeed from getting it right in shipping mobile phones.

Yes, it’s possible that this is a great deal for Google. It’s also possible that it’s their first great big mistake. Stepping into a business area they have absolutely no experience whatsoever of. They’re all bright people, this is true, but that’s a very big risk to be taking.

Posted: 15th, August 2011 | In: Money Comment (1) | TrackBack | Permalink