Google wants to fundamentally alter its DNA within the web economy, and the deal it just struck with Motorola will ensure this. The company is also going to smack down some rivals it recently equivocated to patent trolls along the way.
In the last 24 months, Google developed several new verticals within its business, expanding substantially from the search- and advertising-based business model that propelled it through a decade and a half of online dominance. The Google-Motorola deal represents a strategy shift reflecting the broader industry mantra that the world is moving away from the stationary, desk-bound format of consuming information and goods and that more people, globally, will interact with each other and spend money from a mobile device. It’s as smart of a bet as a company can make on a trend; it’s about as safe as betting it will get cold come winter.
The mega-deal comes as Google accuses its competitors, in a rare screed, of a “hostile, organized campaign” through which they sought to stifle the company’s progression with “bogus patents.” Google singled out competitors like Apple by name, almost foreshadowing this week’s deal. Today, Apple is painfully aware that Google is out to eat its lunch, again and again.
There is a good reason the so-called patent trolls have worked so hard to hinder Google’s development. Already, Google’s Android has been gobbling a growing market share in the smartphone space, and the company’s Motorola Mobility buy will dovetail with a unification of both tablet and phone platforms—another space that, since the initial release of the iPad, Apple has flat-out owned. Battle with Apple will be coming on multiple product platforms, and it’s likely a winner-take-all format. The #1 smartphone developer will probably come out on top in the tablet market, too.
Google and Apple will almost certainly be battling for positions #1 and #2 in the U.S. smartphone and tablet market. The question now is, how many #3s do consumers really need?
Other companies—consider Mircosoft, which, with its Windows phone has utterly failed to pierce the smartphone market share of its better-equipped competitors—may ultimately elect to bow out of the smartphone- and tablet-branding market, and return to making hardware that is essential to platform operation rather than the end consumer product. Amazon will either have to move Kindle light years ahead, or scrap the hardware and work with Google, Apple, or both, to drive sales via tablets. Given the recent trajectory of Research in Motion, it, too, could be another candidate to do the same—its stock price has plummeted and its tablet has been almost universally panned. But RIM’s security is top notch, no question.
Given Google’s dominance in other segments of online industry over the last 15 years, it is difficult to project failure for the company’s biggest acquisition ever. In fact, after seeing deals with targets like Facebook, Twitter and Groupon elude the Web titan, this success in its one play to take on its biggest competitor via M&A represents a victory already for Google. In fact, maybe Google’s next ad campaign for a smartphone should utilize the line: “If you don’t have an iPhone… it’s probably because you went with Android, instead.” That’ll show those trolls.
