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Greg’s Bite: Matching Apple’s Winning Formula

By Greg Mills

The tech industry is collectively scratching its head trying to figure out just what the Google purchase of Motorola Mobility will mean. The other Android handset makers are now worried Google will favor Motorola with advanced features and that they will be left out of the loop. Uncertainty in business is a powerful thing.

The Apple led legal assault against Android has created concerns that it will take serious revisions in the Android OS and handset modifications to even get the phones imported into the US. The potential for breaking existing Android handsets and apps is worrisome. Android is already fragmented, and customers don’t like incompatibilities in a platform.

Microsoft with its poorly received Windows 7 platform is waiting in the wings with Ballmer hoping the shifting sands under the Android platform will give them an edge. Indeed, a number of Android handset makers are looking at hedging their bets and supporting Microsoft as well as Android in a “wait and see what happens” mode.

Google has purchased Motorola Mobility, Microsoft is invested in Nokia, HP bought Plan, RIM has its own OS and Apple authors the iOS and builds their own phones through contractors. The model Apple has made famous — creating the entire customer experience by building the hardware and writing the software — isn’t lost on the rest of the industry.

Google now has the ability to create Android phones that they completely control design wise. Will they be any better? Some tech experts don’t think the new business model of Google and Motorola will really do much in that regard.

The purchase of Motorola was more likely just what they said it was, a way to instantly own a larger patent portfolio. The Google official blog makes it clear that the motivation for spending 13.5 billion dollars in cash was mostly patent related. Any benefit from the close collaboration with the two companies is likely to be a secondary issue.

With all the posturing about Google now owning 25,000 more patents, the elephant in the room is still the fact that Motorola was also served a US federal lawsuit over infringing on Apple’s patents in aspects of Motorola Android handsets. The ownership of the patents doesn’t change the facts of the case at all. If Motorola infringes, it matters not who owns them.

Then the 13 billion dollars has to come from somewhere, and Google is too good a business to not have figured out a way to recoup the money. While Google maintains that they intend to keep Android open source, some people in the know have speculated the prospects of royalties on the Android OS, due the various players may force some sort of license fee into the Android equation.

Microsoft already collect something like $5 for each Android handset sold. Ironically, Microsoft makes more in license fees from Android than they make on the Mobile Windows platform. All of this bodes well for Microsoft strictly from a standpoint of creating an opening in the market. While having an opportunity to break in to the market is helpful, Microsoft may not be able to rise to the occasion.

Should Android stumble, Apple is the big winner since the majority of Android users actually prefer iPhone.

That’s Greg’s Bite.

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