Interesting piece this morning in the Wall Street Journal on Google’s strategy on smart phones and devices. Might Google Have a Sly Motive Behind Motorola? (Sorry, behind the pay wall.)
The author’s premise is that Google has no intention to ever make money on handsets or software, but rather is attempting to kill the profitability of these markets.
What if profits aren’t part of the plan at Motorola Mobility (which Google purchased in 2011)? What if Google’s plan for smartphones isn’t to directly make money for itself but, instead, an attempt to destroy money for other companies by making the phone a commodity device?
The author posits that Google’s ultimate goal is to protect and extend their dominant position in internet interaction and their lucrative advertising streaming. In simple terms, Google’s intent appears to be to “drain the swamp” of device and software profit pools so that device and software players cannot direct consumers away from Google’s internet franchise.
Certainly the data on mobile device market share suggests this is happening. Blackberry has crumbled and Android has become the big leader. Apple operates more and more as the minority player (a replay of Mac vs. PC). And lately, Apple seems to be taking the bait with introducing “low price” versions of the iPhone.
Where does this end up? And where are the hues and cries about predatory behavior? Intentional loss of money by Google’s device division (which appears to be the case) would normally be a sign of trouble. And again, what’s the definition of evil?
Google’s potential strategy appears similar to discussion I have participated in for Microsoft: Internet Explorer supposedly a money losing total investment but meant to protect Operating System business. The distinction on if Evil or Draining the Swamp may lie on where you draw the line. If lump the businesses into one cateogorization / business model then in total it may simply be good competition with the consumer getting a bundled savings. If draw them as separte, it is not as clear.