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Google Is NOT Moving Into the Mobile Phone Business

Paul Budde

It might appear paradoxical for Google to buy a company for $12 billion and to then not move into that business, but I believe this is the strategy supporting that company's purchase of Motorola Mobility.

As many have already pointed out, the value of Motorola resides in its patents.

For more than a decade this company has been a fading star, unable to maintain the international leadership it had in the early days of the mobile phone, back in the late 1980s and early 1990s.

So if Google wanted to buy a mobile company that was in line with its own level of innovative operation it would NOT have bought Motorola.

There is no way Google will try to breathe new life into this ailing company, so its mobile handset partners need not fear that Google will become one of their competitors. This simply will not happen.

Google takes initiatives that allow it to speed up the use of its applications and services. The problems the company is facing have little to do with technology, and everything to do with business strategies. It is continually battling against ingrained business practices aimed at protecting vested interests — whether they be patent-holders, telcos, infrastructure companies or others. It is very much Google's goal for everybody on earth to have access to its services — via the internet, mobile phones or TV sets, or whatever other means might become available.

If it believes, for instance, that it is essential for its customers to have access to high-speed internet infrastructure it will do anything to make this happen, through local initiatives, seed-funding, political lobbying, industry negotiation and so on. If these tactics don't work, or if they are proceeding too slowly, Google will look at other ways to remove the obstacles.

We have seen several large-scale examples of this. There are other smaller-scale initiatives but here are the key ones as I see them:

  • Expanding internationally — Google is involved in building high-speed submarine cables
  • Expanding locally — Google is involved in building local FttH networks
  • Mobile reach — Google buys Motorola patents to speed up the spread of Android.

Google is not becoming a submarine cable company. Nor will it become a telco rolling out fibre. Nor will it become a mobile handset vendor.

Google is one of those unique companies that can think outside the box; that will look for ways to bypass the slow-moving vested interests. In doing so it is enormously disruptive and it spreads fear among the dinosaurs of many industries that are still operating according to the vertical silo structure, with business models aimed at protecting their ageing businesses.

And so I will not be surprised if Google buys a bank or a healthcare system, or moves back into energy initiatives, and so on. However it can use its leverage to advance its business opportunities it will do so.

So what will happen with Motorola?

Of course, Google will keep all of its intellectual property and for the rest it will most likely make more money from selling the different parts of the company than from keeping a rather disjointed set of businesses together under the current umbrella. There are some real gems among the bunch and by unshackling them they could become very successful businesses on their own.

By Paul Budde, Managing Director of Paul Budde Communication Paul is also a contributor of the Paul Budde Communication blog located hereVisit Page
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