AH Primetime: What Are Google's Intentions with Motorola?

moto x

So far, at least, when you look from the outside, it’s not yet very clear what Google intends to do with Motorola. In the early days after the acquisition Google always said that they only care about the patents. I never believed that, because looking at other hints from Google (self-driving cars, Google Glass, etc) it was pretty obvious Google wants to be a hardware company, too, or at least have much closer access to hardware than making an OS for its partners. If they want to push a certain pierce of hardware in the market, they need to be able to do it themselves. That’s also the reason for why Nexus devices and the Chromebook Pixel exist.

Farhad Manjoo from WSJ has a theory: that Google isn’t actually trying to make any money with Motorola, and it just wants to force Apple and the big Android OEM’s to commoditize their products, and make their products cheaper (while being just as good). He says this because Google stands to gain by commoditizing hardware on which to sell or offer its ad-based services.

That’s certainly an interesting theory, and it’s kind of what Google has been doing with the Nexus devices already, although that is more about bypassing carriers, and being able to offer the “Google experience” to people, since nobody else seemed willing to do it.

I don’t think this theory is true about Motorola, though – at least not yet, from what we’ve seen. Many have already said the Moto X was too expensive for what it offered. That could be because Motorola is still trying to recover, and might have a slow product cycle compared to the competition. It could also be because they needed to make a lot of profit per device, in order to give carriers a big chunk of it, so they let them sell it almost unaltered.

Plus, Motorola is still losing money, and I really do think that Google will first and foremost try to make Motorola a profitable company, before it even thinks about getting Motorola to make devices specced and priced like Nexus devices, for which you get a lot of bang for your buck. That may take at least another year, maybe two. Motorola needs to win mindshare before market share, and it can do that either by making super high-quality products that everyone considers the best, or offer a lot of value for the price. So far they’ve gone with the first strategy, even though the execution hasn’t been perfect yet, but they’ll improve on that in the next few years.

The bottom line is that at least for now, Google may actually be trying to make as much profit per phone as Apple, with Motorola. They have no need to try to commoditize Android further to put it in the hands of more people, because there are already a ton of other companies already doing that, at all price levels. So that’s not a concern for Google right now, but recovering their $12 billion they paid for Motorola, plus whatever is losing now every quarter, is.