Google dials it up by pocketing Motorola

August 15, 2011

For a company that is all about world domination via the hardware-agnostic cloud, Google sure seems fascinated with being in the computer game these days.

There are those Chromebook laptops, a partnership with Samsung and Acer that is primarily a means to extend the reach of Google’s cloud-based services courtesy of a delivery system of inexpensive computers that don’t do much of anything else. But that’s a play against Microsoft and its office software suite, not the world’s top computer makers.

And it makes core sense: Google still makes nearly 100 percent of its roughly $30 billion annual revenue from small text ads on web pages, and, to a much lesser extent, its cloud-based services. Anything that drives traffic to those pages is money in Google’s bank.

So of course selling and leasing cheap hardware tethered to those services and to the internet in general makes perfect strategic sense, even though a) we are entering the post PC era and b) for the most part, computers are a commodity item.

Then there was Google’s first foray into mobile phones: the most important accessory most of us carry. This is where Apple reigns supreme: I can’t tell you how many people I know who own iPhones and iPads, but tap only a small fraction of their functionality and could just as well use cheaper phones and data plans.

Google’s experience was, shall we say, character building. The Nexus One, from HTC, was (is) an excellent phone, but Google’s approach to retailing and customer care didn’t so much upend the mobile phone business, as some predicted it would, asĀ devolve into a quagmire of broken dreams.

Google’s free licensing of Android, on the other hand, spurred innovation by unleashing handset makers who are aren’t Apple to compete.

If you posit that the iPhone is equal parts design and user interface, Android is a boon to the Samsungs, HTCs, LGs and Motorolas of the world. They no longer have to sweat the Zen-like details of how to make a mobile phone run in a way that allows us not to notice it at all.

Android helped make that possible, and because of the wide spectrum of phones it powers the mobile operating system has become the market leader, even though the iPhone is itself more popular than any other mobile phone by far.

So why place a big bet on one handset maker when you were doing just fine betting on everyone?

Google says it won’t play favorites, and it has no reason to. The moment Motorola’s phones start offering features competitors can’t is the beginning of game over. Already there is frustration from developers and consumers about the fragmentation of Android.

But on the hardware side, Google does have some agenda items that it could advance, not at the expense of anyone. Top of the list: Near Field Communication (NFC). Google is in the electronic wallet business, but there is exactly one phone in the world that incorporates NFC tech.

When Motorola is in the Plex, figure on that number increasing soon. Google is in the unique position of being able to push this ball forward, with a core strategic driver and all the resources they might need. Nobody can prove that concept better. And if Google’s NFC initiative resonates more than the pure-software approach offered by Square and PayPal and ISIS, watch for other handset makers to get in line.

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