Google-Motorola : Microsoft-Nokia : Palm-HP – Do you see a pattern?
By now you would have already read about the Google offer to buy Motorola Mobility division. You would have read about why this is the biggest mistake Google has ever made. You also would have read about why this is the most brilliant move made by Google.
You would have been told why this is the best thing to have happened to Android and also why this is the worst thing to have happened to Android.
So, there is no agreement on the possible impact of this deal except for one point – this is a BIG deal and a Game Changer.
There is a general feeling that one of the key motivation for Google was to acquire the patents which Motorola own but that can hardly be the whole story.
However, let us step back and correlate this with 2 other deals which happened in recent past.
- HP buying Palm primarily for the Web OS
- Nokia dumping MeeGo and tying up with Microsoft
Do you see a pattern?
Here are the 3 cases:
Case 1: April, 2010 – HP buys Palm for US$ 1.2 billion
Case 2: February, 2011 – Nokia and Microsoft comes together for a “broad strategic partnership”
Case 3: August, 2011 – Google buys Motorola Mobility for US$ 12.5 billion
Horizontal or Vertical – Which is the best way to organize the mobility industry?
Keeping Apple aside, the PC industry is horizontally organized. That means different companies provide the chips, operating system, services etc.
On the other hand the Gaming Console industry is vertically organized where one company provides the hardware, software, online service, shops etc. Currently Sony, Nintendo and Microsoft own and closely control the platform.
Till last year, again leaving Apple aside, the mobility industry was trying to organize itself like PC industry that is everybody was trying to separate hardware from software. Palm split itself into hardware and software divisions, and Nokia helped set up Symbian.
Are we witnessing a reversal of trend?
PC industry was more about standardization – so the horizontal strategy worked very well. Apple with a vertical strategy and a differentiated product could not make much headway. The game was about more hardware power with a standardized interface. The enterprise was the major driver.
On the other hand the gaming console industry was about differentiation which is difficult to achieve without complete control over the platform both hardware and software. Enterprises have no role to play here.
In the mobility industry, Apple with a vertical strategy, have been very successful. Looks like differentiation rather than standardization is what is going to drive the market. The user will probably be interested in the cool new feature and about usability rather than standardization.
So, where does Samsung, HTC, LG and others go from here?