While the US economy continued to threaten a move into recession this past week, Google announced its intention to purchase Motorola Mobility for just over 12 billion dollars.
This move on the part of Google is all about what commentators are describing as convergence in the technology and communication space. At this point, only Apple has achieved real convergence as they describe it, and Apple's increased power in mobile is a threat to Google's business moving forward. Here's why.
Apple owns three primary components of the mobile device experience, the first two being operating system development and physical device design. (The third is media distribution channel - though brilliant, this asset is not the focus of this post.) In the way that Apple computers have always offered a more intuitive, effortless, and some say cool experience for the general computer user, so too the iPhone more completely integrates the utility of its software and the physical device to offer an appreciably better mobile phone experience. This better experience is a result of owning both the operating system development and the device design. Also important in this equation is Apple's control of application development around its devices. This control guarantees that applications never strain either the operating system or the device itself, protecting the user experience of Apple customers.
While Apple has owned both operating system development and device design for its entire history, it is the only software or device developer of consequence to do so. For most of its history in personal computing, Apple held a very small share of the market and the superior user experience of its products (for most, though not all of its history) as a result of this convergence was never enough to compete aggressively against the position that Microsoft created for itself and its device developer partners in the personal computing market.
However, all that began to change 2001 when Apple introduced the iPod and began its move into the digital mobile media device. Microsoft had no presence in this space, and Apple's major competitor was Sony, whose product depended on analog rather than digital technology. It is since 2001 that Apple has been able to capitalize on its position as both operating system and device developer to become a market leader in mobile digital devices, moving beyond the iPod to the iPhone and more recently the iPad. Apple's stock price didn't break $20 until 20 years into its history in 1999, and traded at a high of $400 in the last year.
Why is all of this of interest to Google? Google earns a lot of money from search, a space it has owned for most of its short and very profitable history.
But search algorithms are not impossible to replicate. More importantly, Apple products are moving search to mobile devices. Apple's ownership of both software and hardware development in the mobile device space can mean a serious threat to Google's dominance in search.
Google began its move to a convergence model by producing its own Android mobile operating system, and is looking to complete its move with the purchase of Motorola. With this acquisition, Google will look to compete with Apple on Apple's playing field - producing products with seamless integration of software and hardware for a superior user experience.
This move is good news for Google. This is an acquisition they can afford, they are making it at a time when there is uncertainty about Apple's direction after Steve Jobs, and at the very start of what will be a dramatic shift in the importance of the mobile device in daily information search, communication, and media consumption.
This is bad news for a number of other companies. Ask Yahoo how fun it is to be a one trick pony. Microsoft and any number of device manufacturers will find life in mobile more difficult as converged competitors find it easier to provide a superior user experience. In many ways, we are witnessing the birth of the mobile device, and now is the time to implement a successful strategy. Google has made an important play in this game.
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