Will Google make its own phones or not?

[mammador]

With the Google Nexus 3 out soon, why does Google need to form an alliance with Samsung to make a phone?

OK, Motorola Mobility was bought for its patents. But Motorola has the factories/fixed assets to make phones (or at least the contracts with Chinese companies to do this). Motorola must have huge R&D and marketing arms also. As well as retaining the Motorola brand (which would be silly to discard), could not the existing Motorola resources be used to make Google-brand phones?

 

[Jodell88]

Google was working with Samsung before they bought Motorola Mobility. The next Google Nexus phone could be a Motorola though.

 

[smartpatrol]

Motorola could definitely make the next Nexus phone. Just keep in mind Google is in the difficult position of trying to please their handset partners while still maximizing profit for Motorola Mobility's shareholders.

It's an obvious conflict of interests and we really don't know how Google will handle it yet.


Sent from my Galaxy Nexus using Tapatalk

 

[Puddle Jumper]

Google needs the alliance with Samsung because they bring a lot of things to the table that no other phone manufacturer offers. They manufacture every component needed for a phone from displays and processors to flash memory and cameras.

 

[Bateluer]

Didn't Google state that Motorola would have to bid on the Nexus contacts like every other manufacturer?

 

[poofyhairguy]

Moto hasn't had a Nexus yet.

 

[Bateluer]

Moto hasn't had a Nexus yet.

The Droid 1 was kind of a Nexus for Android 2.0. It didn't have the Nexus name, but it was a vanilla Google device, fully open, and almost no carrier bloat. Came along before Google even thought up the Nexus brand.

 

[micrometers]

didn't google buy motorola mainly for the patents?

 

[smartpatrol]

didn't google buy motorola mainly for the patents?

Specifically, they bought Motorola because Moto was very close to signing a licensing agreement with Microsoft, which would've effectively signaled to every other Android OEM that they need to pay royalties to MS. That, and Motorola were threatening to start suing other Android OEMs for patent infringement.

Basically, Motorola might be the most successful patent trolls ever. They couldn't turn a profit on their phones, but they managed to get Google to buy them for a huge premium over their stock price.

Anyway, regardless whether it was "for the patents", Motorola Mobility is still an $11 billion business with 19,000 employees. Like it or not, Google is now in the hardware game in a big way.

 

[lothar]

With the Google Nexus 3 out soon, why does Google need to form an alliance with Samsung to make a phone?

OK, Motorola Mobility was bought for its patents. But Motorola has the factories/fixed assets to make phones (or at least the contracts with Chinese companies to do this). Motorola must have huge R&D and marketing arms also. As well as retaining the Motorola brand (which would be silly to discard), could not the existing Motorola resources be used to make Google-brand phones?

I will go ahead against the grain here and assume I'm a Google stock holder(which I'm not).

Absolutely not.
Google needs to sell or spin off the entire division Motorola except it's patents.
Motorola is a money losing business and has been so for almost a decade, if not longer. Ask Motorola stock holders for more info about that. Sell all the factories, and fixed assets, sell it's headquarters, get rid of corporate staff, get rid of their marketing arms since they clearly don't know how to market. Combine R&D with Google's department and get rid of any duplications.

There's no doubt in my mind that Google won't be able to sell the rest of Motorola(besides the patents) to some private equity firm for $4-5 billion if they wanted to. Heck, sell it back to Carl Icahn.
Google doesn't need to get into the hardware business. Getting rid of Motorola also removes their "perceived" preferential Android treatment.

Lets call a spade a spade. Google bought Motorola only for their patents. Sell, spin off and divest all other unnecessary operations.

Motorola makes decent handsets, sells millions of units more than most Android manufacturers, and yet they can't turn a profit in almost a decade.
Somethings clearly wrong.

For an example, read about what News Corp did with Hughes Electronics.
http://en.wikipedia.org/wiki/DirecTV#History
At the end of the day, Rupert still got what he wanted(DirectTV) and at a much lower price that what he would have paid if they had accepted his first offer in 2001.

 

[JS80]

I will go ahead against the grain here and assume I'm a Google stock holder(which I'm not).

Absolutely not.
Google needs to sell or spin off the entire division Motorola except it's patents.
Motorola is a money losing business and has been so for almost a decade, if not longer. Ask Motorola stock holders for more info about that. Sell all the factories, and fixed assets, sell it's headquarters, get rid of corporate staff, get rid of their marketing arms since they clearly don't know how to market. Combine R&D with Google's department and get rid of any duplications.

There's no doubt in my mind that Google won't be able to sell the rest of Motorola(besides the patents) to some private equity firm for $4-5 billion if they wanted to. Heck, sell it back to Carl Icahn.
Google doesn't need to get into the hardware business. Getting rid of Motorola also removes their "perceived" preferential Android treatment.

Lets call a spade a spade. Google bought Motorola only for their patents. Sell, spin off and divest all other unnecessary operations.

Motorola makes decent handsets, sells millions of units more than most Android manufacturers, and yet they can't turn a profit in almost a decade.
Somethings clearly wrong.

For an example, read about what News Corp did with Hughes Electronics.
http://en.wikipedia.org/wiki/DirecTV#History
At the end of the day, Rupert still got what he wanted(DirectTV) and at a much lower price that what he would have paid if they had accepted his first offer in 2001.

If they're going to go through all that, why the heck wouldn't they just offer MMI $$$ for the patents? All the transaction costs must be in the gagillions vs just buying a piece of paper with patent #s.

 

[lothar]

If they're going to go through all that, why the heck wouldn't they just offer MMI $$$ for the patents? All the transaction costs must be in the gagillions vs just buying a piece of paper with patent #s.

It wouldn't surprise me to find out that they already tried that.

Possible reasons:
1.) Maybe they tried that initially, and MMI's board along with Carl Ichan said "No, you must buy the entire company or nothing at all."?
If Google didn't acquire MMI, the execs wouldn't have been able to use their golden parachutes anyway.

2.) Maybe it was much cheaper to just buy the entire company outright and divest any unneeded operations than to just buy their patents alone? This could be one of those cases where value is created(or realized rather) by breaking up the companies. In this case, Google may have paid a cheaper price to get the sum of a whole than to pay a more expensive price for a part.
If you imagine that the only value in Motorola was in their patents, and consider everything else(including their phone hardware business) to be a loss(which it was for almost a decade if you read their annual reports), it wouldn't surprise me that Google would have paid either the same amount or a higher number like up to $13-15 billion for the patents alone if you discount Motorola's other money losing ventures.

 

[hans007]

It wouldn't surprise me to find out that they already tried that.

Possible reasons:
1.) Maybe they tried that initially, and MMI's board along with Carl Ichan said "No, you must buy the entire company or nothing at all."?
If Google didn't acquire MMI, the execs wouldn't have been able to use their golden parachutes anyway.

2.) Maybe it was much cheaper to just buy the entire company outright and divest any unneeded operations than to just buy their patents alone? This could be one of those cases where value is created(or realized rather) by breaking up the companies. In this case, Google may have paid a cheaper price to get the sum of a whole than to pay a more expensive price for a part.
If you imagine that the only value in Motorola was in their patents, and consider everything else(including their phone hardware business) to be a loss(which it was for almost a decade if you read their annual reports), it wouldn't surprise me that Google would have paid either the same amount or a higher number like up to $13-15 billion for the patents alone if you discount Motorola's other money losing ventures.

exactly they probably couldn't just buy the patents.


i would bet they will spin motorola mobility off as a subsidiary and slowly sell their share off. kind of like what EMC will probably do with vmware eventaully.

 

[mammador]

I will go ahead against the grain here and assume I'm a Google stock holder(which I'm not).

Absolutely not.
Google needs to sell or spin off the entire division Motorola except it's patents.
Motorola is a money losing business and has been so for almost a decade, if not longer. Ask Motorola stock holders for more info about that. Sell all the factories, and fixed assets, sell it's headquarters, get rid of corporate staff, get rid of their marketing arms since they clearly don't know how to market. Combine R&D with Google's department and get rid of any duplications.

There's no doubt in my mind that Google won't be able to sell the rest of Motorola(besides the patents) to some private equity firm for $4-5 billion if they wanted to. Heck, sell it back to Carl Icahn.
Google doesn't need to get into the hardware business. Getting rid of Motorola also removes their "perceived" preferential Android treatment.

Lets call a spade a spade. Google bought Motorola only for their patents. Sell, spin off and divest all other unnecessary operations.

Motorola makes decent handsets, sells millions of units more than most Android manufacturers, and yet they can't turn a profit in almost a decade.
Somethings clearly wrong.

For an example, read about what News Corp did with Hughes Electronics.
http://en.wikipedia.org/wiki/DirecTV#History
At the end of the day, Rupert still got what he wanted(DirectTV) and at a much lower price that what he would have paid if they had accepted his first offer in 2001.

I was thinking if Google had Motorola's resources, they could kill two birds with one stone. Advance Android and use their own capability to make Nexus phones (since essentially a Motorola phone now IS a Google phone).

 

[JS80]

It wouldn't surprise me to find out that they already tried that.

Possible reasons:
1.) Maybe they tried that initially, and MMI's board along with Carl Ichan said "No, you must buy the entire company or nothing at all."?
If Google didn't acquire MMI, the execs wouldn't have been able to use their golden parachutes anyway.

2.) Maybe it was much cheaper to just buy the entire company outright and divest any unneeded operations than to just buy their patents alone? This could be one of those cases where value is created(or realized rather) by breaking up the companies. In this case, Google may have paid a cheaper price to get the sum of a whole than to pay a more expensive price for a part.
If you imagine that the only value in Motorola was in their patents, and consider everything else(including their phone hardware business) to be a loss(which it was for almost a decade if you read their annual reports), it wouldn't surprise me that Google would have paid either the same amount or a higher number like up to $13-15 billion for the patents alone if you discount Motorola's other money losing ventures.

Having been through multiple M&A's myself, I just can't see this as a plan from the beginning.

 

[Pliablemoose]

I think Google is still trying to figure out what to do with Moto...

 

[WelshBloke]

I was thinking if Google had Motorola's resources, they could kill two birds with one stone. Advance Android and use their own capability to make Nexus phones (since essentially a Motorola phone now IS a Google phone).

Thats an interesting idea.

Google could use Moto to make and release a line of phones separate from all carrier input and sell them retail with no contract.

This way they wouldn't compete too much with the other manufacturers but could drive hardware development and avoid carrier bloat in their nexus phones.

 

[lothar]

I was thinking if Google had Motorola's resources, they could kill two birds with one stone. Advance Android and use their own capability to make Nexus phones (since essentially a Motorola phone now IS a Google phone).

Yeah, but they'd also be killing another bird they don't want to kill, and that's the remaining Android hardware manufacturers.

What would a Motorola Nexus achieve that a Samsung, HTC, or LG Nexus can't already achieve today? Google already does those things you suggested/listed as a benefit for a future "Motorola" Nexus.
There's no proof that it will make their Motorola division turn a profit. There's no proof that the US carriers will accept such a device and subsidize them. Selling devices at full price in the US is a failure. See Nexus One for more info on that. Your point about "use their own capability to make Nexus phones" is largely thrown out of the window.
What makes you think Verizon would be more likely to allow a Motorola Nexus to run Google Wallet when a Samsung Galaxy Nexus cannot?
See Google Wallet on Galaxy Nexus for more info on that. Your point about "advancing Android" is largely thrown out of the window there.

Motorola is mainly a US company(that's where most of their revenue is today...from "Verizon's "Droid" branding which doesn't exist once you leave the US). If they can't win in the US market, they can't win anywhere else in the world. If you go to Europe or Asia and ask them about Motorola, they will say "Moto who?"

 

[Pliablemoose]

I think Larry Page wants to disrupt telecom, but is stuck with what's in place now, Google has a vested interest in keeping Samsung, HTC, Verizon, AT&T, Sprint, et al, with the current subsidized smartphone model, because they're dominating the smartphone OS race at the moment.

The only thing that can change that formula is widespread adoption of another model by consumers. but even then, Google won't want to alienate it's manufacturing partners by showing favoritism to it's in house brand, Motorola.

Currently, the have a firewall in place so Samsung, etc are happy with the marriage, if anything, Moto will lag the industry a bit, so Google can prove it's supporting them as much if not more than it's own phones.

 

[WelshBloke]

Yeah, but they'd also be killing another bird they don't want to kill, and that's the remaining Android hardware manufacturers.

What would a Motorola Nexus achieve that a Samsung, HTC, or LG Nexus can't already achieve today? Google already does those things you suggested/listed as a benefit for a future "Motorola" Nexus.
There's no proof that it will make their Motorola division turn a profit. There's no proof that the US carriers will accept such a device and subsidize them. Selling devices at full price in the US is a failure. See Nexus One for more info on that. Your point about "use their own capability to make Nexus phones" is largely thrown out of the window.
What makes you think Verizon would be more likely to allow a Motorola Nexus to run Google Wallet when a Samsung Galaxy Nexus cannot?
See Google Wallet on Galaxy Nexus for more info on that. Your point about "advancing Android" is largely thrown out of the window there.

Motorola is mainly a US company(that's where most of their revenue is today...from "Verizon's "Droid" branding which doesn't exist once you leave the US). If they can't win in the US market, they can't win anywhere else in the world. If you go to Europe or Asia and ask them about Motorola, they will say "Moto who?"

Just going to talk about the two points I've bolded.

First point.

Nexus phones weren't supposed to be commercial successes, they were meant to drive Android development. People will buy unsubsidised phones, even in the US. Just look at people on these forums, some have imported unsubsidised phones from Europe, those are the people that Nexus phones should be aimed at.

Second point.

Moto doesn't have a particularly good image in Europe, but Google doesn't have to market them as Moto phones they can market them as Google phones.

 

[lothar]

Thats an interesting idea.

Google could use Moto to make and release a line of phones separate from all carrier input and sell them retail with no contract.

This way they wouldn't compete too much with the other manufacturers but could drive hardware development and avoid carrier bloat in their nexus phones.

They tried that with the Nexus One by selling it full price at their online store. It was a complete failure in that regard(in the US).

That strategy also either kills the Nexus line(more likely) or the handset manufacturers line. Isn't that the point of a Nexus today? If Google creates another line that supersedes the Nexus as being the development platform, then all the geeks on Anandtech, Android Central, Android Police, XDA, Cyanogen, and possibly me included would get that instead of getting a Nexus or Samsung Galaxy/HTC Evo/Droid line.
If they did that, what then would be the difference between a Nexus line and a regular Android manufacturer's line? Absolutely nothing.

See my last point in my previous post about Motorola being a US company.
That strategy might work in Europe and Asia, but it won't work in the US where people aren't used to paying full price for a phone.
Besides myself, I don't know anyone else in "real" life who's ever paid full price for a phone in the US except if they lost their phone or dropped it in a lake and don't have insurance on it or something. Not one. The only people I know that do that are people with almost decade old grandfathered contracts.

 

[lothar]

Just going to talk about the two points I've bolded.

First point.

Nexus phones weren't supposed to be commercial successes, they were meant to drive Android development. People will buy unsubsidised phones, even in the US. Just look at people on these forums, some have imported unsubsidised phones from Europe, those are the people that Nexus phones should be aimed at.

Second point.

Moto doesn't have a particularly good image in Europe, but Google doesn't have to market them as Moto phones they can market them as Google phones.

I answered most of this point a few seconds after you posted this.
You posted at 12:34PM, I posted at 12:35PM

So what you're suggesting is creating 3 different Android lines instead of the 2 we already have now?
Line #1: Android Manufacturers.
Line #2: Google's current Nexus line...Google's current development line.
Line #3: Motorola's Google Android...You suggest making this their development line instead?

At the end of the day, either Line #2 would get eaten up by Line #1, or the other way around. You'd still be left with 2 lines at the end of the day if you create that 3rd line you're suggesting.

It would cost far less for Google to tell Samsung "Create a 'Galaxy Nexus Version 2' and we can sell it for full price on both our sites. Hardware will exactly be the same, only difference is that it won't have Verizon's tramp stamp on it and it would have Google Wallet and any software blocked by the carriers." That would be far better than spending money/resources/hardware creating a 3rd development line in Motorola's department since the only thing different will be Google Wallet.

 

[WelshBloke]

I'm suggesting decoupling the nexus line from the carrier's and keeping it totally under Googles control.

So a general manufacturers line, and the Nexus line made and released by Google.

 

[lothar]

I'm suggesting decoupling the nexus line from the carrier's and keeping it totally under Googles control.

So a general manufacturers line, and the Nexus line made and released by Google.

Then that does not avoid their "perceived" preferential Android treatment problem.

Motorola's bread and butter is Verizon's "Droid" brand. They would be competing with the Android manufacturers there and also represent the Google Nexus line exclusively in your scenario.
If Motorola completely avoids or abandons Verizon's "Droid" branding to reduce the "perceived" preferential Android treatment to be fair and only focuses on the Nexus brand instead, they'd go broke much faster than they already are.

Line #1: Android manufacturers line. Moto's "Droid" brand products today are currently competing here.
Line #2: Motorola takes over and makes Google's Nexus lines.

Will Motorola still compete in Line #1? Will Motorola have to withdraw from Line #1 to become an exclusive partner for Line #2? or will they still produce and compete in Line #1, while inheriting the exclusive Google's Nexus line #2?

 

[WelshBloke]

Then that does not avoid their "perceived" preferential Android treatment problem.

Motorola's bread and butter is Verizon's "Droid" brand. They would be competing with the Android manufacturers there and also represent the Google Nexus line exclusively in your scenario.
If Motorola completely avoids or abandons Verizon's "Droid" branding to reduce the "perceived" preferential Android treatment to be fair and only focuses on the Nexus brand instead, they'd go broke much faster than they already are.

Line #1: Android manufacturers line. Moto's "Droid" brand products today are currently competing here.
Line #2: Motorola takes over and makes Google's Nexus lines.

Will Motorola still compete in Line #1? Will Motorola have to withdraw from Line #1 to become an exclusive partner for Line #2? or will they still produce and compete in Line #1, while inheriting the exclusive Google's Nexus line #2?

I'd say pull moto out of the commercial channel, the only reason they aren't bust there already is US carriers branding. This opens up the android market to competition between manufacturers and maybe lowers verizons influence on the android market in the US.
It also means that Google then isn't in competition with the other handset makers.
Also Google can streamline Moto production and maybe stop them losing money, but that wouldn't be such a problem if the loss was counted as part of Googles R&D.