

The Staggering Android Business Failure - jusben1369
http://www.slate.com/blogs/moneybox/2012/10/18/android_s_business_failure_motorola_is_costing_google_big_time.html

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arscan
It is a stretch to call Android a "staggering business failure" based on
losses incurred by Motorola. Android wasn't intended to make money directly --
it was intended to protect Google's real interests (remote services that drive
advertising revenue). Closed mobile platforms could easily cut Google off from
their users, and ultimately their revenue stream.

Perhaps it wasn't smart for Google to get into the hardware business in the
mobile space. But calling Android a business failure because of it? No way.

~~~
htf
Yes, and Google hasn't really even gotten started yet with monetizing Android.
The real money maker will be Google Wallet. Just imagine Google taking a 2%
cut out of every transaction you make through an Android phone. No one will be
calling Android a failure then.

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mattmaroon
This is a misunderstanding of both why Google made Android and why they bought
Motorola. They made Android so that Apple wouldn't have the ability to
kingmake any rival search engine just by making it the iPhone default. They
bought Motorola largely for patents. Neither would appear to add to the bottom
line in the short term if successful, but without them you'd see a massive hit
if Google's theory was correct.

~~~
pedalpete
Your statement about why google "made android" is incorrect. Android had been
in development from 2003 and was purchased by google in 2005. Long before the
iPhone had been introduced.

Motorola was (I suspect) bought for the patents, as you stated.

~~~
mattmaroon
Well, the Android Google bought resembles the one that Google took to market
in name only. But if you like, change "made" to "bought" and the effect is the
same.

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jug6ernaut
"Android has been a pretty epic failure"

How did this reach the front page? Android has around 1.3 MILLION activations
per day. To blatantly call this an "epic failure" is astounding. Furthermore I
don't know how the acquisition of a cell phone manufacturing company can be
linked to Android. Motorola makes more than just Android devices, and even if
they didn't the stated linked is hard to make.

~~~
tptacek
This was a tiny article --- that's what Matt Yglesias, Slate's econ columnist,
writes --- and you didn't even read it; the whole article is about how Android
can simultaneously be a market success and a business failure.

Next time, read first, then comment.

~~~
jug6ernaut
Full quote then.

"And it's pretty clear that when you account for the costs of the Motorola
purchase, Android has been a pretty epic failure. And yet as a product it's an
enormous success—the most popular smartphone OS on the planet and even more
than that a huge driver of smartphone adoption."

This does not change what I said in my previous comment. Even if you relate it
JUST a business aspect and ignore that you can't do that. Lets look at googles
stock breakdown.

[http://www.trefis.com/company?hm=GOOG.trefis&from=home%3...](http://www.trefis.com/company?hm=GOOG.trefis&from=home%3AcompanyRelated#/GOOG/n-0003?from=sankey)

Motorola makes up 2% of googles worth, where Mobile Ads make up 34%. Granted
this can be assumed to not be completely Android, even if we assume that only
25% of that is from android devices, thats 8.5%. So 8x Motorolas worth and
about 21Billion based on Googles 245B market cap. So a worth of 21 Billion in
worth is an "epic failure"? Ok...

~~~
tptacek
_And yet as a product it's an enormous success—the most popular smartphone OS
on the planet and even more than that a huge driver of smartphone adoption._

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hiddenstage
"..the extremely costly Motorola acquisition was directly linked to Google's
decision to launch Android as a major business venture."

That is blatantly false. How did this make it past editing?

~~~
krakensden
There is no editing of Yglesias' regular moneybox posts. Spelling and grammar
errors are pretty common.

It's probably possible to defend this as having been correct but poorly
worded, on the grounds that Google's Android strategy changed around the time
they bought Motorola.

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dm8
Most of the Google's mega acquisitions are long term. And Google indeed thinks
long term. People were saying the same about Youtube in 2008. But look at
YouTube now.

I'm sure Android is helping Google's revenues rather than hurting. And Android
is going to be game-changer in places like India/China. Imagine how much ad
revenue Google will generate. Google beat MSFT with Android not AAPL.

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mmanfrin
> There's a fascinating lesson here because the extremely costly Motorola
> acquisition was directly linked to Google's decision to launch Android as a
> major business venture.

What.

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makhanko
This article is an excellent example of the knee-jerk reaction from the stock
market and the attitude that if it's not profitable this quarter it's not
worth doing.

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jere
>And at times _unwise_ investments can be the ones that do the most good for
the world.

This is probably extremely naive, but I feel this way about almost _all_ of
Google's products.

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crabasa
Since this article has no substance and just exists to feed the "Google stock
is tanking" frenzy, I'm assuming all the upvotes are for the irate and
entertaining comments?

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Sumaso
I'm surprised that Google hasn't used Motorola to make a nexus device yet.

Samsung seems to be doing pretty well for themselves making android devices,
it doesn't seem too much of a stretch for Motorola to do the same.

~~~
redthrowaway
They likely want to get Motorola's house in order first and make sure they
have the product people necessary to make a great device, before they entrust
them with doing so. Worse than Moto being a loss leader for a few quarters
would be a $12B acquisition falling flat with its first major release.

~~~
zmmmmm
My personal theory / guess (and let's face it, we're all guessing) is that
Google doesn't particularly want motorola for phones at all.

I think they've decided they need an in-house capability to produce hardware
in general and they intend to suck all the juice out of Motorola and then
discard its corpse so that they have the ongoing ability to invest in R&D for
hardware like Google Glass, self driving cars, etc. Just like they decided
years in advance of needing it that they had to have a mobile OS in their
arsenal, they've now decided that strategically they have to be able to
produce hardware. Not because they want to but because there are strategic
initiatives they can't pursue without that.

Think of it as the biggest acqhire in history (+ a boat load of patents, of
course).

~~~
redthrowaway
That's certainly possible, but I still think they intend to make Motorola a
maker of vanilla Android phones, to pressure the other OEMs to either improve
or ditch their "differentiating" skins and the like, as well as to provide a
reasonable baseline upgrade path.

I'll admit that a part of me simply _wants_ Google to make Motorola the
company that produces true iPhone competitors, but I also don't think it
unrealistic to imagine that they'll use the resource as a way to drive the
rest of the ecosystem forward, while hopefully making money with great
products at the same time.

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nissimk
Doesn't an acquisition always cause a hit on earnings for the first 1 - 4
quarters as the new companies figure out how to integrate their businesses?

~~~
strandev
This particular hit comes from Motorola losing money last quarter, not the
costs related to acquisition.

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lurkinggrue
Android is a staggering business failure?

Yeah, well, you know, that's just, like, your opinion, man.

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confluence
Bullshit.

Android has one job and one job only. It is there to kill iOS.

Why does Google want to kill iOS? Because it makes money on ads and if Apple
controls the entire high-end mobile platform - they've got Google's future by
the balls and they can squeeze them or their competitors for all they're
worth.

So what does Google do? It commoditizes the complement just like Microsoft did
to kill Netscape - aka the introduction of a free alternative - IE.

You release some product for free - probably the cash cow of another company
(iOS/Netscape vs. Android/IE). You push industry wide adoption across
competing interests that absolutely loathe the competitor or you squeeze them
until they adopt it as an industry standard.

You now turn the cash cow into a free/undifferentiated product that quickly
assumes inflation tracking rapidly falling commodity pricing (most tablets are
now indistinguishable - as is the software - prepare the squeeze). This pushes
your competitor's cash over into your business model (licenses/search).

Android is an astonishing success with billions of devices activated, and a
growth rate that is in excess of iOS by an order of magnitude. It is already
well on the way to killing iOS and the entire Apple platform.

Apple is dead. Long live iOS!

It was good while it lasted.

~~~
thedrbrian
And yet google still make more money from iOS than android , Microsoft is
taking even more money from google and apple are buckets of money from their
mobile platform. I'd bet apple and their shareholders will take a "dead"
platform over the "winning" google one.

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Zigurd
Buying a patent portfolio attached to a troubled hardware-maker is hazardous
for a company like Google. But if Moto didn't make Android devices, this story
would have no link to Android.

Maybe there is a wider story in that Android strategy hasn't been consistently
good or effective. Mixed messages about what Google will do with Moto made
OEMs nervous. Prior to Nexus 7, tablet marketing wasn't brilliant. But
everyone should be so feckless as to bumble their way to 1 million+
activations per day.

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forgottenpaswrd
Slate was property of Microsoft in the past.

It seems like the old owners remain a big influence there.

I suppose it is MS Ads money what creates continuous praises to the Lord there
like with other media (PC magazine...).

