Los Angeles - Google's monster purchase of Motorola Mobility
has made it clear: the digital future is all about portability.
Sales of desktop and laptop computers are sputtering as
purchases of ultra-totable iPads mushroom, signalling that the next great
technology battles will not be waged across computers, but over notepads and
smartphones.
No longer content to merely dominate search, or provide a
popular cellphone operating system in the Android, Google may end up diving
head first into the hardware business with its $12.5bn acquisition of Motorola
Mobility on Monday.
Like Apple and Amazon before it, Google has apparently decided
that the key to monetising search is controlling the platform and the software
that runs on it.
The focus following the big buy has been on the tens of
thousands of patents Google snapped up, but beyond any potential future
innovations, Motorola is undeniably a substantial manufacturing platform.
In theory, if Google can whip Motorola into shape - a big
"if" given the company's also-ran status - it could at some point
cook up an in-house alternative to Apple's wildly popular iPhone and iPad.
"Apple in this world is a little like the opening
credit of the old 1960s show The Outer Limits where it says: 'We control the
vertical, we control the horizontal'," Paul Saffo, a technology forecaster
at investment firm Discern Analytics, told TheWrap.
"When it was first conceived, the web brought the vast
universe of cyberspace to us, but it did it at the one place nobody wanted to
be - our desks," Saffo told TheWrap.
Continuous vs episodic web experience
"What mobile did is bring it to where we spend our
lives, with devices that sit on our laps or fit in our pockets. It shifts the
cyber experience from being episodic to being continuous. That's not going
away."
Google is already a major player in the smartphone game
thanks to its Android software, which commands more than 40% of the smartphone
market. But it doesn't yet have a big presence in hardware; it farms out its
technology to the likes of Samsung and HTC.
That may change after the Motorola deal. Analysts aren't
necessarily buying Google's insistence on Monday that Motorola - its first big
bet on hardware - will remain a separate company forever.
"It's a validation of Apple's approach of tightly
integrating software and hardware," said Roger Entner, founder of Recon
Analytics.
"While Google says: 'Oh, we'll operate this as a
stand-alone operation,' it didn't buy Motorola to leave it completely
alone."
"It's an entirely different avenue for them, but I
think it's a critical one," Mike Hickey, an analyst at Janco Partners,
told TheWrap.
"It's about innovation, about being aggressive. Apple
was running away with the market, so it's not surprising (Google) would want
this asset."
Importantly, mobile also may enable greater monetisation of
the digital space. Traditional online advertising has yet to prove as fruitful
as most would have hoped, but smartphones offer the possibility of
location-specific ads.
"Advertising works better as the advertising engine
knows more about you," Entner said. "If that device is always with
you, it knows where you go, it knows what pictures you take.
"It can combine the search you do with the location you
are. That makes advertising so much more powerful."
And more powerful ads mean more revenue.
Not so certain is what the deal means for Google's place in the tablet market, one of the most rapidly growing sectors in the tech space.
Tablets a top seller
Tablet shipments are projected to hit 61.9 million units
this year, up from 19.7 million in 2010, according to research firm IHS. And
nowhere was the burgeoning popularity of tablets more pronounced than during
Apple's most recent quarterly earnings announcement.
Though iPad sales jumped an astounding 183%, only 3.9
million Macs sold during the period, far less than Wall Street analysts had
projected. Even Apple chief operating officer Tim Cook admitted publicly that
the runaway success of the iPad was dampening sales of home computers.
It's a sector Google must compete in, especially with Amazon
rumoured to be coming out with a tablet in spring. With Android-based tablets
accounting for a mere 20% of the overall market, it would seem this move
signals that Google could be ready to get serious.
And Google has shown that it will not rest on past success.
Not only did it abandon its triumvirate leadership of Sergey
Brin, Eric Schmidt and Larry Page (making Page sole CEO), it also shook up its
bureaucratic structure and tried to reinvigorate its technology development
operations.
The moves were all of a piece with Page's stated ambition to
run Google with "the soul and passion of a startup".
Part of that "startup" spirit is manifesting
itself in an eagerness to push the perimeters of Google's brand identity -
making another play for social networking with the launch of Google+ and
reportedly sniffing around Hulu.
Bolstering the company's ability to offer users more ways to share photos with friends or stream episodes of TV comedy series 30 Rock on their mobile devices will be central to keeping the company current and vibrant.
Yet it all comes back to the need to both innovate and make
money simultaneously. The smartphone market, with its growing clientele,
utility and advertising opportunities may be just the ticket.