Free Google Phone Strategy Revitalized, Post Motorola Bid
Leave it to a venture capitalist to cut through the clutter of punditry, follow the money and point to the next possible direction for Google if it succeeds in buying Motorola Mobility for $12.5 billion this year or the next.
Writing for Xconomy, Morgenthaler Ventures' Rebecca Flynn outlines an insightful scenario where she sees Google's bid for Motorola as a play to offer free phones to consumers, making the money up in mobile search and other ads.
This is, of course, an idea that goes back originally to the inception of Android as a platform in 2007, and gained strength in 2010 with the introduction of the Nexus One phones Google began selling through its Website.
After the Nexus One arrived, some believed Google would offer ad-supported phones and bombard users with advertising. The Nexus One didn't do well at all, and the free phone talk abated.
Twenty-plus months later, and it's come roaring back full force. Flynn said that while we geeks and pundits are all looking at Google's move as pure patent prophylactics, Google acquired Motorola to own the hardware that fuels its $1 billion a year-plus business for mobile search ads. Flynn wrote:
Owning the consumer interface means having control over future monetization opportunities. Search, maps and Google Wallet alone would give the company a treasure trove of data, including personal, location and shopping data. The more data Google has, the more they will be able to algorithmically target consumers with advertising. Let's look at Google Wallet specifically. Google needs credit card numbers and purchasing information--something that Apple has today through iTunes. With credit card numbers, Google could facilitate app purchases (which would motivate more app developers to build on Android). With purchasing information, Google could target ads based on purchase history. Handset manufacturers today are not obligated to embed Google Wallet on their phones. When (and if) this deal goes through, I bet we'll be seeing Google Wallet on all Motorola phones.
In other words, the Motorola merger is not expressly about patents, as many financial and tech experts claim, but also about owning the vehicles that drive mobile ad sales.
Perhaps, that is the ulterior motive behind the patent-protection curtain, but Google can't come out and admit as much.
To do so would scare or offend, Samsung, HTC and other Android OEMs into the waiting arms of Microsoft and Windows Phone 7, which is patent-protected and, OEMs might argue, forthright about its goals to make money.
But can you imagine what would happen if Google did give away free handsets? Android sales are huge in China from $20 phones. Did you see how fast HP TouchPads flew off of shelves? Those were priced at $99. Imagine if Google gives away phones.
Of course, it's highly improbable considering that Google will likely have to shell out big bucks to satisfy its lawsuit versus Oracle. There are a lot of balls up in the air with regard to Android. Too many to predict a free phone giveaway.