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Abstract

This case discusses the reasons for the search engine giant Google Inc's acquisition of the mobile device manufacturer Motorola Mobility Holdings Inc (MM), the value that MM brought to the table, and the downside that the acquisition presented to Google. In 2007, Google launched the smartphone operating system Android in collaboration with 33 telecom companies. Android was made available for free as Google’s strategy was to reduce the cost of mobile web access, enabling more people to access Internet on mobile devices and induce them to use its search services which would bolster its advertising revenue. Android was widely adopted by device makers, and, by June 2011, it had cornered 43.4% of the worldwide smartphone operating software segment. However, Google and Android had a weak portfolio of wireless patents, a fact exploited by Google’s competitors like Apple and Microsoft, which filed patent infringement cases against Android collaborators. Many of these cases were settled or were expected to be settled in favor of Google’s rivals, resulting in Android device makers having to pay royalties to the patent holders. Mobile device makers were finding it increasingly more expensive to deploy Android. Analysts felt that Google had to buy patent suites to file counter suits against the Android detractors. Google adopted this path and on August 15, 2011, announced that it was acquiring MM, a company with a deep suite of patents. With this deal, Google was also expected to compete effectively with Apple by coming up with refined devices that perfectly synced with Android. However, many experts felt that Google had committed a phenomenal folly and wondered whether it would be able to derive the intended synergies from the deal - they pointed out to MM’s precarious financials and a weak smartphone market presence, Google's questionable capabilities in running a brick-and-mortar business, its ability - or the lack of it - to assimilate MM’s mammoth taskforce given the stark contrasts in organizational cultures, and the potential dismantling of the Android network due to conflict of interests. A vital question being asked was whether Google could simultaneously collaborate and compete with its alliance partners for Android. This case is meant for MBA students as a part of the Managing Networked Businesses/Corporate Strategy/Strategic Management curriculum. The case will help the students: 1) Understand various issues and challenges in managing networked businesses; 2) Understand which is a superior strategy, organic growth (which usually entails longer gestation period) or inorganic growth; 3) Discuss the issues that companies need to take care of while building market shares, more so in the technology segment, and the capabilities that they should nurture to sustain the market dominance; 4) Understand if it is a sustainable strategy for a company to acquire another one operating in a segment alien to it just to acquire market share; 5) Understand the disadvantages of the strategy to compete at the expense of an existing and thriving collaboration; 6) Discuss the strategies that Google needs to adopt to keep the Android network intact.
Location:
Size:
Large
Other setting(s):
2010-2011

About

Abstract

This case discusses the reasons for the search engine giant Google Inc's acquisition of the mobile device manufacturer Motorola Mobility Holdings Inc (MM), the value that MM brought to the table, and the downside that the acquisition presented to Google. In 2007, Google launched the smartphone operating system Android in collaboration with 33 telecom companies. Android was made available for free as Google’s strategy was to reduce the cost of mobile web access, enabling more people to access Internet on mobile devices and induce them to use its search services which would bolster its advertising revenue. Android was widely adopted by device makers, and, by June 2011, it had cornered 43.4% of the worldwide smartphone operating software segment. However, Google and Android had a weak portfolio of wireless patents, a fact exploited by Google’s competitors like Apple and Microsoft, which filed patent infringement cases against Android collaborators. Many of these cases were settled or were expected to be settled in favor of Google’s rivals, resulting in Android device makers having to pay royalties to the patent holders. Mobile device makers were finding it increasingly more expensive to deploy Android. Analysts felt that Google had to buy patent suites to file counter suits against the Android detractors. Google adopted this path and on August 15, 2011, announced that it was acquiring MM, a company with a deep suite of patents. With this deal, Google was also expected to compete effectively with Apple by coming up with refined devices that perfectly synced with Android. However, many experts felt that Google had committed a phenomenal folly and wondered whether it would be able to derive the intended synergies from the deal - they pointed out to MM’s precarious financials and a weak smartphone market presence, Google's questionable capabilities in running a brick-and-mortar business, its ability - or the lack of it - to assimilate MM’s mammoth taskforce given the stark contrasts in organizational cultures, and the potential dismantling of the Android network due to conflict of interests. A vital question being asked was whether Google could simultaneously collaborate and compete with its alliance partners for Android. This case is meant for MBA students as a part of the Managing Networked Businesses/Corporate Strategy/Strategic Management curriculum. The case will help the students: 1) Understand various issues and challenges in managing networked businesses; 2) Understand which is a superior strategy, organic growth (which usually entails longer gestation period) or inorganic growth; 3) Discuss the issues that companies need to take care of while building market shares, more so in the technology segment, and the capabilities that they should nurture to sustain the market dominance; 4) Understand if it is a sustainable strategy for a company to acquire another one operating in a segment alien to it just to acquire market share; 5) Understand the disadvantages of the strategy to compete at the expense of an existing and thriving collaboration; 6) Discuss the strategies that Google needs to adopt to keep the Android network intact.

Settings

Location:
Size:
Large
Other setting(s):
2010-2011

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