#GooglePixel #iPhone – Google’s Answer to Apple’s iPhone Dominance: The Pixel Phone : Since its entry into the world of tech, Google Inc. has long struggled to gain any meaningful penetration in the consumer electronics market.
Despite its domineering software presence in mobile through Android (~88% market share), Google has long relied on outside hardware partners to get its apps into the hands of consumers. In 2011, Google first revealed its ambitions to change this status quo.
In what would become the firm’s biggest takeover to date, Google announced it would be acquiring handset maker Motorola Mobility for $12.5 billion. Less than three years later, though, it ditched the Motorola unit for just $2.9 billion.
On the surface, the Motorola deal seemed like a major blunder. It looked like Google’s foray in smartphone production was a total failure. After all, headlines were showing a $9.6 billion loss, and analysts were reaming Google for the sale. In the eyes of CNET, it marked “one of the worst investments in Google’s history.”
But things weren’t quite as simple as they seemed…
For one, that $9.6 billion figure left out a number of crucial details. At the time of purchase, Motorola had $3.2 billion in cash. Jointly, Google saved somewhere around $2.4 billion in deferred tax assets. Prior to selling off Motorola for good, Google also managed to spin off various components of the former company totaling $2.5 billion.
Factoring in these numbers, as well as an estimated $2 billion in operating losses from the Motorola unit during ownership, Google was only in for about $3.5 billion. For perspective, Google last reported $78 billion in cash and short-term investments.
More importantly, though, Google managed to leverage the Motorola unit to keep Android hardware giant Samsung in its rightful place. Prior to the acquisition, Samsung was behaving like a dog that hadn’t been housebroken yet, defecating in the very house Google was sheltering it in.
It threw its own skin over stock Android to make it seem like it had a unique OS. It swapped out Google’s stock apps in favor of its own. It even began building Tizen, an Android rival, that threatened to knock Google out of the game.
But Google was too smart and too influential to let any of that stand. With Motorola under its control, third-party hardware partners like Samsung were suddenly forced to comply. Stop messing with Android, or Google would ramp up handset production and cut them out. That was the unspoken threat.