Google & Motorola Mobility

Google completed its purchase of Motorola Mobility, which is what's left of Motorola's wireless phone business and was spun off by Motorola in January of 2011.  Motorola Mobility makes the Droid RAZR --- a pretty successful Android smartphone --- so the merger raises the question of whether Google is trying to get into the handset business with this purchase.

I think this would be a terrible idea.

Here's why:  A big part of the Android platform's appeal is price.  You can get a reasonable Android setup for a lot less than any iPhone, and there are at least five or six major players --- Samsung, HTC, LG, Motorola Mobility, etc --- producing Android handsets.  And these firms are competing fiercely on price, which drives the overall cost of an Android system down.

This hardware-side competition benefits the Android platform, and therefore Google, quite a bit.  It's the same logic that helped Microsoft dominate the desktop twenty years ago; DOS and Windows ran on commodity machines, so the total cost of a Windows setup was much lower than that of a comparable Mac.

So the last thing Google wants to do is give Samsung and HTC any reasons to stop pushing handset prices down.  And if Google were in the handset business itself, it'd be hard to resist the temptation to help its in-house handset business at the expense of Samsung and HTC.

There is talk of some other reasons for this deal, so I wouldn't be surprised if Google shuttered the Motorola Mobility handset operation.

RIM = DOA?

I've written about iPhone economics before, and it remains a really interesting market.   One of the great stories is that of RIM, the maker of the Blackberry.  Here's a firm that had a commanding market share not too many years ago, but has been completely hammered by the rise of the iPhone and Android smartphone platforms.

RIM is trying to catch up, so have a look at this recent article in The New York Times about release of the Blackberry 10 prototype.

The good news is that RIM understands the importance of getting a large group of software developers to work on applications that run on their OS.  The bad news is that developers will make their decisions based largely on whether they believe the product will be a hit with consumers.  RIM wants developers to make significant investments, but these investments will pay off only if the product sells well.  It's a tough sell for RIM, and I thought it was interesting to listen to the voice of skeptical developers such as Phill Ryu at Impending.

Even the pro-Blackberry-10 people quoted in the article didn't say much that would convince me the firm has settled on a good strategy.  The CEO of Refresh Mobile says the platform integrates well with social media...  but is "connect with Facebook" really much of a differentiator at this point?  And a Gartner analyst cites the phone's ability to capture extra frames when shooting photos.  I agree that this sounds like a nice idea, and is very much something I'd like to have on my phone.   But good ideas are different from good strategy, and it's hard to imagine that "extra frames when you snap" is something that iOS or Android couldn't replicate in a day or two of development-team time.

Gold Storage

I talked to City Weekly earlier this week about an interesting company that offers gold storage right here in Salt Lake.  Here's the story.

Gold prices are up sharply since 2002, but the metal really hasn't been a great investment over the past 40 years.  Here's a link for a chart comparing gold to the Dow since 1980, and you can see that while gold has about doubled over the period, the Dow is up by something like a factor of 14.

Gold might well be a sensible hedge against economic catastrophe, but buyers should be keep in mind they're probably giving up returns in order to buy safety.