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.