Google & Motorola…. anything for Mobile Money?.
In a bid to strengthen its mobile business, Google announced today that it would acquire Motorola Mobility Holdings, the cellphone business that was split from Motorola, for US$40 (S$48) a share in cash, or US$12.5 billion.(TodayONLINE). The offer – by far Google’s largest ever for an acquisition – is 63 per cent above the closing price of Motorola Mobility shares on Friday. Motorola manufactures phones that run on Google’s Android software.
But is this deal likely to effect the world of Mobile Financial Services? To gain an insight into the potential we need to look at the history of the two businesses.
Motorola has had a roller coaster history over several decades. Many of us would recall devices such as the StarTAC and the RAZR, under the Hello Moto messaging. But even with these pinnacle devices, Motorola was never able to achieve the mass market scale of its competitors Nokia, LG and Sony Ericsson. The first Motorola device to use Google’s open source OS, Android 2.0, was released on November 2009, the Motorola Droid. The handset division was then spun off into the independent Motorola Mobility.
Google on the other hand has been on an ever growing distribution base in the Mobile OS space since it’s acquisition of Android in 2005. Then with the support of the Open Handset Alliance, Google launched it’s first release of the acquired platform in 2007. Since that Android has seen a spike in distribution across some 80 device manufacturers. By the fourth quarter of 2010, Android become the world’s best selling Mobile OS.
The challenge for Smart Phone OS providers, has always been the market share limitation globally. In 2011, roughly only 25% of global devices are smart phones. This is where the Google Motorola opportunity comes in. With Motorola’s device experience, Google should be able to create move to penetrate lower down the value chain of the handset market. Thus opening the door for richer distribution of services over the open source OS market. With mid and low end devices powered by Android in the hands of the 700 million mobile users in India, or the 180 million in Indonesia, the distribution of mobile service becomes easier and richer. A perspective very different to Nokia’s recent announcement of factory pre-loaded applications.
A parallel initiative run by the Grameen Foundation, AppLab, who seek to engage with organisations, government entities and socially-minded companies interested in better understanding and meeting the needs of the poor. AppLab has had a long history of building services on the Android platform, particularly in markets such as Uganda, Indonesia. Overlaying Google’s OS, Motorola’s device experience and grass roots level programs such as AppLab’s means a powerful network of organisations with simple tools that can overcome the commercial barriers that Mobile Operators put in place to restrict the success of services trying to access their customer base. Resulting in the easier, quicker and more cost effective creation, distribution and management of mobile services such as Mobile Money.
In summary, with the effective collaboration of open source OS (Google) and a device manufacturer (Motorola), we have for the first time, a complete non-Apple mobile eco-system for the creation of services for delivery over mobile