Google and Motorola: A Case For Vertical Integration

Alan BelniakMarketing, technology0 Comments

There’s been much ballyhoo this week about the GoogleRola acquisition. Many have speculated the true meaning (talent acquisition? [though that’s 19,000 new employees] patent portfolio? software-hardware partnership?)

 

Google has said that they plan on keeping Android truly open.  But one thing this allows is for Google to be more vertically integrated with one of its (now new-ish) markets. For a refresher on vertical integration, see the Wikipedia entry.

an example of vertical integration (from Wikipedia)

In a nutshell, vertical integration is when a company controls most/all parts of the supply and production chain in one specific niche (vertical).  In this case, it would be handsets: software (Android) and hardware (Motorola’s handsets).  Horizontal integration is creating a component to be used across an industry or space.  In that case, it could be the Android OS (to be used on many phones), or a particular type of cellular antenna (that many other manufacturers could license).

 

There are supporters and detractors on each side of vertical integration.  But one thing is very clear:

 

In the mobile device/handset/cellular phone market, there are two other companies that are generally vertically integrated: Apple (and they do this very well), and Research in Motion (RIM, Blackberry), and they are currently not doing this very well.

 

So, I think the jury is still out on whether it’s “a good idea” for the case of vertical integration into the software and hardware of the handset market with Google and Motorola.

How about you?  What do you think?

 

image source: http://en.wikipedia.org/wiki/File:Integration_in_English.svg


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