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Elizabeth Glagowski | August 15, 2011

Where Does the Customer Fit in the Google-Motorola Deal?

Today Google announced that it will purchase Motorola Mobility, the makers of the Droid smartphone and other mobile devices, for about $12.5 billion. Many in the industry note the move was done to resolve patent issues and provide more intense competition with Apple's iPhone and Microsoft's Windows mobile operating system. But it's also a sign that the industry, a fiercely competitive space revolving around innovation and leading technology, needs a shift toward customer centricity.

According to Google's website, the company's number one core principle is to "focus on the user and all else will follow." This strategy has created an innovative culture at Google. In addition to its core search strength, the company's famous "20 percent time" policy yielded products such as Gmail, Google Earth, Translate, and Google Docs, with the primary goal of sharing information in an open environment. "They have a history of building products that they think are cool and hoping customers will use," says Matthew Rhoden, partner at Peppers & Rogers Group. The problem is, customers aren't using them.

This business model focuses inward, where employees' hard work may not have much relevance to customers. "In the past, they have built scores of interesting and 'cool' products," Rhoden says. "However, these products were the result of employee interests versus consumer demand and, as a result, most have received very little usage." A recent New York Times article reveals that many engineers are now encouraged to focus on improving existing tools, like the terrain layer on Google Maps, most of which are not obvious to users. "A lot of people worked very hard on them and they were kind of sad that they spent a year of their life on something that gets 0.1 percent usage," says one Google employee in the article.

Google's Android operating system, meanwhile, has advanced innovation and creativity by using the shared skills of developers and partners in an open collaboration to create a positive user experience and interface. It has resonated with customers, as its market share jumped to 43.4 percent in 2011. It's a great example of meeting customer needs through innovation.

Today's deal creates a lot of potential for customer centricity, balanced with revenue potential. Google will now control both the operating system and the device, increasing its potential relationship strength (or weakness) with customers. Technology can be copied, so Google's decision to own more of the customer relationship (and the patents that go along with it) be an advantage. Customers will have one company to interact with for both hardware and software concerns for their mobile phones. It will mean a lot not only to product development, but also ongoing customer support and the ability to act on customer insight.

And it's only the first step. Motorola is emerging as a leader in set-top box engineering and products. The move has implications beyond the mobile space. Motorola CEO Sanjay Jha said in an investor conference call this morning that "there is a great convergence of what's happening in the mobile world with the set-top box world and content. We'll be able to accelerate that conversion."

By providing a vision for a world-class experience then finding products to fit into that culture, Google and Motorola could be on their way to building a new technological business model. The key to their success, however, will be their ability to provide the top-tier customer experience that is required. Both companies will need to shift their focus from finding customers to buy its products to creating products to serve its customers. Rhoden is pessimistic about that probability in the short term. His concern is that the details of the patent fights and internal merger issues will take precedence.

"Today's Motorola Mobility acquisition announcement reaffirms that Google has a product first, rather than a customer first mentality," Rhoden says. "At the end of the day, the consumer will be the loser in Google's acquisition as the pace of Android innovation is sure to slow as two entities begin their transition and in the future as internal politics come in to play." Along with common antitrust and merger detail questions, many are also concerned about how other OEMs will play a role as partners in Google's innovation, such as LG, Sony-Ericsson, HTC, and Samsung, all Motorola competitors.

No matter what happens, today's news is a prime example of how fluid and converged the high-tech industry has become. The boundaries between industries are blurring and competition is around every corner. The hope is that in the end the customer experience and product quality will evolve along with this convergence.

"This move allows us to supercharge the Android ecosystem," said Google CEO Larry Page in this morning's investor conference call. But the real question is, will it supercharge customer strategy along with it?


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