A Necessary Evil – Why Google and Microsoft Make Hardware

With the fanfare revolving around the launch of Motorola’s new Droid X and its siblings, it reminds me of the questioning why Google bought Motorola in the first place. The prevailing wisdom was that it was for the pile of mobile patents Motorola had in it’s war chest. The phone business was just icing on the cake.

What if it was actually the other way around? Was there actually a necessity for both Microsoft and Google to make their own products beyond just profit? I believe there is, but each have a dissimilar reason that stems from the same core plan.


While both obviously see the need to make their own hardware, Google needs to do so for the saving of Android. The thing that has let Android, the mobile OS market-share locomotive that it is, grab so much of the sales is the same reason that may effect its lifespan. This reason is the fragmentation that’s happened at the hands of device manufacturers. By allowing anyone to use the operating system source code, it has allowed Android to spread quickly. It’s also led to a host of individual changes that threaten the OS’s cross-device compatibility.

To look at a quite real parable for this unwinding, one only has to look at Android’s forefather, Linux and BSD. They too had grown and eventually fell because of the diversity of viewpoints in its implemented. Only now has Linux started to come out of it but arguably too late for the OS. The world has moved on. Google can’t have that happen to Android if it wants the OS – and Google’s presence – on the majority of mobile devices.

So how does that transcribe to making hardware? The best plan they have is to use Motorola to put out the absolute top-of-the-line phones to carry the ‘pure’ Android OS. In effect, Motorola products would show the best case in Android implementation and the most sought-after device at the same time. Should they be able to do this, it would allow them to become the pied piper of Android development. The pundits and word-of-mouth would force manufacturers to adopt the clean spec of pure Android, rather than mixing their own. Should this happen, it keeps the continues or improves the relative ‘ease’ of creating apps for the ever-growing Play Store while reducing the headache of compatibility for consumers. All that means that customers will keep coming back – to Google.

Microsoft, on the other hand, needs to make hardware for a slightly different reason. The launch of Windows RT needs to go as well as it can. It needs to show the speed and all the capability Windows 8 RT can muster within the consumer’s first interaction with the new OS. Therefore it needs to be the specification leader to guarantee the best initial consumer experience it can.

While Android has seen its phone hardware partners engage in a war of ever-better hardware features on high-end phones, Microsoft’s old-school computer manufacturing buddies have fought so long on price alone that all they see is margin. This leads to sacrifices that just can’t happen with a nascent, but high-value product line like RT.  This will be the future of Windows, after all.

As a result of disappointing sales, Microsoft has dropped the price of the Surface RT by up to $150. Is it enough though?
Microsoft learned a number of lessons from Android and created its own premium tablet in the form of the Surface.

Microsoft learned a few lessons from watching the first attempts with Android tablets (as well as partnering with Nokia on Windows Phone) and has tried to implement those lessons with the Surface. By launching the Surface first, with its best possible specifications and performance, Microsoft gets to set the price-to-performance bar for where Windows tablets should start. Their cost-focused partner’s have no choice but to price less than the Surface with their cheaper products or build a better device to charge more.

In the end, for both Microsoft and Google, it’s really about the operating system and its market ownership, so it’s in both of their interests to drive the bus rather than to let someone else take the wheel. To that end, while there will probably be a lot of advertising and hoopla surrounding successive launches, I’d be willing to bet that both Motorola/Google and Microsoft’s profit-loser, but specification leader market position is the least of their concerns. The necessary evil of dipping into hardware is a calculated cost in keeping their partners going in the right direction for the future of their OSs, rather than the whims of their partners.



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