
Assuming Android goes proprietary to Motorola, it falls behind Apple in market share by 201 and Windows Phone (the Other category) gulps up nearly half the mobile phone market.
There’s a good reason why Apple’s products “just work”. But it’s been a bumpy road for the Cupertino, California company because right from the onset competitors were ridiculing its vertically integrated approach to business. Apple’s supposedly ‘closed’ ecosystem is a major weakness, critics cry. The past decade, however, saw the marketplace validate the strategy through booming sales of Apple gear. But what if GOOG actually tried the AAPL model with Motorola, which today makes about one in ten Android smartphones?
That’s the dilemma Piper Jaffray resident Apple analyst Gene Munster set out to explore in his Friday note to clients. In short, making Android proprietary and exclusive to Motorola would add about 35 percent to operating income for Google, the accidental hardware company. By 2015, the phone biz would add a cool $10.5 billion in operating profit and $56 billion in revenue, resulting in a per-share earnings of $25.16 by 2015. There’s just one problem with this hypothetical strategy:
Google loses $4.5 billion in Android ad revenue at $10 per user in 2015 compared to Android’s current trajectory.
Worse, Android would lose “significant share” being exclusive to Motorola phones, dropping to 15 percent market share in 2013, down from 43 percent. And in the calendar year 2015, Google would sell one in five phones, or 172.5 million units. Primary beneficiary? Microsoft, as betrayed Android backers turn to the Windows Phone software.
That’s a lot of assumptions, granted, and Google’s unlikely to risk dropping the ball in online advertising, which led Munster to warn they would most likely “keep the patents and sell Motorola’s device and set-top box businesses”. If the lucrative incentives tempt Google to close Android, Motorola, now the 8th biggest smartphone maker and 5th biggest Android, could benefit as well. Consider this…

Should Android remain open, which it likely will, Google and Apple combined grab two-thirds of the market in 2015.




















