Commentary

More On Google's Insatiable Search For Technology

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Like the hunger for knowledge and the passion to make faster and better widgets, the engineer in Google Co-founder Larry Page will lead the cash-rich company on a path to devouring technology.

Some technology will come from companies like Motorola -- sitting on the fence with a treasure trove of mobile patents at its feet, but not much foresight in what to do with them -- or from more unexpected sources.

Mobile will drive search, online ad growth and consumer purchases at least for the next five to 10 years. This trend first emerged for me in the early 2000s during a discussion with Avnet Executive Chairman Roy Vallee. At the time, he alluded to mobile pushing the electronics parts industry -- such as semiconductors and programmable logic -- into better days.

And while Macquarie Securities Analyst Ben Schachter believes Google's intentions to acquire Motorola Mobility are a largely 'defensive" move, the necessity should "benefit" the entire Android ecosystem. In a research note, he explains how the deal should enable Android development and distribution momentum to continue for a "reasonable price."

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The key point that Schachter highlights questions whether or not Google will build hardware, despite the company's statement to the contrary. Schachter reminds us that the general consensus is that "Google does not intend to stay in the hardware business."

Google could revitalize Motorola. The NPD Group estimates that Google's Android operating system (OS) dominates U.S. smartphone market share, accounting for 52% of units sold in the second quarter of 2011. Motorola's overall mobile phone market share declined 3 percentage points, from 12% in Q2 2010 to 9% in Q2 2011. The company's share of the smartphone market also declined from 15% to 12%.

Motorola's year-over-year unit share of Android OS sales fell from 44% in Q2 2010 to 22% in Q2 2011. Motorola gave it up to Samsung and LG, which both experienced substantial gains, according to The NPD Group. In my opinion, Google in the long run will see the benefits earned and learned by Apple and not resist. While Google will continue to drive ad sales -- paid search to display ads -- through content delivery, in the long term the content delivery will likely come from Google devices.

Some of that content geared for mobile could come from Hulu. Reports have surfaced that initial bids for Hulu are due Wednesday, and that Google remains among the suitors expected to submit proposals in the range of $500 million to $2 billion, along with Yahoo and Amazon.

On Monday, comScore released data from the comScore Video Metrix service showing that Google Sites ranked as the top online video content property in July with 158.1 million unique viewers, followed by VEVO with 62.1 million; Facebook with 51.4 million; Microsoft with 49.5 million; and Viacom Digital with 47.3 million. Total viewing sessions reached nearly 6.9 billion, with Google sites exceeding 3 billion to account for more than 40% of all viewing sessions online. The average viewer watched 18.5 hours of online video content during the course of the month, with Google sites at 5.9 hours and Hulu at 3.4 hours.

For Google, acquiring Hulu is not a far reach, considering that the company continues to prime its video site, YouTube, to deliver content on mobile devices supported by a variety of advertising.

 

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