What Google and Microsoft found out about Smartphone hardware

May 2012 – Google bought Motorola for $13 Billion

Oct 2014 – Google sold Motorola to Lenovo for $3 Billion.

Sep 2013 – Microsoft bought Nokia for $7.2 Billion.

Jun 2015 – Microsoft wrote off the Nokia acquisition.

So both these companies spent a lot of money on buying “patents” or “trying to get into hardware”.

So, what did they find out about hardware?

1. Are they software companies that dont “get” hardware?

2. Is hardware really that hard?

3. Will applying software distribution techniques, margins and marketing work?

4. Is hardware best left to partners who are better at building devices?

5. Why is Apple better at hardware and software but poor at services (remember iTunes Ping)?

6. Will Amazon (which took a big haircut on their hardware as well last quarter) also “give up” on hardware?

7. Why are PC hardware makers – DELL, HP, Lenovo – giving up their leadership on the phone to – Samsung, Xiaomi and HTC?

8. Do you need to have only one hit hardware product (iPhone) and still survive a string of poor also-rans (iPads, Apple TV).

9. Were patents held by Nokia and Motorola worth it?

10. Most analysts and industry observers called this years ago, but why did the CEO’s not see this coming – were their hands truly tied?

5 thoughts on “What Google and Microsoft found out about Smartphone hardware”

  1. The reason why Apple has been more successful is because it is basically a hardware company which got software right. They sacrificed larger ecosystem, through licensing, for higher profit and thus are most profitable company in the world. Microsoft and Google are software companies that did not know how to leverage their hardware acquisitions. It is not in their DNA. They should have instead used that money to help the ecosystem partners – which Google has done better through their Android proliferation.

    Patents are mainly of value when you want to prevent being sued by Patent Trolls. Otherwise patents also lose value – like a car – is a depreciating asset.

    Apple behaved like China – the top man decides what gets done and everyone else goes about doing it and doing it well. Microsoft and others, are like a democracy where there are fiefdoms, groups, “yes on your face, no on your back” kind of subordinates where things may get done but the message gets lost.

  2. I think a software engineer cannot do hardware engineer’s work and vice versa. This applies to big companies’ board room and CxOs as well. Plus a company can innovate once with a disruptive product and build things around that(of course apple is exception that had innovated phone and the way hear music(iPods) ).

  3. Brave questions coming from a Microsoft staffer! Let me add one more. Could it be the case, that mobile phones are now such commodities that there is no longer any room in the market for a third party. You might though so but….

    The other thing that no one talks about is that the main channel partner for mobile hardware makers is large Telcos like AT&T. Telcos now have a fetish to reduce supplier count as that also drives down their inventory, product training and support costs. These Telcos only care about themselves, not the market or giving customers a variety of device choices.
    If MS is going to succeed, they need to find a way to offload the aforementioned costs to bring the large Telcos back to the table or start selling direct to large enterprises to drive volumes.

  4. Both Motorola and Nokia were *failing* companies.

    Microsoft does quite well with hardware in the Xbox space for instance.

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