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Thursday, July 11, 2013

$goog vs partners

Google is about to go head-to-head with the Galaxy S4, and all its other "partners".

Google will spend $500M (talk about innovation!) for the Moto X.

A big part of Samsung's success, and differentiation, in mobile is its massive ~ $4Billion ad budget for their electronics division. 

Google is about to spend half of what Apple spends on advertising for one product. 

The sheer volume of spending, for one product, is insane. It tells me the phone itself will not be able to differentiate enough, on its own technical merits, compared to other Android devices.

And it's a big bet. A big enough bet where margins will be impacted on the ad budget alone. (That's ignoring all related manufacturing costs.)

Google does not have a good track record at consumer electronics. They can produce interesting hardware products, but their market has only found itself with the techie segment of limited distribution. (And even with the limited distribution of the Nexus 4 had major hiccups.)

Mass-market Consumers don't care about stock android. (Even though it now looks boring compared to iOS 7.) Their premium chrome book, costing $1500 with huge cloud storage does not resonated with mass-market consumers. Google Glass annoys more mass-market folks, barring the uber techies. (No amount of advertising with beautiful people wearing them can change that.)

Maybe this ad campaign changes that. However, their traditional ad campaign for search did not do anything for increasing search share. (Their search share, while dominant, is at peak.)

We were told to expect some crazy technical advantages with the Moto X. But mass market consumers don't really give a shit about Google Now. (They don't give a shit about Siri either. Although while driving, Siri is brilliant for txt and calling.)

Mass market consumers don't give a shit about sensors, unless its practical. 

Maybe Google re-invents the smartphone, and handset sales will allow the stock to fill into its outsized trailing multiple. But history tells a different story. 

The one advantage of Moto will most likely be fluid OS updates. Since OS updates are the responsibility of the OEMs, there should be no excuse for Moto to have an immediate OS update mechanism. Hence the unintended favoritism of the Moto phone via the android ecosystem. Although the $500M ad budget is a very blatant form of favoritism. 

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