Google’s Attempt at Crisis Management
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Apple’s (NASDAQ: AAPL) win in the recently concluded law suit against Samsung has forced the analysts, the industry experts and the invertors to question the future of Android, Google’s (NASDAQ: GOOG) mobile operating system platform. A good time is running for Apple as the world’s most valuable company was able to portray itself as the true innovator and will also benefit from a $1 billion damage benefit from Samsung with chances of the amount being tripled by Judge Lucy Koh, since the jury found Samsung was guilty of “willful” infringement of Apple’s patents, and also a ban on eight Samsung devices. All this has got the players and investors of the consumer electronics space very worried and forced Google to step up to dilute the fear and keep its partners from panicking. Let’s look at the entire situation part by part.
The fear among the phone makers
While Judge Lucy’s verdict made Apple’s life very easy, it automatically created a host of problems for Google. The law suit tore apart the hardware and the software used in Samsung’s devices and this created an air of uncertainty regarding use of Android. After the win the iPhone maker demanded to earn royalty from Samsung for the devices that were sold by the South Korean giant and this also poses as a huge threat to all other players whose devices run on Android.
Samsung is the world’s largest smartphone maker in terms of global shipments and a company of such stature can hold out against such a blow. But other smaller players, who feed on the left over market share after Apple and Samsung are done eating, are just too small and too weak to sustain such claims from Apple. What further fuelled the fear was the iPhone maker’s clearly outlined intention of destroying the Android ecosystem and thus going after each and every hardware and software maker involved in the value chain. Apple is spreading fear among the OEMs by not only challenging the Android, but also by threatening each OEM for using the platform.
Crisis management by Google
So, how valid is this fear? Not valid at all according to the Android maker. Though Apple has filed claims that the operating system features found in Samsung’s devices violated patents, Google’s management is certain that this patent dispute will not have any impact on Google. The Mountain View based company designs the Android platform and then gives them to the OEMs so that they can add it to their offerings. Now, these OEMs, in order to distinguish each other’s offerings, add new features to the platform. That is exactly what happened with Samsung. The phone maker took the raw Android and added the pinch-to-zoom, tap-to-zoom and bounce-back features which ended up violating the patents held by the iPhone maker.
Google has been very clear about the entire incident and said the features in dispute are not a part of the core Android operating system, thus making Android complication free. Samsung, Motorola, Sony, HTC – all players add new distinct features, widgets, apps to the Android platform and thus Samsung being accused of patent infringement does not necessarily mean trouble for others since each player offers different add-on features. Still, just the way Samsung’s product offerings were scrutinized by the jury; Google’s Android offering will be further analyzed. This, however, isn’t a matter of concern as the offering is likely to come out free from disputes. Unlike Samsung, Google has made sure that it keeps its offerings distinguishable from that of its peers. May be the reason is Google never wanted consumers to confuse its products with that from the others.
Another reason that makes Android Apple-proof is Google doesn’t sell the platform to earn money. Instead it gives away the OS at no extra cost while benefiting from it indirectly through selling of mobile ads, apps and other digital contents through Google Play. Thus, Apple can’t have a case here as it will be extremely difficult to prove that Android is also harming Apple’s existence. However, the opportunity cost can turn out to be a case builder here but even that should get ruled out as Google’s business model is such. Google isn’t dumping its offering in the worldwide market. Instead, it has devised a new way to function in the space which also can be explained through normal market competition, making it absolutely legal.
When the world’s largest online search provider decided to diversify and entered the smartphone space with its Android platform in 2007, it knew very well that it will have to face a lot of hardships to bring out and keep its offering in the market. Since then the company has come a long way and in the process captured the lion’s share of the phone OS space. Now with Motorola also under its belt, Google has rights to roughly 25,000 patents, which makes the company a strong one to fight against.
The investors, who are worried about the stock, as they anticipate the risk of using Android may limit OEMs from working with Google and thus cripple Google’s growth, need not worry. First of all, Google is now not entirely dependent on Samsung, HTC, Sony or any other phone and tablet maker thanks to its recently acquired Motorola and its Nexus 7 tablets. And secondly, like I already discussed, the Android platform is not violating any of the patents involved in the dispute and is thus totally safe for OEMs to use. The risk of Google being abandoned is not logical and surely the OEMs will not limit themselves from benefiting from the huge success of the platform. The Android maker has put in a lot of effort to manage the ongoing crisis and these efforts will surely pay off.
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