Mountain View-based search engine specialist Google Inc (NASDAQ:GOOG) has again confirmed the existence of another product that has helped churn the rumor mills for quite some time now – the supposedly path-breaking X phone. As the company’s Motorola Mobility Holdings Inc (NYSE:MMI) smartphone unit confirmed the planned launch of the ‘Moto X’ handset, the one question that some investors will be sure to ask is whether this would be the year 2007 revisited once again. Yes, I’m referring to the year Apple Inc. (NASDAQ:AAPL)’s tech guru Steve Jobs changed the way people looked at handsets with the iPhone.
Let’s look at the bigger picture, shall we?
Well, to start with, the Moto X will not be having a bendable display, and there’s no news yet of its expected shatter-proof body structure, two things that would have otherwise made it unique. Instead, the phone’s going to be laced with advanced sensor technology, and would use extra processors to conserve battery life. But then again, this is not an article that caters to tech aficionados, so let’s go ahead and figure out the potential impact of this new stream of revenue generation for a company whose name appears to be synonymous with the word ‘diversity.’ And perhaps what’s far more important is not to take this one product in isolation but to make an honest assessment of the actual commercial viability of a series of new experiments that the company is conducting in the shape of the Google Inc (NASDAQ:GOOG) Glass, Google Fiber, and the Chromebook Pixel, among others.
As things stand at present
Well, if you start by looking at the smartphone scenario at present, Apple and Samsung are the leading smartphone makers, but Google is the undisputed leader as far as operating systems are concerned. In fact, if you go by 1Q 2013 data posted by research firm IDC, Google’s Android operating system commands 75% market share as opposed to a meager 17.3% by Apple Inc. (NASDAQ:AAPL)’s iOS. That’s convincing enough for people like me to believe that Google Inc (NASDAQ:GOOG) has now not one, but two core sources of revenue – search engine dominance and global supremacy in operating systems. As long as there’s no significant alternative to the effectiveness of marketing tools like AdWords or the ease of use and subsequent popularity of Android, these two factors are reason enough why Google should be a really good long-term bet.
The advantages line up
But, now that Google Inc (NASDAQ:GOOG)’s gunning for a greater share of the smartphone handset market with the Moto X, it’s only fair that we attempt a layman’s comparison between the company’s currently available Nexus handset series and the Apple Inc. (NASDAQ:AAPL) iPhone line-up, just to have an idea of where we’re actually headed for. Well, for a start, it’s the price. I don’t see any reason not to believe in the commercial viability of phones that cost less than half the price of a premium Apple handset, while offering much bigger screen size options, ease of usability and dependence on an operating system that outpaces Apple’s iOS in phones as well as in tablets by a handsome margin.
Microsoft (NASDAQ:MSFT)’s challenge
However, that doesn’t mean the competition is getting less crowded for Google Inc (NASDAQ:GOOG). Software biggie Microsoft Corporation (NASDAQ:MSFT) is leaving no stone unturned to ensure the popularity of its Windows 8-based smartphone operating system, as it collaborates with ex-handset market leader Nokia Corporation (ADR) (NYSE:NOK) over the Lumia line-up. However, as I had already mentioned before, the relative scarcity of decent apps for the Windows marketplace as against Android and Apple’s iOS is a crippling factor indeed, and one that pushes Microsoft’s operating system to a distant third place with a 3.2% market share in the first quarter of 2013, as per IDC data.
The enterprise factor
At the same time, Microsoft Corporation (NASDAQ:MSFT) and Nokia Corporation (ADR) (NYSE:NOK) still have a distinct edge over Google Inc (NASDAQ:GOOG) in the race to grab a larger share of the enterprise market, a prized segment for everyone involved in the smartphone industry. That’s because Windows continues to remain the corporate customer’s favorite computing software, while Android’s perceived susceptibility to malware continues to be a stumbling block for Google.
But now, with the launch of the Moto X, Google has a chance to turn the tables as Motorola Mobility Holdings Inc (NYSE:MMI) is a brand that is traditionally associated with US government and defense agencies, thereby lending the company the much-needed corporate credibility. That, in itself, would justify Google’s mega $12.4-billion acquisition of Motorola Mobility. And if you add to that the Moto X phone’s supposedly long-lasting battery power, an already sore point for modern day smartphone makers, coupled with the advanced sensors that helps the phone to better ‘understand’ user preferences, this looks like the beginning of a true ‘life companionship’.
The new kids on the block
And now, a brief look at the Google newbies. To start with, there’s Google Glass, the product that’s supposed to usher in the age of wearable computing. Apple Inc. (NASDAQ:AAPL) has already expressed disdain for it, with CEO Tim Cook saying at a recent tech conference that he doesn’t know a lot of people who would wear a pair of glasses voluntarily in public. Given that Apple is not usually in the habit of openly criticizing its competitors, can we perhaps take this as a sign of alarm at the product’s possible potential? Only time and the iWatch can tell that.
The other significant factor is Google Fiber. Although still at an experimental stage, there’s no reason to believe that Google does not have any commercial motive in the entire thing. And even if it’s just for the sake of motivating telecom operators to offer better Internet speeds and bandwidth, that just means more surfing and more ‘Googling.’ Which is also where products like the Chromebook Pixel would likely come in handy for people hooked on to the Google ecosystem.
My Foolish takeaway
Having said that, the path ahead is unlikely to be super smooth for Google Inc (NASDAQ:GOOG). The company has already been facing scrutiny by the Government on a number of fronts for quite some time now. And Motorola is certainly a brand name that has failed to regain the confidence of mobile marketers and telecom operators lately in almost every major region in the world, including the crucial US market. But, even then, as I mentioned in the beginning, its ‘diversity’ that’s going to eventually win the day for Google. And further growth is just round the corner. Sit back and relax if you own this stock and keep smiling for the next couple of years, if not more.
Subhadeep Ghose has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft.
The article Google: Hard Reality Or Plain Euphoria? originally appeared on Fool.com and is written by Subhadeep Ghose.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
