Internet search giant Google Inc(NASDAQ:GOOG) which
has built massive brand equity with its Android operating software, could soon
come out with its own phone, according to a portfolio manager at T. Rowe Price.
Since Android operating software was not generating
revenues for Google and was more of a branding exercise, the company would soon
jump into the hardware space, is the reasoning by Dan Martino of T.Rowe Price.
"They want to move more aggressively into
handsets and tablets," Martino said recently.
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He holds the view that the acquisition of Motorola
Mobility by Google was not really about the patent fight but a prelude to its
entry into the hardware segment with its own Google-branded phones.
His estimate is that by the end of next year the
company could be ready with a hardware product under the Motorola brand.
However the hardware segment operates on wafer-thin
margins and the only way to get profits is through volumes and this is where
both Samsung and Apple score over their rivals.
However a Google phone means that handset makers
that run on Android such as Samsung, HTC and LG will be in direction
competition with the company that is partnering them and providing their
operating software.
According to Martino Google will have to diplomatic
and use its skills in relationship management.
Martino envisions a less buggy phone that is more
tightly tied to the nascent Android ecosystem. Google has enormous amounts of
cash, meaning they don't need to make much money on hardware, just enough to
stay alive.
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