Monday, August 15, 2011

Google Buying Hardware Company

No, it is not Home Depot, or Ace, Google has set its sights on Motorola Mobility. Its one thing to make the Android software and search engine, it's another to also make the products that the software goes inside. With the acquisition of Motorola, Google gains a firmer entry into cable boxes, the Xoom tablet, and smartphones. Now they are more like Apple then ever before. Should Apple buy a search engine like Bing or Yahoo to stay on par with Google?

A good move for Google or likely to cause them to lose focus in managing internal cultures and organizational changes? Can Google turn these Motorola devices into more must have devices. At the same time will other companies that support the Google Android software start to look at Google as more of a competitor than partner? And does Apple need to react or stay their own course, regardless of a Google-Motorola merger? Interesting times.

Another Cable Operator Bites The Dust

Like most industries, the big fish eat the little fish. So too in the case of cable operators. The number 2 cable giant, Time Warner Cable, has agreed to purchase the number 9 cable operator, Insight Communications. Insight was once twice the size. About six years ago, it sold off half its operations to Comcast and went private. Today they are about three quarter of a million subscribers, with systems in the Midwest.

It is this consolidation that continues to change the state of the communication industry. Satellite has two main competitors, DirecTV and Dish; Telco has three, AT&T, Verizon, and Sprint. Cable still has more, including Comcast, Time Warner Cable, Cablevision, Charter, Cox, Mediacom, and others. To compete effectively in the communication and distribution platform business, cable needs more consolidation for more effective coverage of the US and more efficiency of operations.

At the same time, as these consolidations occur and industries become oligopolies, these industries start to enter into a "too big to fail space". Today we have fewer banking companies, car companies, accounting companies, and now cable companies. In the banking and car businesses, the government swooped in to save them when they became less adept to change and let power corrupt them. Are we in to the same mistakes occurring in the cable industry? Consolidation builds power, but it loses competition, the stuff that keeps them on their toes. As long as telco, cable, and satellite don't start merging each other, competition will keep excessive power at bay.