Streetwise Professor

August 16, 2011

Going Mobile

Filed under: Economics,Exchanges — The Professor @ 12:49 pm

I don’t know enough about the technology to comment sensibly about the Google acquisition of Motorola Mobile.  But I’m guessing that there’s a strong transactions cost economics story to be told here.  I’m looking forward to reading the analysis a TCE type that does know the technology.

One thing that strikes me as interesting is the similarity between some of the issues in this merger and the ongoing silo debate in the securities and derivatives markets.  Apple: the integrated producer.  Android/Google, pre-merger: horizontal platform seeking to encourage competition in the production of complementary products (handsets that run the software).  Apple is analogous to the Deutsche Boerse or CME vertical model; pre-merger Google is in some ways analogous to the LCH.Clearnet horizontal model.  Just as the horizontal model is under pressure in the financial markets (note LCH.Clearnet’s recent travails, and the recent news that Markit is in negotiations to buy it), it is apparently under pressure in the mobile phone/device market too.

Again, I don’t know enough about the mobile phone and software markets to judge whether the comparison is more than superficial.  But I’m guessing that although the technological details differ, the underlying economic forces are quite similar.

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  1. Patents?

    Comment by So? — August 17, 2011 @ 12:10 am

  2. Perhaps the most interesting question: This is by far the largest acqusition Google has ever attempted, and Motorola does business in markets Google doesn’t know. Will the deal result in Google being able to sustain (and hopefully increase) the market value of Motorola or will this be another example where the value of Motorola Mobile is lost by the merger?

    Comment by Eric — August 18, 2011 @ 7:06 pm

  3. HP’s PC business is up for sale.

    Comment by So? — August 18, 2011 @ 9:43 pm

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