GOOGL - Google

[LC]

I find it funny that when you read the Google, Apple, and Microsoft threads, all of them essentially predict that each of these companies, who are all competing against each other, is going to go into decline. (Google - "mobile ads less profitable" , MSFT - "no traction in phone", AAPL - "not cool anymore"). Truly fascinating.

Very good observation! It's also interesting that, when predicting the "decline" of each of these companies, no new competitors names are given. MSFT is going to decline but Win8 is going to successfully compete with Apple's ecosystem. Apple is going to decline but SIRI and iphone apps are going to cut into Google's share of the pie. GOOG is going to decline but replace MSFT as in the future as we all move to the cloud.

 

It's like rock-paper-scissors, but everyone loses in the end!

[VAL9000]

What do you guys think about ad retargeting?  I think that it is a huge, huge change for the display advertising business.  Forget about smartphones, ad retargeting is an important innovation that is going to make display advertising a lot more profitable.

 

What's hilarious about this is now I have a uFile display banner showing up when I visit this forum.  Thanks for that!

 

And yes, it's a great innovation and will help AdSense become more profitable and competitive.

 

[VAL9000]

I find it funny that when you read the Google, Apple, and Microsoft threads, all of them essentially predict that each of these companies, who are all competing against each other, is going to go into decline. (Google - "mobile ads less profitable" , MSFT - "no traction in phone", AAPL - "not cool anymore"). Truly fascinating.

Very good observation! It's also interesting that, when predicting the "decline" of each of these companies, no new competitors names are given. MSFT is going to decline but Win8 is going to successfully compete with Apple's ecosystem. Apple is going to decline but SIRI and iphone apps are going to cut into Google's share of the pie. GOOG is going to decline but replace MSFT as in the future as we all move to the cloud.

 

It's like rock-paper-scissors, but everyone loses in the end!

 

If there are three competitors and one winner, then on average everyone loses.  :)

 

[constructive]

In my opinion, the market consensus is that Samsung will beat Apple and Intel, with Microsoft and Google's  competitive positions basically continuing as is.

[txlaw]

http://www.theverge.com/2013/1/24/3904134/google-redesign-how-larry-page-engineered-beautiful-revolution

[bargainman]

I find it funny that when you read the Google, Apple, and Microsoft threads, all of them essentially predict that each of these companies, who are all competing against each other, is going to go into decline. (Google - "mobile ads less profitable" , MSFT - "no traction in phone", AAPL - "not cool anymore"). Truly fascinating.

Very good observation! It's also interesting that, when predicting the "decline" of each of these companies, no new competitors names are given. MSFT is going to decline but Win8 is going to successfully compete with Apple's ecosystem. Apple is going to decline but SIRI and iphone apps are going to cut into Google's share of the pie. GOOG is going to decline but replace MSFT as in the future as we all move to the cloud.

 

It's like rock-paper-scissors, but everyone loses in the end!

 

nope, you're leaving out Amazon, and maybe samsung.  Amazon is gunning for everyone, and their margins are zero...  Basically they are a non-profit going up against 3 companies with some of the highest margins in history.

[Palantir]

Amazon has neither a desktop, nor a laptop, nor search, nor a TV or anything except Kindle.....I'd say it has a long way to go.

[Palantir]

 

Very good observation! It's also interesting that, when predicting the "decline" of each of these companies, no new competitors names are given. MSFT is going to decline but Win8 is going to successfully compete with Apple's ecosystem. Apple is going to decline but SIRI and iphone apps are going to cut into Google's share of the pie. GOOG is going to decline but replace MSFT as in the future as we all move to the cloud.

 

It's like rock-paper-scissors, but everyone loses in the end!

 

Indeed. Google is going to eat Apple, it is the world's largest mobile OS. Google is going to rule the world! Except that mobile ads mean it will permanently impair its profits, and Siri could cut into Google's market share. Apple is the winner! But wait....it can't innovate anymore, it's going to be under threat by emerging rivals. Like Microsoft. That Windows 8 thing....mmmmmMetro. Microsoft has nothing in phone and tablet and search, but enterprise is very strong. Wait, Google is launching Google Apps, and enterprises are buying Apple. Sell Microsoft!

 

All of these stocks have some kind of "overhang" about them.

[bargainman]

Amazon has neither a desktop, nor a laptop, nor search, nor a TV or anything except Kindle.....I'd say it has a long way to go.

 

That they don't produce hardware doesn't really matter.  Amazon has kindle which they sell for nothing or even a loss.  That means they can produce hardware that competes with Apple's high margin products.  Their products are available on any hardware product.  I have kindle books and the entire video library on any computer I want, plus on my Roku box.  Bezos recently says he likes this model because it aligns with customers better. He's not trying to sell them on a device, he wants them to use any device, and then keep buying content.  He's happy that people have first version Kindles out there since they keep using it to buy content.

 

Amazon does have search for buying products! that's probably the most valuable search around.  Any store can list their products on Amazon's site, and even get fulfillment by Amazon.  Often it's better to search amazon for products than Google that's why Google recently started putting search results that are sponsored in their main page for deals iirc.

 

They have a growing content library of video, they have the massive fulfillment infrastructure.  Have you researched AWS and all the other services they offer?  They are charging into the server in the cloud market and getting a massive scale advantage as companies all over realize they can't compete.  That only increases their scale advantage.

 

They are basically applying the scale and low margin they learned in the retail space to the tech space, and it makes them a very dangerous company.

[Guest valueInv]

Amazon has neither a desktop, nor a laptop, nor search, nor a TV or anything except Kindle.....I'd say it has a long way to go.

 

That they don't produce hardware doesn't really matter.  Amazon has kindle which they sell for nothing or even a loss.  That means they can produce hardware that competes with Apple's high margin products.  Their products are available on any hardware product.  I have kindle books and the entire video library on any computer I want, plus on my Roku box.  Bezos recently says he likes this model because it aligns with customers better. He's not trying to sell them on a device, he wants them to use any device, and then keep buying content.  He's happy that people have first version Kindles out there since they keep using it to buy content.

 

Amazon does have search for buying products! that's probably the most valuable search around.  Any store can list their products on Amazon's site, and even get fulfillment by Amazon.  Often it's better to search amazon for products than Google that's why Google recently started putting search results that are sponsored in their main page for deals iirc.

 

They have a growing content library of video, they have the massive fulfillment infrastructure.  Have you researched AWS and all the other services they offer?  They are charging into the server in the cloud market and getting a massive scale advantage as companies all over realize they can't compete.  That only increases their scale advantage.

 

They are basically applying the scale and low margin they learned in the retail space to the tech space, and it makes them a very dangerous company.

Amazon and FB are Google's biggest threats. Google has made a strategic blunder by focusing its efforts on fight Apple instead of its actual threats.

[Guest valueInv]

Some analysis on Nexus 7 numbers:

 

http://iterativepath.wordpress.com/2013/01/26/nexus-7-sales-almost-doubled-but-from-what-levels/

[bargainman]

Amazon and FB are Google's biggest threats. Google has made a strategic blunder by focusing its efforts on fight Apple instead of its actual threats.

 

Well that I'm not sure of..  I don't know that Google was fighting Apple with Android per se.  they were, but taht's cause Apple was there first.  I think they were probably fighting the inevitable rise of the post Pc world and mobile etc, and it was in their best interest to control or go after that market.  They were fighting to be there in scale before MSFT, RIMM, NOK and Samsung got their act together.  Now they basically own a large part of mobile search just by being there second and being the most ubiquitous OS.  i would say that was a very important strategic move.  Chrome browser too.  They are extending their moat by being the default search in all these devices and browsers.  Kind of how MSFT was trying to fortify their moat by shipping IE by default with Windows.  They are definitely still fighting FB with google+ (which is more than just the social network), and Amazon on the web services and search front.  It's definitely a multi front war..  But Amazon has the advantage that they like small margins, huge scale and no profits for years to come...

[no_free_lunch]

Bargainman,

 

Well said, I was going to post but you covered everything I had to say but more elegantly. I would just add that while google has failed with google+ they absolutely gave it their all.  I disagree with valueinv in that regard.  I recall reading announcements from sergey/brin (can never keep track of which one is which) that google+ and related more social google was the future of the company.  Employees were to fall in line in that regard or get out.  The problem is they are engineers and don't really have an advantage in attracting people to a social site.  They can build a great social site no doubt but it seems it is all about attracting and building that critical mass, I don't know if they will succeed in this.  The fact of the matter is though that there is just not much you can do to crack facebook.

[Guest valueInv]

Amazon and FB are Google's biggest threats. Google has made a strategic blunder by focusing its efforts on fight Apple instead of its actual threats.

 

Well that I'm not sure of..  I don't know that Google was fighting Apple with Android per se.  they were, but taht's cause Apple was there first.  I think they were probably fighting the inevitable rise of the post Pc world and mobile etc, and it was in their best interest to control or go after that market.  They were fighting to be there in scale before MSFT, RIMM, NOK and Samsung got their act together.  Now they basically own a large part of mobile search just by being there second and being the most ubiquitous OS.  i would say that was a very important strategic move.  Chrome browser too.  They are extending their moat by being the default search in all these devices and browsers.  Kind of how MSFT was trying to fortify their moat by shipping IE by default with Windows.  They are definitely still fighting FB with google+ (which is more than just the social network), and Amazon on the web services and search front.  It's definitely a multi front war..  But Amazon has the advantage that they like small margins, huge scale and no profits for years to come...

 

FBs core business is advertising. Apple's isn't. FB has announced a search engine. Apple hasn't. Nuf said.

[bargainman]

FBs core business is advertising. Apple's isn't. FB has announced a search engine. Apple hasn't. Nuf said.

 

I hope you spend more time on your analysis of the companies you invest in than you do posting retorts like 'Nuf said'. 

 

You can't just look at two companies and say 'they're both in the same core business' therefore they should or should not be worried about one another, or have each other as highest priority competitors.  By extension, MSFT shouldn't have been worried about Apple since MSFT's core is software and Apple's is hardware.  it shouldn't have been worried about Google since Google's core business is Advertising and MSFT's is software.  IBM shouldn't have worried about MSFT since they were into desktop computers and IBM was into mainframes.  The entire point of disruption is that it usually hits incumbent companies from a completely unexpected angle.  Google's great strength is that they are a software and cloud based company but they don't have to charge for the software since they make money on advertising, hence they can beat MSFT in that sense, since MSFT needs to sell its software directly.  Amazon's great strength is that they are immensely happy with huge scale and tight margins and are happy entering into the software space where incumbents want to have really high margins.  There were several reasons Google was interested in competing with Apple.  First they didn't want Apple, or someone else, controlling the distribution network.  They already knew Apple would control the high end, but they wanted to be the MSFT to Apple's Mac in the 90s. They wanted to control the conduit to possible customers.  Android is arguably one of the most successful platforms in history when you consider the uptake and penetration of sheer numbers.  That will pay off immensely in the future.

 

I highly recommend that everyone read Joel Spolsky's piece on strategy and the way that "Smart companies try to commoditize their products' complements."

 

http://www.joelonsoftware.com/articles/StrategyLetterV.html

 

FB's core business may be advertising, but 2 things.  First, their revenue was last 5 billion vs google's 50 income 0.5billion vs 11B.  Second, FB is already a massive incumbent.  Apple was not, in a sense that they were focused on the high end.  One of the most important lessons is innovative disruptive businesses, especially tech, is 'market gap analysis'.  Go to where there is a hole in the market, don't try to compete head on.  Going head on with the gorilla is a sure way to lose.  Google knows this, which is why they keep saying that Google plus is not about the social network!

 

http://mashable.com/2012/06/29/google-plus-problem/

 

As such, strategically it made more sense to go after the massive market that was developing under Apple's high end iOS than to go after the low end market that FB still hasn't figured out how to really monetize!

 

That said in the world of tech there is not one threat!  All companies these days are basically frenemies all fighting battles on multiple fronts, trying to use different business models to take each other on.  There is an intense and highly complex interplay at work.  No company can focus all its energies fighting only one competitor.  There is plenty more to be said!

 

 

[no_free_lunch]

FBs core business is advertising. Apple's isn't. FB has announced a search engine. Apple hasn't. Nuf said.

 

Just another example of stories investors like to tell.  :P

[Palantir]

 

I highly recommend that everyone read Joel Spolsky's piece on strategy and the way that "Smart companies try to commoditize their products' complements."

 

http://www.joelonsoftware.com/articles/StrategyLetterV.html

 

This is a good article. So what is next, Facebook, Bing, and Amazon join together to make search a commodity?

 

On the other hand it seems Apple is doing the exact opposite of what he says. They're commoditizing nothing, and trying to make everything proprietary.

[Guest valueInv]

FBs core business is advertising. Apple's isn't. FB has announced a search engine. Apple hasn't. Nuf said.

 

Just another example of stories investors like to tell.  :P

 

1,What % of FB's revenues are from advertising?

2, Have you been following the news?

[Guest valueInv]

FBs core business is advertising. Apple's isn't. FB has announced a search engine. Apple hasn't. Nuf said.

 

I hope you spend more time on your analysis of the companies you invest in than you do posting retorts like 'Nuf said'. 

 

You can't just look at two companies and say 'they're both in the same core business' therefore they should or should not be worried about one another, or have each other as highest priority competitors.  By extension, MSFT shouldn't have been worried about Apple since MSFT's core is software and Apple's is hardware.  it shouldn't have been worried about Google since Google's core business is Advertising and MSFT's is software.  IBM shouldn't have worried about MSFT since they were into desktop computers and IBM was into mainframes.  The entire point of disruption is that it usually hits incumbent companies from a completely unexpected angle.  Google's great strength is that they are a software and cloud based company but they don't have to charge for the software since they make money on advertising, hence they can beat MSFT in that sense, since MSFT needs to sell its software directly.  Amazon's great strength is that they are immensely happy with huge scale and tight margins and are happy entering into the software space where incumbents want to have really high margins.  There were several reasons Google was interested in competing with Apple.  First they didn't want Apple, or someone else, controlling the distribution network.  They already knew Apple would control the high end, but they wanted to be the MSFT to Apple's Mac in the 90s. They wanted to control the conduit to possible customers.  Android is arguably one of the most successful platforms in history when you consider the uptake and penetration of sheer numbers.  That will pay off immensely in the future.

 

I highly recommend that everyone read Joel Spolsky's piece on strategy and the way that "Smart companies try to commoditize their products' complements."

 

http://www.joelonsoftware.com/articles/StrategyLetterV.html

 

FB's core business may be advertising, but 2 things.  First, their revenue was last 5 billion vs google's 50 income 0.5billion vs 11B.  Second, FB is already a massive incumbent.  Apple was not, in a sense that they were focused on the high end.  One of the most important lessons is innovative disruptive businesses, especially tech, is 'market gap analysis'.  Go to where there is a hole in the market, don't try to compete head on.  Going head on with the gorilla is a sure way to lose.  Google knows this, which is why they keep saying that Google plus is not about the social network!

 

http://mashable.com/2012/06/29/google-plus-problem/

 

As such, strategically it made more sense to go after the massive market that was developing under Apple's high end iOS than to go after the low end market that FB still hasn't figured out how to really monetize!

 

That said in the world of tech there is not one threat!  All companies these days are basically frenemies all fighting battles on multiple fronts, trying to use different business models to take each other on.  There is an intense and highly complex interplay at work.  No company can focus all its energies fighting only one competitor.  There is plenty more to be said!

 

1, That is really bad logic. First, the point is no that a company shouldn't worry about other companies who are is adjacent businesses, its that they should worry more about companies in their own business. Do you see the difference?

2, So you're saying that since FB is already an incumbent, Google should give up the add business and build things like driverless cars?

3, FB is small because most of their ad products are still in beta or havne't been released yet or have been released for just a quarter or two.

4, Commoditizing a complement is a great idea until you become a complement yourself. Take a look at Motorola losses. An how about subsidizing the Nexus 7 and the Chromebooks? Who is bearing the costs of commoditization? And how about Nexus Q and Google Glasses? Doesn't sound like they are interested in commoditization.

5, Google does not control Android in the real world. The apps are controlled by the operators, the UI by the device vendors, the marketshare by Samsung.

6, G+ is not a social network? It looks a lot like FB - features,etc. Coincidence? If it quacks like a duck.....

7, If you commoditize a massive market, there is no money to be made by everyone - including you. So what are they doing? Going after a massive market or commoditizing one? You can't have your cake....

[no_free_lunch]

1,What % of FB's revenues are from advertising?

2, Have you been following the news?

 

Yep, yep I do follow the news and yes Facebook makes their money from advertising.  Never disagreed with that point, not even sure why you'd bring it up as it's common sense.

 

Explain to me how google has been ignoring/not focusing on facebook?  What is google+?

 

Google (GOOG, Fortune 500) once gave its engineers the time and resources to be creative. That experimental approach yielded several home-run hits like Chrome and Gmail. But Google fell behind in one key area: competing with Facebook.

 

That turned into corporate priority No. 1 when Larry Page took over as the company's CEO. "Social" became Google's battle cry, and anything that didn't support Google+ was viewed as a distraction.

 

Google has been focusing on facebook, they were late but it has been a priority.  They are failing, but it has been a priority.  What would you have done differently?  Right now, the next threat is out there and it's not facebook, who knows what it is, do they chase that down too?  Why don't you make a prediction on what all the competitors are over the next 5 years so in retrospect we will know how brilliant you are.  The fact is you just can't know these things, you do have to respond somewhat as these threats emerge.

[Guest valueInv]

1,What % of FB's revenues are from advertising?

2, Have you been following the news?

 

Yep, yep I do follow the news and yes Facebook makes their money from advertising.  Never disagreed with that point, not even sure why you'd bring it up as it's common sense.

 

Explain to me how google has been ignoring/not focusing on facebook?  What is google+?

 

Google (GOOG, Fortune 500) once gave its engineers the time and resources to be creative. That experimental approach yielded several home-run hits like Chrome and Gmail. But Google fell behind in one key area: competing with Facebook.

 

That turned into corporate priority No. 1 when Larry Page took over as the company's CEO. "Social" became Google's battle cry, and anything that didn't support Google+ was viewed as a distraction.

 

Google has been focusing on facebook, they were late but it has been a priority.  They are failing, but it has been a priority.  What would you have done differently?  Right now, the next threat is out there and it's not facebook, who knows what it is, do they chase that down too?  Why don't you make a prediction on what all the competitors are over the next 5 years so in retrospect we will know how brilliant you are.  The fact is you just can't know these things, you do have to respond somewhat as these threats emerge.

Pinterest - they are the only other company able to capture intent.

 

Google does try to respond to every little threat out there - Propeller, Currents, Offers. Any new startup gains traction, google has a copycat product out there in a year.

[no_free_lunch]

Pinterest is not what is going to be big in 5 years, it's big now.  It is already valued at well over $1B. 

 

As far as capturing intent, how does facebook do that?  I don't see it.  They have location info and personal details but really not intent.  Obviously the competitive space is broader than websites with intent.  Really any website once it gets to a massive scale is a potential competitor.  That is why google bought youtube for instance.  They simply can't buy them all.

 

One technology which does capture intent are services like Apple's Siri.  In fact you couldn't have clearer intent or a more comparable technology to search.  It is search.  It is this type of technology that google is guarding against.  If they had just let Apple own the market then they could potentially lose control of the future of search.  You have just too narrow a definition of search, you are thinking exclusively of the way it is implemented now with a website/browser widget.

 

You still haven't responded to how google is ignoring facebook.

[Palantir]

I agree with ValueInv. Apple has Siri, but it is not a "core" technology to Apple's business model. Apple is essentially a hardware company that treats software as a freebie that works with its hardware. I mean sure, people like to fantasize about how Siri could become the trump card against Google's search, but it doesn't align with Apple's business model of integrating hardware and software.

 

How is Google + not a social network? FB seems to be THE threat to Google. It is the main portal through which people interact with others, it has huge user data, and can help you find things. Google would love nothing more than that.

[VAL9000]

4, Commoditizing a complement is a great idea until you become a complement yourself. Take a look at Motorola losses. An how about subsidizing the Nexus 7 and the Chromebooks? Who is bearing the costs of commoditization? And how about Nexus Q and Google Glasses? Doesn't sound like they are interested in commoditization.

Using the Spolsky framework, they are commoditizing the device.  A device has two components: hardware and software.  They already drove the cost of the software down, but two new issues arose from this approach which were not anticipated when Android was conceived.  The first was patent litigation.  The second was the cost of hardware.

 

Motorola's purchase is an attempt at solving both of these issues.  Android is now backed by a significant chunk of valuable patents.  I have noticed that over the past few months the board posted "stories" around patent litigation have steadily declined to a trickle.  I can't say why this is, but it certainly doesn't make news the way it did a few months ago.

 

The other benefit that buying Motorola provides is that Google can further drive down the cost of hardware.  This is done in two ways:  First, Motorola can provide handset cost leadership to the market by building lower-cost hardware than other handset makers.  The theory here is that if Motorola and Samsung release the exact same device, but Motorola can do it $20 cheaper, then Samsung will have to also sell their device for $20 cheaper.  GOOG will keep its Android partners honest with pricing.  Second, Motorola can innovate on hardware and grant a free license to its Android partners.  Both of these strategies will further push down the cost of the overall device.  You could also say that Motorola is a preventative measure from keeping Samsung from becoming the only remaining Android handset manufacturer, which would give Samsung considerable negotiation leverage with Google.

 

Google's core businesses are complemented by these devices.  Lower device cost means more devices.  More devices means more search/AdWords, more AdSense, more YouTube (more FB and more Amazon, too).  It also happens to mean less AAPL.

 

How far does it go?

 

Well only about 2.5 billion people on Earth have internet access today.  I'm assuming that Google wants that number to be closer to 7 billion.  Get the device down to $40-50 with LTE and a 5-inch screen, and you'll get to 95% penetration relatively quickly.

 

7, If you commoditize a massive market, there is no money to be made by everyone - including you. So what are they doing? Going after a massive market or commoditizing one? You can't have your cake....

 

See above and tell me if this strategy seems long-term beneficial or detrimental to GOOG.  Also feel free to comment on AAPL/AMZN/MSFT as well.

 

[Guest valueInv]

4, Commoditizing a complement is a great idea until you become a complement yourself. Take a look at Motorola losses. An how about subsidizing the Nexus 7 and the Chromebooks? Who is bearing the costs of commoditization? And how about Nexus Q and Google Glasses? Doesn't sound like they are interested in commoditization.

Using the Spolsky framework, they are commoditizing the device.  A device has two components: hardware and software.  They already drove the cost of the software down, but two new issues arose from this approach which were not anticipated when Android was conceived.  The first was patent litigation.  The second was the cost of hardware.

 

Motorola's purchase is an attempt at solving both of these issues.  Android is now backed by a significant chunk of valuable patents.  I have noticed that over the past few months the board posted "stories" around patent litigation have steadily declined to a trickle.  I can't say why this is, but it certainly doesn't make news the way it did a few months ago.

 

The other benefit that buying Motorola provides is that Google can further drive down the cost of hardware.  This is done in two ways:  First, Motorola can provide handset cost leadership to the market by building lower-cost hardware than other handset makers.  The theory here is that if Motorola and Samsung release the exact same device, but Motorola can do it $20 cheaper, then Samsung will have to also sell their device for $20 cheaper.  GOOG will keep its Android partners honest with pricing.  Second, Motorola can innovate on hardware and grant a free license to its Android partners.  Both of these strategies will further push down the cost of the overall device.  You could also say that Motorola is a preventative measure from keeping Samsung from becoming the only remaining Android handset manufacturer, which would give Samsung considerable negotiation leverage with Google.

 

Google's core businesses are complemented by these devices.  Lower device cost means more devices.  More devices means more search/AdWords, more AdSense, more YouTube (more FB and more Amazon, too).  It also happens to mean less AAPL.

 

How far does it go?

 

Well only about 2.5 billion people on Earth have internet access today.  I'm assuming that Google wants that number to be closer to 7 billion.  Get the device down to $40-50 with LTE and a 5-inch screen, and you'll get to 95% penetration relatively quickly.

 

7, If you commoditize a massive market, there is no money to be made by everyone - including you. So what are they doing? Going after a massive market or commoditizing one? You can't have your cake....

 

See above and tell me if this strategy seems long-term beneficial or detrimental to GOOG.  Also feel free to comment on AAPL/AMZN/MSFT as well.

1, The patent "story" has come to an end. First, Google settled their antitrust suit and agreed not to sue anyone using their FRAND patents. Second, Google has withdrawn most of its lawsuits against Apple and other as part of this agreement. Check the news. Further, many of Motorola's handsets remain banned both in the US and in Germany because of patent lawsuits it lost.

2, Motorla continues to lose money. Take a look at Google's quarterly numbers. They could reduce prices but that will only increase Google's own losses. Smasung has massive economies of scale (it is the worlds top chip buyer) and manufactures its own chips. Further, Samsung continues to make massive strides against other Android vendors and sends an order of magnitude more on marketing. In other words, they have far more pricing power than Motorola.

 

Finally, Androids problem is not high prices. There are many Chinese vendors pushing prices down very quickly. Take a look at Huawei, Lenovo and Xaomi. These guys are driving Motorola out of the market.