Google: Was Motorola a bad deal?

IE Focus | By Enrique Dans, Professor at IE Business School

Google bought Motorola for 12.5 billion dollars, invested in it to make it competitive and then sold it for  2.91 million, keeping its patent portfolio. A tale of success or failure?

Google has sold its Motorola mobile phone business to Lenovo for 2.91 billion dollars, thereby demonstrating that hardware, although it plays a crucial role in strategy development, is seen by the company as being a factor that is somewhere between marginal and accidental.

Google’s acquisition of Motorola was one of the biggest surprises of the summer of 2011. Google paid 12.5 billion for a legendary manufacturer that had come down in the world, but which had a massive portfolio of patents that could be fundamental in navigating the complex scenario of litigations the company was thinking of launching at the time.

Moreover, the acquisition posed a problem. If Google’s strategy with Android was to make itself attractive to all  Smartphone producers, how would said producers feel about the fact that the company that was selling them something as vital as an operating system would also be competing against them through its own newly acquired handset manufacturer? Becoming a mobile phone manufacturer was a dangerously incoherent move by Google.


Leaders in innovation: the battle between Samsung and Apple

IE Focus | By Ricardo Perez, Professor at IE Business School

Only a couple of years ago Apple was the indisputable leader in consumer electronics, but it hasn’t kept up the momentum and now Samsung has it in its sights.

Just two years ago Apple was the undisputed leader in innovation in consumer electronics. Its telephone was unparalleled in features and applications ecosystem. The iPad was sweeping the decks in sales worldwide and it made us learn to work and play in ways that we never imagined, while its competitors tried to copy its products as fast as they could. But the latest products launched by Apple have lost a little of their wow factor. They are merely reinterpretations in different sizes with better features than their previous versions.

Samsung is in total counterphase. After many years of trying to reach Apple’s levels of functionality and ecosystem, it would appear that it is now managing to close the gap. Its telephones are selling at the same price, the company is experimenting with different form factors and they have at least the same technological and software capacities as Apple’s phones. Obviously the war that is being unleashed is not just one of company against company, like Nokia and Motorola years ago, for example. Today these companies are competing in three major fields: technology, ecosystem and integration.

In the field of technology, namely what handsets are able to do, the two firms are very different. Apple has never tried to be the most innovative in this respect. It doesn’t develop its own technology which means it depends on advances made by its suppliers. Its strength in the market is what now keeps it ahead of the rest. Samsung also produces screens and the chips that make telephones work. It invests thousands of millions in research in these areas. It uses these advances for its other electronic divisions, including televisions. That’s where Samsung’s advantage lies.


The value of conversations

IE Focus | By Enrique Dans, Professor at IE Business School

The Internet is a permanently ongoing conversation in which people recommend, redirect, provide links, etc. The value of your website depends on how involved you are in this conversation.

One of the main advantages of a solid Internet presence is its capacity to serve as a subject of conversation. Today, everything is about conversation. A campaign, a product launch, the publication of findings, or an appearance on the news, are only worth as much as their capacity to take center stage in a permanently ongoing conversation in which we all participate.

Technology has lowered barriers to entry in the publishing sector to the extent that today an enormous number of people are now able to be constantly involved in that particular conversation. The consequences of this are clear: the value of your brand is directly related to the extent to which it features in said conversation.

Contrary to what company directors may think after decades of unidirectional marketing, the conversation cannot be controlled. The most you can hope for is to be one of the voices taking part. If your web presence is good enough, the people talking about you will have a place to link up with each other when they do. They will be able to include a link to a relevant part of your website in their comments, where it is possible to find information that is permanently available (nobody wants to provide a link to information that disappears after a certain amount of time, and only serves to bring up a message saying “Error 404: not found”) and interesting references (information on products, photos, logos, comment, reactions, etc.).


Megaupload. When piracy hurts us all

IE Focus | By Pedro Letai, Professor at IE Business School

After the closure of Megaupload, all the people who used its online storage service for their personal files are now unable to access them. They are just one set of innocent parties affected by digital piracy.Perhaps it’s a bit late now to close the stable doors, as the more pessimistic tend to say with regard to piracy on the Internet. Seeing as pessimism has a habit of taking things closer to the point where you just give up, the Megaupload case has offered some of us a glimmer of light at the end of the tunnel.

On January 19, the FBI closed Megaupload’s download website and detained its head, Kim Schmitz. As I write this, the attorney general has requested that he not be given conditional bail on the grounds that he has enough resources to flee the country. After seeing photos of some of his parties and of some of his assets, the attorney general is not the only one who thinks this. Although Schmitz obviously has to presumed innocent until proven guilty, he would be an odds on favorite in a dodgy character contest.

The angry reaction of the defenders of the social ill known as free access to culture, coupled with the mass elimination of content or even closedown of other accommodation services on the Internet, are enough to make you think that the steps taken are not quite as insignificant as some would have us believe. Meanwhile, cinema revenues in the US have gone up 32% just this week, and video streaming pay sites like Filmin have doubled their traffic in Spain.


Facebook – more questions than answers

IE Focus | By Dr. Ricardo Perez, Professor at IE Business School

Facebook’s decision to float the company on the stock market has revealed the true figures of this internet giant, and has left quite a few questions unanswered, particularly where advertising is concerned.At last we have some real information rather than just rumors about Facebook’s business figures. Allow me to put things into context with some of the key data. In 2011, $3,200 million in revenues and $1,000 profit. Many analysts expected to see figures over 4,000 million and say they are surprised. Some say that facebook’s revenues have not grown as fast as they should (over 80%), while others complain that net margins are also going down (still at 25%). However all have a positive opinion about the almost 4,000 million that the company has to invest in order to keep growing.

But after examining all these figures there are more questions than answers about Facebook’s future. Let’s take a look at these questions and the challenges they pose for the firm.

How scalable is the advertising business as it stands today? Growth in the advertising sector has decelerated. Adverts that appear on the right-hand side of the screen (I have just counted seven on my personal page) are not relevant in the majority of cases. Hence they are of little value from the point of view of the advertiser. In spite of the fact that they changed their policy at the end of last year, attempting to raise prices and quality, they did not get the desired results. The challenge lies in finding a better formula for using the information available to customers and convert it into a more focused form of advertising.


IE Focus || The Legacy of Steve Jobs

By Enrique Dans, professor at IE Business School

Jobs has left us a legacy that goes way beyond technology. He has left us with an approach to life and business management based on innovation, commitment and a capacity for work.The way in which Steve Jobs’ legacy has impacted products and industries is seriously impressive. The first personal computers, the organization of windows and desktop on the computer screen, new life breathed into animation films, the revolution of the music industry with a market that everyone said could not exist, a revolution in the mobile phone industry that practically destroyed the previous leader… And more recently the reinvention of computers with the iPad, generating thousands of millions in sales, creating and destroying entire industries, while multiplying the value of the firm by a couple of thousand. And yet I believe that his greatest legacy is the way we now see business organizations, innovation, and the kind of commitment and capacity this involves.

In times when it seems that imitating, repeating, and spending your life doing as little as possible are in fashion, Jobs is the most salient example of what it means to dare, to fight, to do things better than expected. He wasn’t a technology genius. He didn’t need to be. His strength lay in understanding trends, or creating them. His products were always enormous commitments with an element of risk. But they were also born of passion, entering sectors to which he brought the values that his vision of Apple stood for: a focus on the user and ease of use, the design, the total integration between hardware and software that brings life to a device, not stopping at good, going for excellent. He entered industries where there had always been a disconnection between client and technology. In the music industry nobody had been capable of giving the customer a simple and solid means of managing his/her music. 


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IE Focus || Steve Jobs: the great re-inventor

Contrary to popular belief, Steve Jobs was not a great inventor, but rather a great re-inventor, capable of transforming existing products like the mobile phone or MP3 to make life easier for the user.There are certain battles we human beings know we can’t win – at least for now. We all knew that Steve Jobs was going to die: first, because although he may have seemed to be immortal, he wasn’t. And second, because the gap between cancer and technology means that cancer is still cancer, and when it goes badly, you can’t beat it, even with all the means in the world at your disposal. It is very possible that many of the obituaries we have read recently in the press were actually written months ago. When a person with a reputation for being a born worker with a vocation stays at the helm of Apple until so recently, despite such obvious physical decline, you tend to think the worst when he finally takes the decision to stop working, namely that he must be in a very bad way.