When Google’s (GOOG) Motorola Mobility division announced Project Ara — a platform for creating modular smartphone hardware — there was considerable interest in the concept, followed by the suspicion that this might be more theater than reality. After all, while a modular smartphone that users could upgrade by the component instead of having to buy a whole device every year or two sounds great (if you’re a consumer), it could wreak havoc on smartphone profits. And while Google might be happy to see Apple (AAPL) and Samsung (SSNLF) take a hit, its own handset division would suffer just as badly.
But when GOOG unloaded Motorola Mobility on Lenovo (LNVGY), suddenly it had nothing to lose by disrupting the existing smartphone sales model. The recent announcements by Google that it’s taking over Project Ara from Motorola and holding not one, but three Project Ara developer conferences in 2014 (the first in April) sends a clear signal — Google is actually serious about this.
And this ambitious initiative could shake up the handset space in a very real way.
We’ve written before about the jostling going on between GOOG and Samsung. Google owns Android and gives the mobile OS away for free to smartphone manufacturers. This strategy ensures its own services (like Google Maps, Search and Google Now) are front and center on these smartphones, driving Google’s mobile ad and search revenue.
Samsung was great for Google several years ago when popular smartphones including its Galaxy S III helped push Android into a commanding lead over competing platforms like iOS, Microsoft’s (MSFT) Windows Phone and BlackBerry (BBRY) — devices where Google services don’t get the same priority placement. However, Samsung became too big. Over 63% of mobile devices running Android globally are made by Samsung. That’s a problem for GOOG, because Samsung likes to overlay its own user interface on top of Android, it offers its own app store for some devices and it’s experimenting with replacing Android altogether by moving the new Gear 2 and Gear 2 Neo smartwatches to its in-house Tizen operating system.
It’s bad enough that Samsung has the ability to mess with the placement of Google services on its Android smartphones, but what if SSNLF decided to ditch Android altogether, or pull an Amazon (AMZN) and develop its own version based on the open-source base code? If those Galaxy smartphone owners stick with Samsung instead of moving to an alternate Android device, then a huge chunk of Google’s Android user base could essentially be lost.
This would be bad news for a company dependent on ad revenue that’s increasingly generated by mobile devices.
GOOG has few weapons to defend against that scenario, but Project Ara may just be the most effective.