Have been busy finishing the Roadside MBA book…  Nearly done with the copyediting!

Can’t resist posting this, however.  Google is selling Motorola Mobility.  Or at least, the handset-making parts (and keeping some patents).

And I’m not surprised.

I’ve been porting my old blog posts over from the Utah Economist Blogger site to this new WordPress home page, and it’s given me a good excuse to revisit some of the ideas I’ve written about in the past.

Sometimes I’m even right! (Imagine that, an economist getting it right…) Blackberry seems pretty much dead as a smartphone platform, as I suggested about a year ago.  Smartphones are a two-sided market, and you have to get developers and end-users to coordinate on your platform to win.  The expectations of each side of the market matters for the others’ decisions, which means it can be really hard to catch up once you fall behind (as BlackBerry did).  While the stock got a little bump today on hopes that the MSFT/Nokia deal would spur some interest in BBRY (from whom, I don’t know), it’s been a rough ride ever since the bad news in late June that BlackBerry 10 shipments weren’t meeting expectations.

Google completed its purchase of Motorola Mobility, which is what’s left of Motorola’s wireless phone business and was spun off by Motorola in January of 2011.  Motorola Mobility makes the Droid RAZR — a pretty successful Android smartphone — so the merger raises the question of whether Google is trying to get into the handset business with this purchase.

I think this would be a terrible idea.

Here’s why:  A big part of the Android platform’s appeal is price.  You can get a reasonable Android setup for a lot less than any iPhone, and there are at least five or six major players — Samsung, HTC, LG, Motorola Mobility, etc — producing Android handsets.  And these firms are competing fiercely on price, which drives the overall cost of an Android system down.

This hardware-side competition benefits the Android platform, and therefore Google, quite a bit.  It’s the same logic that helped Microsoft dominate the desktop twenty years ago; DOS and Windows ran on commodity machines, so the total cost of a Windows setup was much lower than that of a comparable Mac.

So the last thing Google wants to do is give Samsung and HTC any reasons to stop pushing handset prices down.  And if Google were in the handset business itself, it’d be hard to resist the temptation to help its in-house handset business at the expense of Samsung and HTC.

There is talk of some other reasons for this deal, so I wouldn’t be surprised if Google shuttered the Motorola Mobility handset operation.

I’ve written about iPhone economics before, and it remains a really interesting market.   One of the great stories is that of RIM, the maker of the Blackberry.  Here’s a firm that had a commanding market share not too many years ago, but has been completely hammered by the rise of the iPhone and Android smartphone platforms.

RIM is trying to catch up, so have a look at this recent article in The New York Times about release of the Blackberry 10 prototype.

The good news is that RIM understands the importance of getting a large group of software developers to work on applications that run on their OS.  The bad news is that developers will make their decisions based largely on whether they believe the product will be a hit with consumers.  RIM wants developers to make significant investments, but these investments will pay off only if the product sells well.  It’s a tough sell for RIM, and I thought it was interesting to listen to the voice of skeptical developers such as Phill Ryu at Impending.

Even the pro-Blackberry-10 people quoted in the article didn’t say much that would convince me the firm has settled on a good strategy.  The CEO of Refresh Mobile says the platform integrates well with social media…  but is “connect with Facebook” really much of a differentiator at this point?  And a Gartner analyst cites the phone’s ability to capture extra frames when shooting photos.  I agree that this sounds like a nice idea, and is very much something I’d like to have on my phone.   But good ideas are different from good strategy, and it’s hard to imagine that “extra frames when you snap” is something that iOS or Android couldn’t replicate in a day or two of development-team time.

Some excellent iPhone economics in the NYT business section yesterday.

For those interested in a broader view of markets like this (and there are actually a lot of markets like this…), check out Marc Rysman’s survey of “two-sided” markets in the recent Journal of Economic Perspectives.