Google Motorola and the Android partners : should you acquire an upstream customer?

Since Google offers the Android operating system free to cell phone makers like Samsung and LG there is much debate on whether cell phone makers who use Android will start feeling sidelined. Apparently the cell phone makers using Android were given a heads up on the acquisition of Motorola and everyone congratulated Google and at least politely asserted that this shows  Google's seriousness for the mobile market. But this brings up a fundamental question of : should you acquire an upstream customer?

An upstream customer is one who brings you one step closer to the final consumer who uses  your product (e.g. Android ). An upstream customer could also mean acquiring an independent distributor. Think of all the Quick Service Restaurants (QSR) where some restaurants are company owned and others are franchised. If Google goes by that logic there is nothing to fear by other upstream customers like LG and Samsung. Surely a food franchiser would keep all elements of the customer facing pieces ( the menu, the bread and the salad) uniform.  In fact, Android might get better when its tested and refined at company owned devices (Android at Motorola)  and at franchised type operations (Android at LG and Samsung).

One question remains and that is why should Android go free to Motorola competitors? And if you have used Android you know when you try to update a new contact it asks you :

  1. Would you like to store the contact on the Cellphone instrument?
  2. On the SIM card ? ( if it is a GSM phone) 
  3. Or in your Gmail account?

When you are given the option – you don't want to be tethered to a device (what if you lost your cell phone?) . You want to "go cloud"  and the payback is that you have to see all those ads when you use the free Gmail. So there is a revenue model and that sort of makes things easier to understand.