Google and Motorola: What the #@!*%?

It's two days later and I'm still confused.  When I saw the headline yesterday, my jaw literally dropped.  "Google bought who?  That's got to be a misprint.  They must have bought a mobile operator, like Sprint or something.  But Motorola?  Really?" 

Usually when a big tech merger happens you can see the logic behind it.  Even if you don't agree with the logic, you understand why they made the deal.  But in this case the more I think about it the more confused I get. 

Did Google buy Motorola for the patents?  If so, why isn't it spinning out the hardware business?  Or did Google buy Motorola because it wants to be in the hardware business?  If so, does it understand what a world of other problems that will create for Android and the rest of Google?  Seriously, if Google tries to integrate Motorola into its business we could end up citing this as the deal that permanently broke Google.

Why roll the dice like that?  Maybe I'm missing something, maybe Google has a screw loose, maybe both of the above.  Or maybe I'm wrong to look for airtight logic.  Companies sometimes make decisions on impulse, especially when they are under stress, and it's a sure thing that Google is under stress these days on IP issues.

So I have a lot more questions than answers.  My questions are about Google's intent, its next steps, and how other companies will react...


Why did Google do it, really?  The conventional answer is that Google wanted Motorola Mobility for its patents.  That's what Google itself implied, and Marguerite Reardon over at CNET agreed (link).  That might well be the explanation.  Om Malik had a really intriguing take: Google bought Motorola as a defensive move to prevent Microsoft from getting the Motorola patents (link).  And Richard Windsor of Nomura, who I respect deeply, said in an e-mail that this is all about the patents.  He predicts that Google's new patent portfolio will create a balance of power enabling Google to quickly force a settlement to the patent lawsuits against its licensees.

But if you wanted only the patents, I think you'd buy Motorola, keep the patents and then spin out the hardware company to avoid antagonizing your licensees.  Google says it intends to keep Motorola and run it.

Besides, as Andrew Sorkin pointed out in the New York Times, Google could have bought a different but also important mobile patent portfolio from InterDigital for about $10 billion less than Motorola (link).  Maybe there's some magic patent at Motorola that Google feels is worth $10 billion more, or maybe there are some terms in Motorola's patent cross-license agreements that Google desperately needs.  But again, if that's the case, why not keep the patents and resell the hardware business?

Unless Google is lying about keeping Motorola intact, I think Google intends to be in the mobile hardware business.  Which raises the next question...


Does Google know how to run a hardware business?  No, of course not.  The processes, disciplines, and skills are utterly different.  The same business practices that made Google good in software will be a liability in hardware.  Google's engineers-first, research driven product management philosophy is effective in the development of web software, because you can run experiments and revise your web app every day in response to user feedback.  But in hardware, you have to make feature decisions 18 months before you ship, and you have to live with those decisions for another 18 months while your product sells through.  You can't afford to wait for science.  Instead, you need dictatorial product managers who operate on artistry and intuition.  All of those concepts (dictatorship, artistry, intuition) are anathema to Google's culture.  Either Google's worldview will dominate and ruin Motorola, or worse yet the Motorola worldview will infect Google.  Google with Motorola inside it is like a python that swallowed a minivan.

To put it another way, I think Google has about as much chance of successfully managing a device business as Nokia had of running an OS business.

But the real question is, does Google realize that it doesn't know how to make hardware?  I doubt it.  Speaking as someone who worked at PalmSource for its whole independent history, an OS company always believes that it could do a better job of making hardware than its licensees.  It's incredibly frustrating to have a vision for what people should do with your software, and then see them screw it up over and over.  The temptation is to build some hardware yourself, just to show those idiots how to do it right.

I think maybe Google just gave in to that temptation.

But if Google really wants to sell hardware, that raises questions for the other Android licensees...


How will Google really manage Motorola?  Google says it's going to treat Motorola as an independent company without any special access to the Android team.  But what's the point in that?  Motorola hasn't exactly been dominating the mobile device world lately, so I find it very, very hard to believe that Google would buy it and leave it intact.  Wouldn't you want to have Motorola create special products that take advantage of the latest Android features?  Kind of like a flagship operation?  Then when you announce a new initiative at Google IO, you can have some nice new Motorola hardware ready to ship with it on day one.  Of course, the other Android licensees will be allowed to participate too.  They're welcome to run flat out to keep up with every Google software initiative, disregarding expense and business risk, just like Google's Motorola subsidiary will.

Which makes you wonder...


How will the Android licensees react?  I think we can safely disregard the positive quotes from the other Android licensees.  What would you do if your company depended utterly on Android, and Google called you up twelve hours before the announcement and asked for a quote?  Would you risk Google's anger by refusing to give a nice quote?  Of course not.

But would you honestly be happy?  Of course not.  In the last year, you gained share at the expense of Motorola.  Now instead of being a weak and failing vendor you can snack on, Motorola has infinite financial resources and cannot physically go broke.  Sure, I am happy to compete with that.

The other issue is the one everyone else has already pointed out -- even though Google says there will be a firewall between Motorola and Android, you suspect it'll be semi-permeable, meaning you'll always be at a bit of a disadvantage.

So what do you do?  A lot of people are predicting that Android could be in danger of losing licensees.  For example, Horace Dediu at Asymco drew a parallel to the Symbian consortium, whose members were uncomfortable because Nokia held the largest share of the ownership (link).  But when Symbian was launched, those companies were happy to sign up, despite the asymmetric ownership, because they thought Symbian was going to dominate the mobile OS market, and they were scared of Microsoft.  They dropped out only after it was proven conclusively that only Nokia was capable of making a Symbian phone that sold well in Europe. 

I can tell you from personal experience at Palm that licensees don't care about governance issues when they think your OS will help them sell a lot of units.  It's only after growth slows down that they get twitchy.  As long as Android continues to grow explosively, the licensees will be right there with it because they're terrified not to be.

Google probably knows the licensees can't go anywhere.  In fact, it has a history of treating them very roughly in private (check out the nasty tone in the private memos between Google and Samsung exposed by the Skyhook lawsuit here).  So in some ways the Motorola deal is just more of the same.

But there is still a risk to Google.  Android licensees will probably be more willing to talk to Microsoft now, and they might do a few more Windows Phone products, if only to get leverage against Google.  So Google has just thrown a lifeline to Windows Phone, which otherwise might have been headed for extinction if the first round of Nokia products failed.

This might also be an opportunity for other mobile platforms.  If there were any...


Is there a third path?  The Android licensees are probably pretty wary of both Google and Microsoft at this point, and may be wishing forlornly that there was a third alternative for mobile operating systems.

Unfortunately, I don't think there is.  The handset vendors' embrace of "royalty-free" Android strangled the other Linux mobile platforms.  TrollTech was bought by Nokia and then killed, while Access's evolution of Palm OS died for lack of customers.

There's speculation that HP might broadly license Web OS (link).  But HP has its own hardware conflict of interest (a much stronger one than either Google or Microsoft).  Far more importantly, keep in mind that mobile phone companies license an OS because they believe it's going to sell millions of units for them.  If HP, with all of its resources and channel presence and strong brand, can't sell significant numbers of Web OS phones, why would HTC or Samsung believe they could do it?

[Edit: In the original version of this post, I failed to mention MeeGo.  A couple of people have told me that was unfair, and I think they are right.  Based on past experience, I have a lot of skepticism about OS consortia, especially ones involving Intel.  But if MeeGo's ever going to get serious consideration from hardware companies, now is the time, and I should have acknowledged that.]

Hint to Android licensees: If you build up HTML 5 as a platform, you won't have to depend on anyone else's platform.  But in the meantime, your realistic choices are Android and Microsoft.

Speaking of Microsoft...


What will Microsoft do now?  Steve Ballmer faces a very interesting decision.  Windows Phone just got a boost because it's now seen as a more vendor-neutral platform than Android.  The door is probably open for Microsoft to build deeper relationships with Android licensees.  If Microsoft sill believes in its licensing model, it will focus on walking through that door.

But as others have pointed out, Microsoft's position is now a bit lonely in some ways.  The other major smartphone platforms (iOS and Android) now have captive hardware arms.  Even RIM has both hardware and OS, although it's been a while since RIM was held up as a model for others to emulate.  Will Microsoft feel exposed without its own hardware business?  And if it does feel exposed, will it buy Nokia?

I'd be very surprised if it did.  Buying Nokia would decisively end the Windows Mobile licensing business.  You'd be betting Microsoft's mobile future even more completely on the ability of Nokia to execute in hardware.  Besides, why buy the cow when you're already milking it?

I'd also like to think that Microsoft learned from the Zune debacle that it's not great at creating mobile hardware.

And then there's the fruit company...


What will Apple do?  Apple's history since Steve returned is that it doesn't react to competitors; it forces competitors to react to it.  Apple is brilliant at setting the terms of the competition so other companies are forced to compete on Apple's turf.  Everyone else is focused on building licensed commodity hardware, so Apple creates integrated systems.  Everyone else has optimized their supply chains to sell through third party retailers, so Apple creates its own stores.  Everyone else stopped making touchscreen smartphones, so what does Apple make?

You get the picture.  So I don't expect Apple to make any changes in response to the Motorola deal, but I would be shocked if Apple didn't have plans for changing the terms of the competition again now that Google is trying to build more integrated hardware and software.  There are all sorts of game-changing moves Apple could make -- do a much larger push in web services, create an iPhone Nano (fewer features and lower price), even create its own search engine or social network (potentially valuable just to make Google crazy).


What's next?

To sum it all up, it's impossible to predict what will happen.  Hopefully the new balance of power in patents will make the big lawsuits go away, although I doubt we'd see a resolution before the deal closes, and that could take many months.  If Google bought Motorola for the patents, it'll either sell the company or let it gracefully rot, and we'll go back to business as usual. 

On the other hand, if Google tries to integrate Motorola into its business, that's a noble mission, and I hope they'll succeed because the mobile industry needs more competition to Apple in systems design.  I dearly hope Google will take the challenge seriously and recognize that it'll need to make fundamental changes to its culture.  But those changes would be daunting even for a company experienced in mergers, and Google's never done a deal this big before.  I think the most likely outcome of the Google-Motorola merger is some flavor of train wreck.

I hope I'm wrong.

38 comments:

Anonymous said...

Android is soundly beating the iPhone- many, many more people are choosing Android over Apple's cash cow iPhone. Apple turned patent predator when it realized it's making the same mistake it did- being close and integrated, with desktop and lost to Windows. Google had to buy Motorola for its patents because Apple resorted to patent predation. Hopefully, Google concentrates on Android, sells the Motorola brand, while keeping the patents.

Scott Hughes said...

Don't forget that Samsung, the highest profile Android licensee, has it's own OS, bada, on the back burner and it's currently selling more devices than Windows Phone 7.

Nebadon said...

ok I think your over looking the fact that google manages one of the largest server farms on the planet, to say they do not understand hardware is probably the most absurd statement of the year.. just sayin..

http://en.wikipedia.org/wiki/Google_platform

Anonymous said...

Nobody gained smartphone market share from Motorola in the last few years. They've held their share even in a rapidly growing market (i.e. they are growing at the same rapid rate), where rivals like Nokia and RIM have actually lost double digit share.

I've seen this mistake repeated across the web. Why do commentators feel the need to talk this deal down to the degree that they'll just make stuff up?

miusuario said...

Google is focusing on closing the deal before disclosing what they plan for Motorola's future. The statement on the acquisition is "light". There is no real excitement in continue Motorola's business, and there are hints on protecting Android. Once the deal is closed, I wouldn't be surprised of seeing Google spinning off MMI.

Chuck Till said...

Again, a well-written piece. Motorola Mobility, despite its name, carries a lot of hardware products for the cable TV market such as set top boxes. Surely Google will divest those.

As for software companies making a go of it in the hardware business, I wonder how Oracle is doing with Sun.

I tend to agree that Google acquired Motorola preemptively. Whether the threat came from Microsoft or someone else (e.g. Ericsson), we may never find out.

In any event, speculators who had bought InterDigital stock anticipating an acquisition by Google were the big losers.

As for patents, apparently we're not far from a movie like 1987's Wall Street -- except that the lead character will be a patent litigator instead of a financier.

K1m0d0 said...

Mr Mace dissects this deal from the vantage point of someone who's been there. This is a frank analysis of an individual who has had some success as a manager. The potential integration/ culture issues are significant. I don't think of this author as an analyst or commentator. Those folks are seldom constrained by what they don't know.

gzost said...

Also wondering what to think of this.
The patent angle makes sense in principle - but doesn't justify the price. After all, Motorola is presently being sued in connection with its Android devices by both Microsoft and Apple, and not necessarily doing too well here (based on what Florian Mueller writes at FOSSpatents). Additionally, if their interest really is in lessening patent pressure on the Android ecosystem, then why is their reaction to the Lodsys threats against developers limited to a measly reexamination request to the USPTO? Not standing behind developers (like Apple is trying to) doesn't inspire confidence.

The hardware side is even more puzzling. Aside from the question of whether they can run Motorola, this makes everybody in the Android space rethink their strategy. Samsung might focus more on bada, LG might actually take a real interest in MeeGo, and Windows Phone 7 may just have become an option for others again. An exclusive Googorola Android phone that has features 6 months ahead of everybody else, is an uncomfortable proposition. Seeing how pushy google has been so far, fearing such a device is not paranoia.

PeterGuidry said...

Why buy Motorola?

Fear. Not fear of MS/Apple lawsuits, which were already ongoing with Motorola, so deterrence factor would be low there.

Fear of Motorola opening a 3rd front in the patent wars. Did you Miss the Sabre Rattling from Moto on using their IP to extract licensing fees from Android vendors??

I think Moto opening that third front would be straw that broke Androids back, and Google bought them more in desperation than from any master plan.

Anonymous said...

now i can't wait for the data only pocket sized tablets that have built in google voice VOIP.

phones but without the rate plan.

but there is still one missing link, google buying a carrier.

would not surprise me in the least if google buys sprint/clearwire before the year is up.

Christian said...

@chucktill:

why divest the set-top box division when Logitech dropped the ball on Google TV? I would do a two-prong approach on hardware (if they plan on keeping the hardware division, which I believe is not necessarily in their best interest, as stated by very well written piece): smartphone and set-top boxes.

Cablecos would love to have Google play with them instead of always being "over-the-top" and consumming vast amount of bandwidth displacing the cablecos' own products.

Anonymous said...

Wow, Nebadon. Are you really suggesting that being good at administering and running a server farm requires the same skill set as designing and building end user devices like smartphones? Just like the guy painting your house must also be a fine artist...

Rick said...

It's hard not to see this as a jittery response from a rookie CEO.

Patrick Lopez said...

My take on the hardware piece is about the TV / Set top box market, where Motorola is leader in market share (for STB).
Elements of response to your blog at:
http://coreanalysis1.blogspot.com/2011/08/google-moto-your-tv-is-next-battlefield.html

Andreu Castellet said...

Well, I am as shocked by the news as Mike says about himself.
My take is that after a few moves we will see Google getting rid of Motorola's hardware business and getting the patents. But, being a bit twisted in the strategic reasoning...
What if the answer was not Android but... Chrome? Could Google be in need of Motorola's devices business to develop Chrome OS machines -the other mobile OS owned by Google- in order to position Chrome somehow?
OK, I know this is not the most conventional way to see the thing but please, you big brains, give it a though.

Tom Frauenhofer said...

I did a small blog entry for my company that went over the history of Palm and other licensees (from the point of view of an outsider, mind you). Pretty much jibes with what you wrote here.

http://blog.thelathe.com/2011/08/17/googarola/

Walt French said...

“…(potentially valuable just to make Google crazy).”

These are the only words in the post that don't quite ring true. Trying to mess up your opponents works great in zero-sum contests but trying to ruin your enemies is a guaranteed loser in dynamic markets where new entrants are always entering.

Walt French said...

Michael & others, please find ways to shoot down this thesis:

It's About the PR of Android Inevitability

MMI, Samsung, HTC and Google itself are all at noticeable risk of very negative court decisions about Android's (or its devices') incorporation of others' intellectual property. MMI has been losing money for years and is losing market share to its Android brethren despite being the originator of Droid and the Elected One for Honeycomb; a $25 per US handset tax and a few hundred million back-payments could put it under. Other Android manufacturers, especially those with business in countries with weaker IP protections, might survive.

That would certainly explain MMI's aggressive bargaining (announcing the day before the deal closed that they were considering using their IP as an offensive weapon, with the wide interpretation that the only targets were other Android licensees). And MMI's negotiation of the huge termination fee. There's a whiff of blackmail against Google, in fact.

Google would never respond to blackmail. But having its #1 squeeze succumb to an incurable STD could inspire Google's other girlfriends to seek protection, and pronto. The paparazzi would ridicule Google; its aura of inevitability and “Do No Evil” slogan transformed forever into mockery.

So, rationally but post-haste, Google claims to buy MMI's patent portfolio and a bunch of talented engineers and businesspeople to boot. Alas (ignoring the incredible Cringely claim), this portfolio is worthless against the Oracle suit, and one presumes that MMI already used it to its full worth in fending off Microsoft and Apple, which is to say, it has NO worth in anything of the sort.

Google promises to give MMI a nice home near a sanatorium, with an incredible multi-billion breakup fee as down payment on the hush money.

When the fit hits the shan, Google's Chief Counsel claims that the judgements (and/or confidential settlements) would've been much worse had they not stooped to play the bogus patent game. Google is still the white-hat, even noble firm, and its OS can now continue its march to 100% market share.

The fine engineers at MMI? Of course, you cannot say otherwise about keeping them; otherwise the place goes crazy and Google looks like those heartless corporate raiders you sometimes read about, all about profits and nothing about talented people making great products.

But with Moto only holding a small market share, their fate is largely irrelevant to Android. Perhaps they'll license out reference designs for the other OEMs, who will be paying Google, MSFT and perhaps Oracle anyway. By the way, Google has long observed the carriers' “barefoot-and-pregnant” strategy, playing handset manufacturers against each other to retain all the profits; the difference is that they want 100% market share rather than 2011 profits. The awful profitability for the OEMs is no concern for them, even if they are now one.

(Set-top employees of MMI face a more clear-cut future: If Google retains that division, they can expect the cable companies to renew exactly zero contracts until Google withdraws Google TV—monopolies do NOT finance upstarts who want 100% of their revenues. So MotoSetTopBox goes elsewhere.)

Admittedly, this story facilely embeds too much certainty. And nobody I've read is willing to ascribe this much rationality to Google. Still, what with Google being SOOO conscious about its image and the importance of fans' image Android's inevitability, there are some strong links. What say you all?

Relentlessfocus said...

Like Google's mathematically driven insider joke based bidding on the Nortel patents, everyone outside of the immediate Google brain trust is baffled by the MMI move and scurrying to come up with a logically sound business explanation for it's purchase of MMI.

Google themselves mention the patent angle yet many have offered views that the patent angle is less than it seems given the factors pointed out by Florian Mueller and others.

Michael points out the difference between hardware and software cultures and I'd add that MMI have not built an impressive high end product since the first Razr and seemingly lack the management talent to produce hardware at the level of Nokia, Apple or even Samsung.

Another aspect of recent Google activity is their PR in which they attack their competitors as being anti-competitive, call out Apple for NOT being innovative and falling back on patents to defend their bottom line and then claiming that only Google are truly innovative in the face of much evidence that they copy ideas of others and disrupt their business models by giving Google knockoffs away for free. It's hard to know whether this is extremely cynical PR or if perhaps Google really believes it.

What we're left with is a corporate management love of the irrational, a counterpoint to Google's engineering driven culture. Based on this line of reasoning I'd say that Google didn't have one clear cut rationale for it's purchase of MMI but having thought through the situation much as the rest of us have decided to spin the wheel of fortune and "go with it" to see what happens. It strikes me as a dangerous business strategy but it may just be the way things are in Mountain View. As Freud said, "sometimes a cigar is just a cigar".

Anonymous said...

You are confused, because, like most others you haen't really figured out Google's real plans ( which shouldn't be at hard if you put your mind to it.)

Nebadon said...

Google develops all their own hardware, you should really do some research before responding, Google has a ton of experience developing hardware, just because you cant buy it on a shelf at best buy does not make it any less important.

Michael Mace said...

What a cool discussion! Thanks very much for the comments.

One note: I think we're all searching for insight here. That makes this kind of a brainstorming session, a place where all ideas are welcome and nothing gets dismissed out of hand. That means you're welcome to disagree with each other, but please do it respectfully.


Scott Hughes wrote:

>>Don't forget that Samsung, the highest profile Android licensee, has it's own OS, bada, on the back burner


Good point. I have been very dismissive of Bada because, well, I used to work with Samsung and I know what their software is like. But maybe I'm being too dismissive. Have you orked with Bada, and if so, what do you think of it?


Nebadon wrote:

>>your over looking the fact that google manages one of the largest server farms on the planet, to say they do not understand hardware is probably the most absurd statement of the year


Sorry for the confusion. I guess I should have been clearer. What I was trying to say was that, in my opinion, Google does not understand how to manage the development, planning, marketing, support, and distribution tasks of a consumer electronics hardware manufacturing firm. Running a server farm, although a wonderful life experience and incredibly educational in many ways, does not in my opinion prepare you to make and sell consumer electronics.

If it did, Cisco would still be selling Flip cameras.

Google does still sell its Search Appliance, but it is an enterprise product and, alas, not good training for consumer electronics. In my opinion.


Anonymous wrote:

>>Nobody gained smartphone market share from Motorola in the last few years.


Thanks for the clarification. I was thinking of overall mobile phone share, in which Motorola has been steadily shedding installed base share in the US to Samsung, LG, and others. Nielsen has published a lot of good numbers on this.


>> I've seen this mistake repeated across the web.

Not sure why that happens, anonymous, but there are a lot of different measures of share, and maybe other people are using a different definition than yours.

I think Motorola's underwhelming tablet product, and the excessively geeky Atrix, have not helped its image.


miusuario wrote:

>>Google is focusing on closing the deal before disclosing what they plan for Motorola's future.


You may well be correct, but if so it's sad to see a large and self-righteous company like Google lie about its plans for a technology icon like Motorola.


Chuck Till wrote:

>>As for software companies making a go of it in the hardware business, I wonder how Oracle is doing with Sun.


That is an interesting counter-example. But at least Oracle already knew how to sell to enterprises.

Speaking of Oracle, there is speculation online that maybe Motorola had a license to Java that would emasculate the Oracle lawsuit against Android. If so, that might change my view of the deal.


K1m0d0 wrote:

>>I don't think of this author as an analyst or commentator.


Thank you very much. The term "analyst" sounds so darned passive and academic. I prefer to think of myself as a tech industry guy who happens to spout off online.

Michael Mace said...

gzost wrote:

>>if their interest really is in lessening patent pressure on the Android ecosystem, then why is their reaction to the Lodsys threats against developers limited to a measly reexamination request to the USPTO? Not standing behind developers (like Apple is trying to) doesn't inspire confidence.


Good point. I had not thought of it.


PeterGuidry wrote:

>>Fear of Motorola opening a 3rd front in the patent wars. Did you Miss the Sabre Rattling from Moto on using their IP to extract licensing fees from Android vendors??


Yeah, the timing on that is interesting. Thanks for mentioning it. But if I were Google trying to defend the licensees, I'd make it incredibly clear that I intended to spin out Motorola, not run it. Maybe Google did that privately and we're just not hearing about it.


Anonymous wrote:

>>there is still one missing link, google buying a carrier. would not surprise me in the least if google buys sprint/clearwire before the year is up.


Intriguing. But would Verizon continue to promote Droid phones if Google bought Sprint? That's the part I can't figure out.


Christian wrote:

>>Cablecos would love to have Google play with them instead of always being "over-the-top" and consumming vast amount of bandwidth displacing the cablecos' own products.


That is an interesting scenario, and I had not through about it at all. Thanks.


Patrick Lopez wrote:

>>My take on the hardware piece is about the TV / Set top box market, where Motorola is leader in market share (for STB).


And they have been working on it for a loooong time. Interesting.


Andreu Castellet wrote:

>>What if the answer was not Android but... Chrome? Could Google be in need of Motorola's devices business to develop Chrome OS machines -the other mobile OS owned by Google- in order to position Chrome somehow?


Very interesting. I had not thought about it, but I'm sure the Chrome team is all over it.

Picture poor Motorola six months from now, with the Chrome and Android teams both demanding devices be built for them. Sounds like a lot of little disputes for Larry Page to arbitrate.

Not a lifestyle I would choose.


Walt French wrote:

“…(potentially valuable just to make Google crazy).”

These are the only words in the post that don't quite ring true.


Yeah, you're right, I was kind of having fun at that point.

But let's build a serious scenario: what if Apple found a way to improve search and built it into Mac OS and iOS so you'd never need to go to a search engine in the first place? How woudl that change the competitive dynamic?

I don't think Apple would do that just for the terror value, but what if they found a way to do to search what they did to smartphones?

Michael Mace said...

Walt French wrote:

>>There's a whiff of blackmail against Google, in fact.


Yeah, you and others who cited that have a point. But that implies the deal wasn't closed until the day before announcement. hard to believe both Boards of Directors could move that fast.


>>Alas (ignoring the incredible Cringely claim), this portfolio is worthless against the Oracle suit

Bummer.


>>The fine engineers at MMI? Of course, you cannot say otherwise about keeping them; otherwise the place goes crazy and Google looks like those heartless corporate raiders you sometimes read about, all about profits and nothing about talented people making great products.

Depends on whether you're planning to lay them off or spin out the company. Many Motorola employees might prefer to be both independent and free of Carl Icahn.


>> Still, what with Google being SOOO conscious about its image and the importance of fans' image Android's inevitability, there are some strong links. What say you all?

I think it's interesting. I'm not sure if you're right, but at this point I'd like to see as many theories as possible.


Relentlessfocus wrote:

>>Another aspect of recent Google activity is their PR in which they attack their competitors as being anti-competitive, call out Apple for NOT being innovative and falling back on patents to defend their bottom line and then claiming that only Google are truly innovative in the face of much evidence that they copy ideas of others and disrupt their business models by giving Google knockoffs away for free. It's hard to know whether this is extremely cynical PR or if perhaps Google really believes it.


I suspect that Google, like Microsoft, often believes its own PR.


Anonymous wrote:

>>You are confused, because, like most others you haen't really figured out Google's real plans ( which shouldn't be at hard if you put your mind to it.)


That's the best comment of the week.

Tim F. said...

An interesting aspect to MMI retaining share: 60% of it remains feature phones.

I think Google is most certainly being duplicitous to get the deal through; even presuming some unseen master plan, there is no doubt MMI is going to be shredded to pieces quicker than was occurring naturally (I predicted 1 or even 2 of the smaller Android ODMs would cease to exist by 2014--SE, LG, or Moto... at least in name or in terms of presence in the phone market). Google will have to de-emphasize featurephones; if it does try to muscle into the STB market with GoogleTV, their share will switch over to Cisco and others; MMI will not be able to settle MSFT and AAPL suits until deal closes, etc, etc, etc...

Varun said...

I think there are some compelling reasons outside of the patents business - whether done offensively or defensively - for Google to have bought Motorola; I'd be interested in your thoughts.

For one, while HTC and Samsung have been blessed with the Nexus-branded phones, Motorola can be credited with really pushing Android as a platform with their Droid series. More than one tech-savvy person I know considers Android and Droid inseparable. So there's at least two good reasons right there: (1) I doubt Motorola would have looked kindly upon Google also licensing Droid from Lucas to describe their phones; and, (2) for better or worse, Motorola really started the initial roll of reasonably powerful, reasonably slick Android-based devices and Google's trying to capitalize on that existing reputation.

Second, Motorola Mobility (for reasons I'm not completely sure about) ended up with the set-top box business when they split from Motorola. Imagine if every Motorola set-top box came with GoogleTV included - can you imagine how many extra eyes on Google that would bring? For that reason alone, I think Google made the right call on buying Motorola, even if there's a lot of hand-waving about patents and mobile.

Third, Motorola has an impressive user-facing customer service team. Google has been rightly criticized for its failure to provide a telephone number to call when something goes wrong with a Google product. Motorola's existing customer service was ranked reasonably effective the last time I saw, and Google may have seen an opportunity to inexpensively acquire a decent customer support team.

So that's four reasons it makes sense. As to the question you posed about if it is patents, then why not buy the patents and spin-off the hardware ... I think the writing is on the wall for software patents in some fashion or another, because of patent trolls. Google itself has come down fairly harshly against patent trolls and it needs to show that it has an active hardware business using the patents when push comes to shove. To do so would not only open it to the obvious claims of hypocrisy, but also potentially, should there be a change in the patent regime, to losing the patents it has acquired. If it has a hardware business and it is building devices using those patents, it's a different ballgame.

Your thoughts on this?

Anonymous said...

This is a very USA-centric discussion in a global market. In Europe the Motorola handset brand is shot and in the UK their current sales share is virtually zero. Other metrics are as low as you could imagine. If Google thinks it has a viable mobile phone brand they are likely to get a shock when they look accross the pond and the brand building exercise is likely to be a big challenge.

Anonymous said...

Droid was licensed by Verizon, and belongs to Verizon, not Motorola. The Droid Eris and Droif Incredible are NOT Motorola phones.

Motorola's set-top boxes are sold to cable operators. I think they have ZERO interest in any Motorola box with GoogleTV unless they get a huge cut of Google's ad revenue from it. We could see Google kill a business faster than Nokia.

Watchdog

Anonymous said...

My friend, let me tell you:

YOU ARE WRONG.

Time will tell you the great company Googlerola will be.

.thomas said...

here's for hoping the nokia n9 meego/qt phone sells well and other manufacturers consider producing handsets based on meego. qt and html5 may still challenge the "only a three horse race" concept argued by elop.

Chuck Till said...

I don't agree with @Christian's thoughts on the reaction of the MSOs to the deal. Look, the #1 supplier of set top boxes in the U.S. was just acquired by a player with a record of indifference (at best) or hostility (at worst) to the cable industry. Meanwhile their #2 supplier, Cisco (formerly Scientific-Atlanta), is in a blue funk and surely is reconsidering its interest in commoditized CPE. Having the two suppliers who provide over 90% of your set top boxes in flux simultaneously is very unsettling. The natural reaction of the MSOs will be to push for divestiture of the set top business by Google.

Anonymous said...

It seems that HP just got rid of their conflict of interest. :-/

Catullusrl said...

Failure of the android business model
Google developed Android as a defensive strategy against Microsoft and latterly Apple. They were scared that these companies would dominate the mobile phone platform and be in a position to choke off access to Google services. Deploying Android as a free operating system and monetise by ad supported services, in particular search.
http://abovethecrowd.com/2011/03/24/freight-train-that-is-android/
However, consumer behaviour on the mobile phone is completely different from the desktop – people don’t use search!
http://fora.tv/2011/06/28/Elevation_Partners_Director_and_Co-Founder_Roger_McNamee#fullprogram
(Watch Chapter 3)
By acquiring Motorola, Google are able to monetise Android more effectively by the sale of hardware and software. Why are they prepared to risk the stability of the Android ecosystem by going into competition with the other handset manufacturers? Simple – Android isn’t making them much money anyway !!!!

pk de cville said...

Google's iPad Killer Strategy...

They will use MMI only to develop an iPad Killer.

They will handle concerns (and own) their big licensees by offering to sell partnerships in the project.

So I expect to see HTC, Samsung, LG, Toshiba, et all buying/sharing Googerola with the aim of achieving quality and ecosystem parity with iPad by 2013.

pk de cville said...

Google's iPad Killer Strategy...

They will use MMI only to develop an iPad Killer.

They will handle concerns (and own) their big licensees by offering to sell partnerships in the project.

So I expect to see HTC, Samsung, LG, Toshiba, et all buying/sharing Googerola with the aim of achieving quality and ecosystem parity with iPad by 2013.

Bob said...

It's pretty obvious. Google doesn't know how to run a hardware company, but Motorola does.

So, by buying Motorola, taking ownership of the patents, then letting Motorola continue to be Motorola, Google is now in the hardware business without knowing how to be.

Also, if they don't pump up the hardware side of things too much, and don't give the Motorola entity unfair access to Android, then they can run Motorola as a hardware provider that sticks to the stock Android OS. So, even if all other hardware manufacturers insist on tweaking Android, if anyone wants a stock Android OS, they can just stick with the phones Motorola pumps out.

People could just as easily question why Amazon would own IMDB.com, but it works.

Beast Of Bodmin said...

I don't know why Google bought Motorola Mobile.

Apple care about margin more than market share. But where are they on the saturation curves for their products?

Android was always going to be a race to the bottom (also known as commoditisation). The same race to the bottom that has led to epileptic-fits-inducing web sites that are plastered with adverts.

The Android hardware sellers are not interested in maintaining their devices. If you want an OS upgrade, they would rather sell you more hardware.

Android market share may go up, but how many players are chasing how much revenue between them?

HP's tablet was a rushed, "Me Too" attempt. The recent fire sale was an interesting experiment in price discovery though. If HP could do a Sony PS3 and somehow make money from selling WebOS-based software/ services, then they could afford to sell their tablet at a loss.

RIM are not living in the real world. The Playbook was rushed to market.

Microsoft with Windows Phone 7.X have a hardware partner with Nokia, but can Nokia pull their corporate finger out and line up behind this OS?

I assume that these companies' targets are to beat the iPhone and iPad. Normally, those who are not first try harder, but if what I see is their best efforts I don't see Apple having much problems from their competition for a while.

Oluwatobi Soyombo said...

In my own opinion, Google is getting into the hardware business. This may not appear to all now, but time will emphasize it. Good luck GOOGLE!