OS Licensing and Firewalls: That's Not the Point

I see where Andy Rubin said Google is building a "firewall" between the Android team and Motorola Mobility (link).  That's exactly what we called it when Palm licensed out its OS, and actually the firewall worked pretty well.  I'm sure Google can and will prevent information leaks between the Android team and the Motorola team.  Those teams do not work in the same buildings (many of them are not even in the same state), so that's pretty easy to do.

Most PalmOS licensees didn't have big worries about our firewall.  They wanted to know it was in place, and they were careful about sharing information with us, but we were able to work together.  The reality is that if your OS is selling well, the licensees will put up with almost anything (look at the early history of Microsoft if you doubt me).  And if sales slow down, no amount of firewalling will keep them loyal.  Look at the, uh, more recent history of Microsoft in mobile.

The place where Palm had trouble (okay, one of the places) was that it could not figure out what to do when the financial interests of the OS conflicted with the financial interests of the hardware team.  It wasn't about the firewall, it was about the corporate business goals.  To put it in Google terms, what happens when a change to Android will hurt sales at Motorola Mobility?

Let's make up an example: Suppose that Motorola needs a new feature in the OS to support its next-generation product line.  It has already started building the new devices, and has...say, $200 million in parts already ordered to build them.  The orders cannot be canceled, and the parts will become obsolete if not used quickly.  The Android team has trouble implementing the feature, and realizes that it will have to choose between the feature that Motorola needs and another feature that HTC needs for its next-generation products.  It's a zero-sum game; there are only enough engineers to produce one of the features.  Who wins?  Will Google accept a writedown of $200 million to protect its promise to HTC?

This is not a theoretical question; tradeoffs like that happen all the time when you're developing an OS.

Want to guess how those questions were answered when Palm hardware and Palm OS were in the same company?

I think that's the real reason why Palm and PalmSource had to be separated, and I think that's the real question Android licensees are thinking about.  Not is their information safe, but would Larry Page accept a financial bloodbath at Motorola to protect other Android licensees?  If Google has addressed that question, I haven't seen the answer.  It's a very hard question for any CEO because it pits the interests of Android licensees against Google shareholders.

None of this will drive away Android licensees, but I think it will affect the strength of their interest in also working with Microsoft -- which, when it abuses its licensees, tends to abuse all of them equally.


Avi Greengart said...

Microsoft may not have played favorites in the past and may revert to form in the future, but right now Microsoft is scrambling for its mobile life so it's giving Nokia a lot more attention than any other WP licensee - witness the changes made to the OS to support lower cost hardware in the Lumia 610.

Of course, Google does the same thing with its Nexus program. Whoever gets the Nexus treatment gets the OS first, while everyone else scrambles for months to adapt the OS to different chipsets and UI skins. This leads to wonderfully quick OS innovation and terrible fragmentation, but it appears to be by design. If there's really a firewall, Motorola will never get to be in the Nexus program again, which could hamper its ability to be successful.

Anonymous said...

There is another path that can be taken, and that is Motorola being "passive". Instead of being proactive, they are reactive, adding functionality to their hardware only after it is added to Android.

On the software side they could release Android exactly as is, none of the skins/launchers/MotoBlur etc. Ironically no vendor actually does that since they all feel the need to "differentiate", although since most are in the hardware game they are terrible at software. It also has knock on effects like delaying operating system updates as the differentiated software has to be ported too.

If Motorola did the reactive/vanilla thing, then my next Android phone would be from them. I wonder how other vendors would react?

Avi Greengart said...

Anon, I agree that plain vanilla Android would certainly be an improvement on many of the vendor skins, and might actually be a differentiator in the market with consumers. However, Sanjay Jha said that the root of vendor UI differentiation is not the vendor's desire for differentiation, but the carrier's insistence that vendors don't give them twelve mostly identical Android phones.

Anonymous said...

@Avi: since no other vendor is going vanilla, it is still differentiated! And you clearly pointed out the other issue - too many phones. Phonescoop shows a bewildering number of Motorola models just in the US.

Instead they could limit themselves to 3 instead of being spread so wide. ie do a few model and do them very well. Works for a fruity competitor.

Anonymous said...

motorola should just manufacture strictly nexus products

Michael Mace said...

Good point, Avi.

You folks are doing a great job of discussing this among yourselves; I should probably just sit back and let you go at it. But I wanted to touch on one thing...

>>Sanjay Jha said that the root of vendor UI differentiation is not the vendor's desire for differentiation, but the carrier's insistence that vendors don't give them twelve mostly identical Android phones

I have no reason to doubt the sincerity of Sanjay Jha, but I really doubt that most of the phone vendors are anxious to ship phones that have no visible software differentiation from the other Android phones. In the feature phone space, the phone vendors treasured their proprietary UIs.

If you're the lowest-cost producer, sure, you don't care about UI differentiation. But if not, I think you want some sort of angle.

Anonymous said...

Motorola doesn't have to have the best devices or even high market share. All they have to do is set the bar for Android devices, and Google still wins by others selling more units due to "better" devices.

This is somewhat analogous to the Chrome web browser. Its presence reinvigorated the whole web browser ecosystem. Even if Chrome didn't get a single user, Google as a whole still massively benefited from improved browsers.

Every time someone doesn't buy an Android device, Google loses. The competitors get to pick the defaults for email service, documents, storage, contacts, app stores, social and have the greatest opportunity for advertising. It is far better for Google to have a small share of a large pie, than a large share of small pie.

"Boring" Motorola devices can set the baseline. They can be the worst Android devices you can buy. Other manufacturers making something better is just gravy.

Anonymous said...

It is pretty obvious that Google has bought Motorola for the patents. Witness the activity in Germany at present, as reported by Florian Meuller at Foss Patents.

I would not be surprised if it, at some point in the near future, becomes apparent for everybody that Google has not used much energy to think about or address the problems that Michael brings up.

When that happens, Google will take some rush decisions where there are two directions for them to move:

1: Go for vertical integration (Apple and RIM model) and see mass defection from OEMs to Microsoft. Since these firms are weak and losing money (HTC, LG, Sony etc), then it is not that much of a problem; maybe they withdraw from the smartphone market. The big problem is Samsung, which is the largest Android OEM.

2: Shut down Motorola as a hardware company and focus on the IP assets. Samsung would be very glad.

Anonymous said...

3. Sell the hardware business to Huawei and just keep the patents, an R&D lab and the STB business for Google TV.