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May 25, 2012
Google's Motorola: What Will Opposites Attract?
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Google Chairman Eric Schmidt prepares for a news conference in Seoul, Korea.  He played down concerns that the search giant would give preferential treatment to Motorola Mobility.Done deal. After approval from the EU and US reviewers, was there much doubt that Google's acquisition of Motorola Mobility would run aground in China? Now that the marriage is consummated, those of us outside the honeymoon suite can only guess at the fun that the two companies are having together. But more importantly, we can only guess at the progeny of such a seemingly mismatched couple.

Fewer Employees, Fewer Products? We know for a fact that new Motorola Mobility CEO Woodside feels that Motorola makes far too many models of phones. Perhaps "any" is too many for a company that knows next to nothing about hardware manufacturing. Maybe what many have speculated and Google has denied is true: the acquisition was all about IP, and the only hardware that Google plans to wield is an axe.Dennis Woodside is the new CEO of Google-owned Motorola Mobility. His plan is to focus on making fewer handsets, better.

Cuts in manpower seem inevitable, given the fact that certain jobs necessary for an independent company will simply become redundant under Google. It's not like there are no precedents; an acquisition by Google is a perfect time to update your resume and rediscover that dusty LinkedIn profile. We do know a few people that won't be around anymore -- some as-yet-unnamed senior executives, and CEO Sanjay Jha, who was responsible for Mobility being spun off from Motorola in 2008, and for their smartphones adopting Android a year later.

Patent Wars, Part 2. Jha's relationship with Google adds plenty of fuel to the explanation that the acquisition was chiefly about Motorola Mobility's 17,000-odd patents. While some have doubts about this strategy (and some diehard Google-haters opine that patent protection strategies are fine for anyone except Google), conventional wisdom agrees that Google is in need of a bolstered portfolio in this age of unending IP litigation between tech companies.

Google was reeling from the loss of Nortel's portfolio auction in the eleventh hour to a team composed of nearly every heavyweight in the tech industry (but how bad can you really feel if it takes the combined efforts of Apple, Microsoft, Sony, RIM, Ericsson, and EMC to beat you?). No doubt there was some regret about not taking Jha up on his earlier offer to license Mobility patents, but when Google came crawling back, Jha raised the stakes: sorry, the licensing offer has expired... but how about you just buy us?

Of Hardware Superchargers. This required Google to collectively ask itself: could I be a hardware company? Oh, there were those who predicted that Google would simply shut down or spin off the part of Motorola Mobility that actually makes products, and sit on the patents. After all, MM wasn't exactly making money hand over fist -- but $12.5 Billion is a lot of money to spend on patents, especially considering that Nortel's highly desirable portfolio sold for "only" $4.5 Billion. Not to mention that Google's "supercharge Android" rhetoric tacitly implies a future commitment to smartphones, as well as "home devices and video solutions."

And Motorola Mobility may not have been in great shape, but it does provide both a high-profile brand and some very desirable products. Although under the consumer radar, the set-top box division provides hardware to major cable providers -- a combination of R&D experience and existing relationships that could prove useful if Google decides to further the admittedly struggling Google TV project. Again, Google's own announcement links Motorola's STBs with the "the transition to Internet Protocol," a perfect fit for Google's attempts to infiltrate the home experience with Logitech Revue STBs and even LG TVs.

Mobility Means Mobile. But mostly there's the smartphone division. Jha took a company that could no longer rest on the StarTAC feature-phone laurels, transitioning to a company known mainly for the Droids. One must consider that Motorola came back from a major mid-2000s slump, boasting a March 2012 market share greater than HTC and trailing only Samsung and LG in the Android world (Apple is in the top three for all smartphones, although which position they take depends largely on whose market reports you read). While picky little details like negative operating margins called Motorola Mobility's long-term viability into question, Google did not, on the whole, purchasing a failing company.

Google isn't completely unblooded in the hardware wars. The company worked with HTC and then Samsung on the Nexus series, touting the results as a "pure Android experience." No pesky manufacturer tweaking with the UI, no carrier-specific (and un-deletable) apps, and -- most importantly from the dev and hacker point of view -- open-source and inherently unlockable. Although the HTC partnership bore mixed results, the Nexus S and Galaxy Nexus were almost universally praised. They even sold fairly well, giving Samsung a financial boost and recently leading Google to offer US customers the option of direct purchase from the Google Play store.

A Road Paved with Direct Intentions. Oh, you mean you didn't know that Google Play's now-familiar lineup of Apps, Books, Music, and Video has been joined by a fifth category, Devices? To be honest, there's only the Galaxy Nexus right now, but it seems obvious that Google is making a place for hardware. And who can blame them? They've invested heavily in Android, only to give it away for free. But this leads to a rather sensitive area, however -- namely, who gets to Play?

You might think that Motorola, as a Google company, would be able to join the Nexus on the virtual shelves. But if so, what does that say to HTC, LG, Sony, and all the other device manufacturers who have carried Android to the masses? What about Samsung's considerable stable of non-Nexus products? None of these companies (nor the carriers, nor the customers looking for support) were too keen on Google's direct-sale website for the original Nexus, which disappeared shortly thereafter.

Playing Favorites. When the acquisition was first announced, the question of the Motorola Effect quickly followed. Google has been hard at work from the beginning, trying to convince Android partners that Motorola devices would get no special treatment. Andy Rubin, Google's SVP of Mobile, has gone as far as to claim that Motorola is only one of the next-generation Nexus bidders, and has no guarantee of making the final cut.

Google possessing a hardware "laboratory" to refine Android features and deployment should, in theory, benefit all OEMs and carriers of Android devices. Ironically, this theory seems to contradict assurances of separation between Google and Motorola Mobility. When you have OS developers and hardware engineers under the same roof, what company in their right mind would erect an impenetrable "firewall" between them? Simply having the right hand aware of what the left hand is doing confers an advantage. In a situation like that, hypothetically speaking, you might forgive competitors for looking at OS alternatives.

OS Urbanization. For example, there's a headline-grabbing little thing called Windows 8 coming out soon, and its Metro UI is derived directly from Windows Phone. For the time being, tablets are getting the focus of Metro's "device agnostic" desktop-to-mobile sprawl... but expect Microsoft to do everything in its power to leverage a still-dominant PC market share toward its smartphones. The resulting integrated "experience" could provide the kind of seamless device continuity that has so far even escaped the mighty walled garden of Apple.

At the very least, Android hardware manufacturers will be quick to call Google to task for preferential treatment. When Google premiered Honeycomb on the Motorola Xoom, it was just another partnership -- if the same thing happened now, it would be tantamount to nepotism in the eyes of competitors. So Google's new in-house hardware division may prove to be as much trouble as it's worth.

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