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Perspectives August 16, 2011

Google & Motorola

Thoughts on the acquisition

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Very very interesting news about Google buying Motorola Mobility this morning. It’s got so many implications it’s tough to take in all at once, so wanted to capture a few thoughts quickly.

First thing worth pointing out, though, is this: we don’t actually know the shape of the whole deal at this point. Will Google keep the MOTO hardware business? Keep the patents and sell the hardware side? Keep both? It’s hard to know how their internal evaluation went, and what they’ll do from here, so a lot of this is really hard to speculate about.

Having said that, a few thoughts:

– it’s another instance in a long history of software (and now Internet) business devouring the previous generation’s hardware businesses. Internet businesses are inherently more leveraged: distribution power trumps almost everything else, especially in a phase where the technology portion is maturing.

– along those lines, it’s interesting to think about what happens next for Samsung, RIM, HTC, Nokia, but I’m way more interested in what the software players do. All eyes in that regard are on Microsoft, but I think the more interesting long term questions are for Facebook and Amazon.

– 2 things it’s clear that Google didn’t buy MOTO for: its margins or its ~20k employees.

– seems like Google definitely wanted the IP portfolio.

– and it seems to me that, assuming they keep the hardware business, that they want Motorola because it gives Google full control over the hardware and software stack, which is the only way that they’ll ever be able to even approach the excellent UX fit & finish of the Apple offerings. I feel like that’s one of the top drivers, and maybe the most important one over the long term.

– One other thing that this merger is decidedly not about is distribution — if anything, Google’s distribution power with respect to Android is somewhat weakened, at least in the short-to-medium term, as they’re undoubtedly going to cause some grief with partners Samsung and HTC. Feels like Google has calculated that control over getting the experience right trumps any distribution help they might get from their handset partners.

All of this lines up pretty well with my post about Screens, Storage & Networks last week — the last 60 days have seen Google push hard to get in the top tier on Screens (MOTO) and Networks (Google+).

My most esoteric point I’ve left for last, though: one of the unfortunate consequences of this development is that I think it will move perceptions of big corporations building open software (and in this particular instance, I’m specifically talking about open source software) at least a few more notches towards the cynical. The question that everyone will ask anytime a company tries an open experiment like Android in the future, the inevitable line of questioning will be: “Sure it’s open now, but for how long?” Whether premeditated or not, the path of Android has been from wide open to asserting more and more control — and this is another data point on that path. I’m not criticizing or indicting anyone for this — I think it’s essentially just a natural evolution and response to market conditions that require tighter integration. I think in a lot of ways it’s inevitable in technology networks for this to happen. (And I’ve written about it a bit before.) My only real sadness here is that it’ll move cynicism on corporate open source efforts up one more notch, and that’s not good.

Overall, though, fascinating day, fascinating time. Big moves!

“Internet businesses are inherently more leveraged: distribution power trumps almost everything else, especially in a phase where the technology portion is maturing.”