While Google’s proposed acquisition of Motorola Mobility still awaits regulatory approval in China, the merger is, for all intents and purposes, a done deal, which makes me wonder why no one is really talking about it.
As monumental paradigm shifting acquisitions go, this one ranks among the top in my mind, not simply because Google is acquiring Motorola’s extensive patent portfolio that it will undoubtedly use to bolster the defences of its Android ecosystem, but more so because this deal will change the mobile scene forever, turning Google from a veritable mobile puppet master into an actual player in the smartphone game.
But here’s the issue, does Google really want to be a company that actually makes and sells things, rather than one that simply profits off the labours of its cadre of partners? While many have written about the patents and the complaints levied by competitors, few have yet to really explore how Google will actually utilize Motorola, how it will balance being a neutral Android kingpin while dealing in hardware on the side, or even how it will manage Motorola’s extensive worldwide manufacturing network. It all seems like quite a task for a company that realistically has little experience in doing, well, actual things.
How do you solve a problem like Motorola? It’s strange to question to ask, given that Google has gone out and spent over $12 billion to secure Motorola and its extensive patent portfolio, but its one that a recent report from the Wall Street Journal attempted to answer.
Since the acquisition was first announced last August the one word everyone has been throwing around is ‘patents,’ Google needs them, its competitors want to prevent it from getting them, and complaints are already being levied about Motorola not playing fair in regards to licensing its patents in a fair, reasonable, and non-discriminatory fashion. But again, all of this has been covered before.
What we have yet to see is how Google hopes to actually utilize its new found patents while simultaneously retaining its current neutral role as the Android king. The search engine giant claims it has big plans for Motorola, infusing the company with R&D money to produce that next innovative must-have Android device. It’s certainly a strategy that will allow Motorola to compete directly with Apple, but here’s the problem, it will invariably mean competition within the Android ecosystem as well.
For a company that has attached its entire revenue stream to Android advertising (and not directly to the OS itself) Google has made itself entirely beholden to its Android partners for making money, meaning the search engine giant can ill-afford to stir up dissension among its partners by making Motorola the darling of the Android family.
So how will Google manage this quagmire, saying nothing about how it plans to actually manage Motorola’s global manufacturing infrastructure? As the WSJ reports, it seems within Google itself there is no recognition of the possible pitfalls of wearing both the hat of an Android kingpin and the hat of a handset market, “only a cocky belief that Google really can be all things at once: a hardware company with software margins, and a neutral Android arms dealer that just happens to be building its own Motorola army on the side.”
Truth be told, perhaps Motorola really isn’t worth the hassle, meaning that if Google purchased the handset maker for its patent portfolio, as Bernstein analyst Pierre Ferragu says, “the logical thing is to sell the rest.”