Yesterday, Google announced its purchase of Motorola’s mobile handset division - split out from it’s parent company into what was called Motorola Mobility not that long ago. Google seems to have three goals. 1) Eliminate the middle-man. As I’ve discussed in previous posts, one of the problems that Google used to have was that their partners, HTC, Samsung, Motorola and so on, were given the source code for the latest version of Android - that they could then choose to update to run on their phones and then pass on to the carriers for distribution wirelessly to their end users. The problem was, most of the middle-men weren’t updating existing phones - they were busy making new phones. 3-6 months seems to be the average lifetime of a phone design from most manufacturers other than Apple in the current smartphone game. Apple customers have been able to get free software updates to their 3 year old iPhones giving them new leases on life, whilst Android users have usually been stuck at the operating system version they bought the phone with. New features and bug fixes left wanting. Now that Google own a middle-man, they can control the product cycle and prioritize their releases the way they want to. 2) Acquire Patents. Recently the issue of software patents has been very public with the purchase of a mass of patents from the remains of Nortel (for whom I once worked many years ago) by Microsoft and Apple left Google wanting. The way to play the patent game seems to be more about the person/company who has the most patents is the person no one is prepared to sue for fear of a counter-suit. Motorola Mobility has a very sizable patent portfolio that Google will very likely start putting to use suing both Apple and Microsoft to keep to push their Android operating system further out of the legal reach of their competitors. 3) Full Hardware Control. This puts Google on the same table as Apple. The real question is whether they will or can deliver a highly integrated experience that they can sell on their own terms to carriers the way Apple has with the iPhone. Consider that carriers already have HTC and Samsung supplying most of their phones, tailored just the way they want. Most carriers put up with the iPhones lack of tailorability simply because it pulls in the new customers.
Google then, it would seem, has just spent $12.5 Billion USD on a good acquisition. Or have they? The problem is that if Google choose to exert their control of the hardware and give preferential treatment to their own Motorola division, how long will it be before HTC and Samsung choose to dial-back their Android phones and move more towards Windows Phone 7, or their own operating systems? If Google keep the best features for themselves to entice more people to purchase their Motorola phones (given they now OWN a mobile manufacturer - their business model requires that they sell as many units as they can) it will only drive their current partners away - losing Android overall marketshare and in the process Google will lose some of its revenue from Android. If they don’t give preferential treatment to Motorola and they are fair to their partners then why spend so much money on Motorola Mobility in the first place? After the excitement of the potential for this purchase has faded away, the reality of running a hardware product business that has seen declining sales in recent years and the potential alientation of Googles current partners will dawn on Google. I’m not so sure the purchase was wise at all. The end result could hurt Google and Android severely. Alternatively Google could elevate the hardware platform to a whole new level with many great new features that other manufacturers are too reluctant to add. Make no mistake though: one way or the other this was a pivotal moment in the history of the mobile market. Stay tuned for the glory, or the chaos to ensue.