Now that Google has officially and completely swallowed up Motorola Mobility, the question becomes: What now?
It’s a good question. When Google announced it was acquiring the company that built the iconic RAZR
phone in August last year, it caught many by surprise. Until then,
Google seemed to be content to be the chief architect of the Android
mobile operating system, leaving hardware manufacturing to, well,
hardware manufacturers.
But the buy made sense as straight-up purchase of intellectual property. Motorola
holds many patents (more than 17,000) and some even serve as the basis
for standard technologies in wireless communication. The main purpose of
the acquisition was clearly to beef up Google’s relatively weak patent
portfolio — a smart move, given the litigious nature of the tech world
today.
However, besides the IP, Google also got a hardware company for its $12.5 billion. Now it has to do something with it.
In his announcement
Tuesday, Google CEO Larry Page says Motorola will be a wholly owned
subsidiary of Google, suggesting the company’s operations will remain at
arm’s length from Google proper. Since Android (and Google) are
supposed to remain hardware neutral, this is cautiously good news for
Motorola’s competitors.
But in the same note, Page says it’s replacing Motorola’s CEO with a
“longtime Googler” and several other key executives will be replaced as
well. Google appears to have big plans for Motorola Mobility, but given
that newbie CEO Dennis Woodside doesn’t have a strong history in
telecommunications (he began his career as a mergers and acquisitions
lawyer, according to his LinkedIn profile) or Android, it’s unclear what
those plans are. I see three possibilities:
1. Motorola Forever
Google could go full speed ahead with Motorola as a hardware company. Motorola used to be a buzz-worthy brand and, with the RAZR and StarTAC, created some groundbreaking products. For a moment, it captured a little of that magic again with the Droid RAZR, which debuted last year.
However, owning Motorola complicates Google’s relationship with other
Android manufacturers. Given the replacement of many top executives,
you’d have to be tremendously naive to think Motorola now won’t have
some kind of inside scoop on Android, even if the relationship is kept
distant on paper.
However, if recent rumors are to be believed, Google could be mitigating this problem — not by limiting Motorola, but by giving several
hardware makers preferential treatment. Google is said to be expanding
its partnerships to give more manufacturers an early look at future
versions of Android.
There’s also the side note of Motorola’s cable-box business. If
Google is serious about pressing forward with Motorola, as my colleague Christina Warren observed,
it would be a big missed opportunity if it didn’t see this as its
gateway for Google TV. Of course, what will really make that service
sing is content partnerships, not fancy tech.
2. Spin Off
Going the other direction, Google could just take its patents and sell off Motorola’s hardware operations and other assets to the highest bidder. This would be a public-relations nightmare for the company, not to mention a tremendously wasteful thing to do. If Google really wanted to just boost its IP arsenal, there were cheaper ways to go about it (as Facebook has recently shown).
While making hardware does appear to be strikingly against Google’s
general philosophy (by the same token, it’s not a media company), a
spinoff is unlikely. If that were the plan, Google could have just
issued a press release noting the acquisition — there was no need for
Page to write a personal note praising Motorola’s history of hardware
innovation.
3. Somewhere in Between
Then there’s the ugly possibility that Google will end up crippling Motorola because the two businesses together are actually less than the sum of their parts. IP aside, if Google is keeping Motorola separate — or is treating all its hardware partners in the same way — what’s the point of owning it?
Also, a corporate merger like this sends ripples throughout a
company. Will Motorola engineers now be gun-shy about introducing phone
features that might annoy its corporate parent? By the same token, will
managers be too careful about tightly integrating some Google services
to avoid accusations of collusion? And if Windows Phone eventually
achieves significant market share, I think we can forget it ever showing
up on a Motorola device. But is that the position a true hardware
innovator would take?
Good management can deal with some of those issues, but some pose
fundamental questions about what kind of company Google wants to be.
With good answers, Motorola could end up influencing Android for the
better. A few years from now, Tuesday’s gung-ho note from Page may be
looked back on as the seed of a brave new Motorola, which rose to new
heights once it was under the Google umbrella.
Or it could be like when eBay bought Skype:
a confusing move, poorly executed, involving two companies that don’t
really fit together. That would be a depressing outcome, but both sides
should take heart: Those brands are still around today, and they’re more
successful than ever.
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