Monday, August 15, 2011

Google's acquisition of Motorola Mobility, and the need for whole product solutions.


Google to Acquire Motorola Mobility,
says "Combination will Supercharge Android".

As anyone connected to the internet must know by now, Google's announcement of its intent to purchase Motorola Mobility disrupted a normally quiet summer Monday morning like one of the solar flairs that threaten to wreak havoc on all earthly electronic communications.  The company made the announcement in a conference call at 5:30 AM Pacific time, clearly a violation of the company's "do no evil" philosophy!


Many commentators see the acquisition primarily as a strategic defense move in the escalating patent wars that are being waged by Microsoft, Apple, and Oracle.  While saying that the acquisition will "supercharge Android" by accelerating innovation, Google CEO Larry Page also highlighted the value of Motorola's patents in his blog post:
We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

While there's no doubt that possession of the Motorola patents will provide Google with more ammunition with which to fight the "Rockstar Bidco” group in the short term, concluding that is all there is to it would be a mistake.  Google's culture of innovation is well known. To continue to compete with Apple in the long term, Google will need to develop better, innovative "whole product solutions".

As Dr. Joel West (formerly of the San Jose State Lucas School of Business) describes it in his paper "How Open is Open Enough? Melding Proprietary and Open Source Platform Strategies", 
Thus, to make a successful “whole product” solution, the owner of the innovation seeks to attract such complementary assets, in part by sharing the overall returns of the innovation with the third party supplier of such assets.
This is the approach that Google took in founding the Open Handset Alliance, leaving it up to third parties to provide the hardware that drove Android to the top position in smartphone operating systems.  But, that strategy has also led to fragmentation. While VP of Engineering Andy Rubin has defended Android's openness, the company has also found it necessary to switch preferred partners at seemingly every point of major innovation: with HTC for the first G1 and Nexus One, with Motorola for the first DROID, Honeycomb and the Xoom tablet, and with Samsung for the Nexus S.  Bringing Motorola Mobility into Google eliminates the inefficiencies inherent in switching lead horses at every turn, and positions the company to better compete with Apple, which has progressively moved further into controlling their hardware from silicon on up. Meanwhile, the likes of HTC and Samsung can continue to compete and grow the ecosystem - to the degree that Android stays open.


The lack of a whole product solution has been most evident in the Android-based Google TV strategy. The company's strategy of partnering with Intel, Logitech and Sony left Google TV shut out of the cable TV market. Motorola Mobility brings a leading provider of set top boxes to Google, a key missing ingredient.  However, content is king in the TV business, just like apps in the smartphone business. To complete the TV picture, look for the bidding competition for Hulu to heat up between Apple and Google.


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