Google’s acquisition of Motorola for a surprisingly low $12.5 billion is a rather concering proposition. Not when you think about the acquisition in terms of Google “wanting to control the hardware for Android handsets and tablets”. If you think about what Google really got things get all the more concerning, but first you must believe what MG Siegler believes:
Increasingly, Google is trying to do everything. And they have the arrogance to think that they can. And it’s pissing people off.
I have a hard time arguing against that notion. Certainly everything doesn’t truly mean everything, but when an Internet search company starts creating self-driving-cars — well perhaps everything really does mean everything.
You can’t take statements like this one by CEO Larry Page seriously:
The combination of Google and Motorola will not only supercharge Android, but will also enhance competition and offer consumers accelerating innovation, greater choice, and wonderful user experiences.
Because the preceding statement is:
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.
“Increase competition” is a flat out lie, unless of course you mean between patent litigators in the courtroom.
That’s how many patents Motorola owns — that’s what Google is buying, everything else is a fringe benefit to Google and a potential disaster to competitors.
This acquisition is about far more than getting handsets and tablets — if that was all Google wanted they would have been far better buying HTC or Samsung, as these companies make more compelling hardware. What Google is getting in addition to the Android devices and the patents is:
- Home telephones
- Radios (walkie-talkies)
- Modems/ routers
The first two are a bunch of “meh” the last item is where things get really interesting. Google now not only owns patents and a “complete” Android experience, but they also bolster their ISP ambitions with the addition the Motorola modems.
Motorola has long made the best modems a consumer can buy for their home DSL/Cable connections — Google now owns that. That prospect scares me as the last thing I want is a party with a vested interest in what, where, and how I browse the Internet to be standing between me and the Internet. Google is now that party — of course they may never leverage it, but do you really believe that?
How long before there are Google branded modem/routers on the market that tout Google cloud features as the benefit? That scares me a lot, mostly because Motorola SurfBoard modems are so good.
Back to Android
Let’s get back to the meat of this acquisition: Android.
Mike Cane fears for Android partners and thinks they may suffer the same fate as Microsoft MP3 partners did when the Zune came out:
This is exactly the position every single Microsoft partner using PlaysForSure DRM for MP3 players was in when Microsoft announced its own player, the Zune. They all dumped their products.
I don’t see the same happening here, mostly because handset partners seem to be in far greater denial — more on this in a bit.
In an interview for a site on the Internet, Peter Kafka asks:
Q: How does this change Android from partner perspective? Do you think MSFT now positions itself as a “neutral” platform?
To which he gets these two response:
Page: No change to Android. Still an open ecosystem.
Rubin: Nothing changes. Motorola remains a separate business. This is about “protecting the ecosystem, and extending it as well”
That’s a hard line to swallow even if you aren’t an Android licensee. Does any one really buy that crap? I think by now the Internet itself has by and large proven that Android is not-so-open and that Google hasn’t really done much to “protect the ecosystem”.
Android may have more “open” facets, but it is not really that open in the respect that most open source software is. This acquisition will eventually wake Google up to the fact that they need more proprietary software.
Craig Grannell thinks such an acquisition will be able to up Apple’s game and create some of the best handsets out there. I can see the potential for that, but I also saw the potential for Google Wave and other failed Google offerings.
This acquisition only has potential for as long as it can hold Google’s attention — thus far nothing other than Adwords and Gmail has been able to hold that attention for very long. Even Google searches are becoming less accurate than some smaller upstarts (including Bing).
If you don’t believe — then explain why Motorola will be left as a “separate” company instead of rolled into the fat of Google? You will never get an Android device that controls the experience in the same way that any Apple product can if two separate companies are making the device. If — IF — Google had sought to actually make Motorola a part of Google then I could give that notion some thought, but that’s not the goal.
Motorola will remain separate so that Google can drag Motorola’s name through the mud with patent disputes — I have seen that tactic somewhere else… 2
Kevin C. Tofel has a nice take on the purchase over at GigaOM saying:
The situation is akin to Microsoft buying Dell: Would HP and others be happy about that?
That’s spot on, but he left out the fact that Microsoft would have to still be trying to convince HP that “everything’s cool bro”.
Again at GigaOm Darrell Etherington makes an excellent point:
Also, if Google is serious about ensuring that this deal doesn’t negatively affect its relationships with other hardware partners, it can use the purchase to at least try to ease some of the patent pressures being applied to Samsung and others.
In other words Google is going to majorly tip its hand when they do, or likely do not, step in with their new found patent holdings to help out competing companies (because now Samsung and HTC are competitors to Google, as much as they are partners).
Of course Google has refuted all of this by putting up some choice quotes from Android partners. Which leaves smart people asking: what was the question that was asked to get these quotes?
I think the question was: How do you feel about Google buying Motorola’s patents to protect Android partners?
When the question really should have been: “How do you feel about your licensor now buying a company to compete directly with your company?”
That would have told a much different story.
Google would finally have a real business model for Android! Instead of just giving everything away for free for a cut of advertising revenue, Google is now in the position to bring in hundreds of dollars of revenue and profit per smartphone sold, the way other companies do.
How any Android “partner” could read that and not be worried is beyond me.
Lastly I leave you with some choice wisdom from Horace Dediu:
The lesson (and warning) was that a licensor that is also a licensee makes other licensees uncomfortable. The supplier is also a competitor. This is classic channel conflict and never ends well.
Open or not, with or without equity, these arrangements are always unworkable.
Now who is more naive when Google states they are “protecting the ecosystem” with this purchase? Google, or Google’s partners?
Update: A few have said that the Modems/Routers may not go with this deal. As far as I can tell the consumer grade stuff is a part of the Mobility group — though I may be wrong.