As I stated in my post last month on Google’s earnings call, I am a big-time fan Larry Page, and the way that he is running Google as CEO. The guy is simultaneously a chess player and a coherent communicator about WHAT Google is doing and WHY.
Towards that end, today’s move to acquire Motorola Mobility is fundamentally a recognition that if Google doesn’t establish a serious defensive position with respect to its patent portfolio 'surround' on Android, it risks the proverbial 'death by a thousand cuts.'
In other words, the writing is already on the wall (and in lots of court documents) that between Oracle, Microsoft and Apple, the 'fig leaf' of plausible hope that Android's handset OEMs can embrace the mobile/post-pc software ecosystem funded by Google, and freely reap the rewards, must now be seen as nakedly untrue.
Henry Blodget of Business Insider puts it best when he says about the deal that, “It seems safe to say that, six months ago, investors and partners did not realize that Google was going to have to shell out $13 billion to ‘defend’ Android, let alone start competing with its hardware partners.”
Simply put, the best lipstick that you can put on this pig of a deal (more on that in a bit), and the reason that HTC, Samsung, LG, et al are giving their boilerplate support is that it answers a core question of any ecosystem play; namely, how clean is the intellectual property provided by the ecosystem operator, and how committed is that operator to protecting its licensees.
Is HTC happy about today’s deal, knowing that Google now has 'first cousins' whose sole reason for being is to sell hardware devices that directly compete with them?
Hell no, but they are immediately less happy about having their nuts squeezed by Microsoft, the specter of Apple stepping on their wind pipes, and Oracle pouring hot oil on them.
Compromised survival is better than risk of death almost any day, and that risk was long past the point of being merely 'theoretical.'
The Best Alternative to No Agreement (BATNA)
Thus, Google’s acquisition of Motorola should be seen as the best alternative to no agreements (BATNA) being made by Google to strengthen its IP portfolio.
It should also being seen as a formal acknowledgement that the question of IP purity is no longer a mere border conflict in the pursuit of Android-everywhere, but rather, a prolonged war out in the open.
Plus, to be clear, in the chess scheme game of things, it’s not like HTC, Samsung or LG have anywhere else to go. They have played that card by addicting themselves to Android, and as such, are effectively part of Google’s concubine.
Moreover, let’s be brutally honest. If Google really wanted to get into the hardware business, does anyone consider Motorola state-of-the-art? On any level? No.
Sure, in the abstract, you can connect the dots to mobile phones, tablet devices and set-top boxes, and conclude that there are other synergies in this deal, but to get them, you need to assume a second-order of corporate integration that Google is wise (and likely) to avoid.
After all, merging Motorola’s 19K employees with Google’s 29K employees is a soupy broth that, for cultural reasons, I am highly doubtful that Google wants to make.
The Law of Unintended Consequences
Netting all of this out, I can take Google at their word that this acquisition was a defensive move – although a note aside, that obviously doesn’t say a whole heck of a lot about the tenure of Sanjay Jha (Google Mobility's CEO) in terms of creating great products and sustainable value at Motorola. Would-be hardware OEMS counting on Android to save your hide, you might take note of that fact.
Moreover, I can see why HTC, Samsung and LG will hold their noses and support this deal, as this is the price you pay when you give up software-differentiation. The 'high' is great, but the hangover kinda sucks.
Similarly, today’s deal signals yet another reality check in the sanctimonious positioning of Google as operating according to some higher moral code. They are as ruthless as any profit-bound company, and all such commentaries about open-ness should be seen as marketing spin going forward.
I will grant you that Google is better than most, but never forget that Google only seeks to fully open what they desire to commoditize, NOT what they aspire to monetize. Pontifications on open-ness are like those on beauty. It is in the eye of the beholder.
Similarly, this is one of those moves that feels like a big-company action, which is as it should be. Google is a big company.
But then again, in positioning itself with the best and brightest as the place to work, this move again signals an end of innocence, something that both recruits AND growth investors will take note of moving forward.
Now, while you might counter that peers like Apple or Facebook are hardly innocents in terms of their own ethos, note that this has never the positioning of these companies.
You go to Apple to build the insanely great, not to be warm and fuzzy, and sanctimonious. You go to Facebook to build the ubiquitous social utility, and join an hyper-aggressive culture.
For Apple, this deal opens the door for them to further assert that they were 'right' about the endemic goodness of deeply integrating hardware, software, service, marketplace and tools into a complete solution, and that Google 'blinked.'
Don't get me wrong. I don't believe that Google blinked (except on patents), but truth is the first victim of wars, and this will offer yet another salvo in the mobile/post-pc wars.
Today also opens the door to Microsoft potentially coming up with a new calculus (economics, positioning) to establishing a foothold with Windows Mobile 7, not to mention HP with WebOS. Will they? I am dubious, but they should (try).
Finally, it’s easy to see how this deal distracts Google ever so slightly in finding some mojo and momentum on the tablet front.
In a segment where there is no obvious catalyst to buy an Android-based tablet (e.g., the carrier push factor in mobile), and where Apple is running away from the competition, the time that Andy Rubin and team will be spending assuaging partners in the coming months, is time lost co-creating with them.
Bottom Line: Google needed to do this deal, I guess, and good for them for being decisive about it, but this was no rope-a-dope, as Dan Lyons dorkily suggests. It was simply better than doing nothing, and waking up one morning to find Motorola’s patent portfolio in the hands of Microsoft.
UPDATE: John Gruber of Daring Fireball has a delicious rant that is one part call out on Dan Lyons, and one part compilation of the various write-ups from the course of the day. As always, a fun read.
UPDATE 2: Well that didn't take long. Bloomberg is reporting that Google is replacing Motorola Mobility CEO, Sanjay Jha, with Dennis Woodside, who led Google’s ad sales in the Americas before overseeing the merger from the Google side. As noted in my original piece, Google's dismissal of the strategic value of Motorola's hardware business (at the time of the deal announcement) spoke volumes about Jha's tenure. At the same time, the move to replace him with a Google insider versus an MMI member suggests that the combined companies will hardly be arms-length from one another. More fodder for the wake-up call aspect of this for Google's third-party hardware OEMs, not to mention the increased probability of "unintended consequences" alluded to in the piece.
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