Google acquiring Motorola Mobility

Why is Google buying Motorola Mobility? Interesting question! A more relevant question – what will Google do with Motorola once they buy it? Given below are some of Google’s options. The assumption is that Google is most interested in Motorola’s patents and least interested in their Cable business. This assumption eliminated some of the combinations from the options.

Option 1: Keep the patents, keep the operations – phone as well as cable.

This option offers multiple advantages for Google: it will help Google get the protection of the patents, Google can attempt to achieve the same advantage that Apple has achieved through tight integration of the phone hardware and software. This option might help Google in their TV battle through Motorola’s existing installed base and partnerships.

But there are many questions here. Is Google interested in the tightly integrated model? In fact, Google’s press statement says that it will keep the Moto phone division at an arm’s length from Android. Does Google have the capability to manage the integrated model? Not everyone who adopted the integrated model for Smartphone is flourishing today – look at Nokia, RIM. What will be the response of the Android partners like HTC and Samsung if Google tries an integrated model on the side? Android’s strength has been the wide adoption by vendors like HTC and Samsung. Will Google develop the integrated model at the cost of the current strength?

Is Google interested in the Cable part of the business at all? Or is it just an appendage that came along with the rest of Motorola?

Option 2: Keep the patents, keep the phone operations, sell off cable business

This appears to be a better choice than Option 1 as the cable business does not appear to be Google’s focus today.

Option 3: Keep the patents, sell the operations – phone as well as cable

If Google’s priority is to maximize the Android market share their main concern will be to keep their vendors happy. In that context this option makes a lot of sense. But then why did Google buy these businesses in the first place? If Google chooses this option it amounts to admitting that they were forced to buy the whole company when they wanted only the patents. Will they get a buyer for the phone business?

Option 3 inherently assumes that this acquisition is a knee jerk reaction to losing the bid on Nortel patents. If this is a part of a well thought strategy by Google to change the course of the Android development, it gets more interesting. Google did attempt introducing a Google branded phone. But it was more of a ‘loose integration’ as Google did not directly design and manufacture the handset. The attempt was a failure in the market, and the model was taken out within months. But Google termed ‘the experiment’ as successful as they learned all they wanted to learn from that. Did they learn that they need to have tighter integration than that? Is this acquisition an application of that learning?

This line of thinking narrows us to options 1 and 2. Will Google be able to do the tightrope walk balancing the Android partners and MMI smart phone business? Motorola is not the most successful Android vendor today. If it is to own Droid brand, Google would like it to be the leading Android phone and not just an also ran. If Droid market share has to improve, it needs to be better differentiated from the other Android phones. I am not able to think of how Google will do this while keeping the other partners happy. Why is Google doing this when Android ecosystem is doing so well? Ed Bott feels that Google might be not fully happy with the current Android partnerships. He sees this acquisition as an admission that the partnership business is not working for them. If that is right, then Google must be ready to go all out at the expense of the partnerships to make Droid the number one Android phone – or even the number one smart phone.

Hmmm, if I am Samsung or LG, I would start evaluating my options.