This has been a pretty mad week in technology starting with Google’s purchase of Motorola Mobility for $12B followed by HP announced the folding of their PC business including their newly launched tablets featuring WebOS. There have been some articles about the Motorola purchase which I really enjoyed and some that I thought seem a bit short-sighted for various reasons. So here are some scattered thoughts about the events this week.
It’s all about defense
It’s really hard to imagine why Google would buy Motorola outside of its patents. While I wouldn’t second guess what Google’s patent defence would be or if I think it’s better or worse after the purchase, Google does believe that it’s worth $12B. Android is important to Google – not because of it’s $11M revenue through the Android Marketplace but it’s really important for their ad business. It’s the main reason why they got into it and then continues to give it away for free. The Android, Chrome and ChromeOS strategy all have the same goal which is really about further reach and control over how a user interacts with Google. It’s not difficult to recognize that the browser is quickly replacing the desktop when users aren’t mobile and users are consuming information on their mobile devices more and more each day. Outside of Microsoft’s accusation that Google intended to purchase Nortel’s patents to attack others, I haven’t been able to find an instance where Google attacked anyone based on patents outside of protecting others.
Strength in numbers
Android’s strength is in its ecosystem which is made of the OS, the manufacturers that use them, the software and the developers that develop the software. Android is important to Google and I would imagine even more important than Motorola. It is in Google’s best interest to keep the ecosystem they have in tact. If Google intends to get into the handset manufacturing business as an additional business, HTC would have been a much better buy. Google does not have the in-house expertise to turn around Motorola as a handset business. While I agree that Google may use the opportunity of owning Motorola to build phones in the way that they envision the phone, it by no means equate to other OEMs from creating other phones that are equally or are even more successful. That Nexus program to date proves that. The Nexus series are phones that are built very closely by OEM manufacturers to date starting with the Nexus One followed by the Nexus S but rarely are these phones the overwhelming favourites in terms of number of handsets purchased. In fact, the Nexus One was a complete flop. It is also the Nexus One experience that should indicate to both the market and OEM manufacturers that Google buying Motorola is unlikely a threat to their business. Building a business is much more than building a successful technical product – it’s also about marketing and partnerships. Google does not know how to do either well in the handset business and unfortunately (as I snakily remarked in my Google+ post) neither does Motorola.
Changing the game but not really
The OEM reaction of Google’s purchase of MMI is reminiscent of a two-year old child welcoming a newborn sibling into the family for the first time. The OEMs are tentative and cautious; they’re waiting to see what Google will do with MMI. On one hand, they’re a bit optimistic because the 25K odd patents could land an extra hand in protecting their Android investments. On the other hand, they’re also worried that Google might play favourites with Motorola by giving them special privileges. For Google to really protect Android, it will need the OEM support. Without OEM support, the number of Android handsets sold will plummet and likely resulting in the loss of developer interest and hence equating the demise of Android altogether. Motorola is nowhere near the top in terms of total number of Android handsets sold. It is in Google’s best interest to treat all their OEMs well if they intend to protect the Android platform. I think HTC recognizes this.
There’s plenty of room for everyone
For OEMs to compete with Apple, the only realistic choice is Android. No one is going to out-Apple Apple however the good news as the market has shown, not everyone wants an Apple. There are other factors that people look at when purchasing a phone including price point and form factor. While no one Android phone is dominant in market today, many companies, especially HTC and Samsung, have been able to make successful Android products that compete one another and make each of their parent companies money. Google is very interested in the number of devices activated; it is a metric they actively track. It is quite easy to imply that their own revenue is based on these activities and not so much from the revenue generated by manufacturers or from the marketplace.
I don’t get patents
I have to admit this – I don’t get the patent wars that we’re in. It’s obvious that it isn’t working and that it’s hurting innovation in the US especially at a time where innovation is one of the longer term answers to US economic success in the future. Some of the patent disputes are silly. I remember seeing this article and thinking to myself that yes, all tablets look like iPads but the author seem to also have missed that most devices look similar to each other long before the iPad. The Lenovo PC tablets look very similar to the Dell Latitude tablets that look very similar to the Asus tablets. It’s the nature of the beast. I’d hate to imagine if someone in home building patented open-concept homes or that cars have 4 wheels in the 1920s. Imagine how much further we’d be as a civilization.
WebOS is a failure of HP, not a failure of WebOS
Launching (or in this case re-launching) any new platform is hard. Even when Google first launched Android, it took many a year before it became the success that it is today. WebOS is a decent enough OS. While I read that HP spent a lot of money in terms of marketing it, I don’t think I’ve come across any ads for it. I suspect that HP marketed it like it was 1999 with tactics such as in store marketing, etc. The market has changed but HP hasn’t. I sincerely hope that someone else (even HTC) picks up WebOS. It deserves a much better fate than it got.