The shockwaves of the recent announcement that Google is buying Motorola Mobility, the handset and device division that spun off from the Motorola mother ship not long ago, will continue to ripple far and wide. There are several reasons why this could be a great boost for Android, but also some major concerns about getting the two companies and their product lines to blend well.
There’s much debate about the reasons behind the acquisition. Was Google looking to boost its patent portfolio to create a Mutually Assured Destruction/Mexican Stand-off scenario (pick your metaphor) in the midst of the tit-for-tat patent suits going on right now? There are arguments on both sides about how worthwhile this gambit is (Yes it is! No it’s not!). There are also arguments that patents are only a piece of the puzzle, and that Moto’s hardware business was also a major part of the logic. I fall into this camp.
Blend the Ecosystem
It seems like years ago that Google’s first phone, the Nexus One, was launched, but it was only 18 months ago. I wrote at the time:
"Google's introduction of Nexus One, a phone to truly call its own, is a completely necessary move for the company. Only by taking ownership of the whole user experience will Google really be able to prove the value of its Android platform.… The lackluster success of the early Android phones has surely made Google realize that they need to take a much stronger role in order to bring all the pieces of the experience together. The catch-as-catch can approach they've had so far just isn't going to cut it. Fragmentation is a death knell for a product like this at this stage of maturity. Google needs to lead the charge with an integrated platform until the experience gap is fully closed. Then it can afford to loosen the reins and let the handset manufacturers, carriers, and third party developers go do their own things independently, safe in the knowledge that they will all come together to create something interesting and valuable for customers."
The underlying rationale here, as I described in that earlier article, is that early in a category’s development (e.g. smartphones, tablets), complex devices, platforms, and ecosystems under-perform user expectations unless they are highly integrated. This creates a gap between the experiences that products can provide and what people want (see diagram). This gap can take time to close as the technologies and platforms improve, and instead of creating a finely blended smoothie, you get a lumpy concoction that’s unpleasant.
Making the platform or ecosystem modular and open too early prolongs the time that a gap exists. Microsoft’s phone OS always suffered from this until a sharp change of course with Phone 7, and Apple quickly trounced them with its integrated offering. The Nexus One was Google’s first step in rectifying its own initial misstep.
The Motorola Mobility acquisition is a huge step further along that progression. Google clearly still feels that the fragmentation and variability of third-party hardware makers (with the frequent intervention of carriers seeking special interfaces, additional apps, and in some cases removing Google’s native apps and services altogether) is leaving money on the table. To be fair, some of the Android handsets have been very good—the Motorola Droids have consistently been strong players—but then there are other products that just completely send the Android/Google brand into the toilet.
This is a cycle that gets repeated in many industries, and the integrated/proprietary vs. modular/open balancing act is one that many companies struggle with as they make strategic choices on investments, alliances, and how to deploy complex products and ecosystems. I devote a significant amount of time to this in my book, Innovation X, as it’s a fascinating area.
The Motorola acquisition also strengthens Google’s position in the new diversity of digital ecosystem touchpoints: set-top boxes, broadband connected TVs, home networking, and phone-based payments (digital wallet). Motorola Mobility already plays in these (mostly immobile) areas, which is interesting to Google because the lines between these products and phones and tablets, in terms of services and content, are increasingly blurred. It’s all about the multi-screen experience today, and making what happens in your home work seamlessly with your devices out on the move. Anybody’s who’s worked in the “smart home” market knows that it’s more dumb than smart, as getting devices to talk together well is really difficult today. Google would love to solve that problem, and is one of the few companies that has the scope and clout to pull it off – even more so now that it has a major player in the hardware endpoints.
Will the Cultures Blend?
Google has said that it will keep Motorola Mobility as a separate company. No doubt this is partly to assuage fears of its other hardware partners that they will be kicked to the curb in favor of the in-house brand. (HTC in particular finds itself in a tough spot now, as both its OS providers now have favored hardware partners—Microsoft/Nokia and Google/Motorola. This latest merger may well push some companies back into the Windows camp as they hedge bets.)
Should Google merge Motorola more fully into its existing business units? In a word: No.
As Google discovered with its early stumbles with Nexus, designing and selling hardware is a really different business than online services, advertising, and software development. Google is amazing at many things, but this does not appear to be one of its talents. Better to keep it under a different brand, with a different team working with the processes it needs to. Which is not to say they should not seek to influence one another, and that there aren’t things Motorola could learn from Google about innovation and development.
Michael Mace has a jaundiced view of this combination:
"The same business practices that made Google good in software will be a liability in hardware. Google's engineers-first, research driven product management philosophy is effective in the development of web software, because you can run experiments and revise your web app every day in response to user feedback. But in hardware, you have to make feature decisions 18 months before you ship, and you have to live with those decisions for another 18 months while your product sells through. You can't afford to wait for science. Instead, you need dictatorial product managers who operate on artistry and intuition. All of those concepts (dictatorship, artistry, intuition) are anathema to Google's culture. Either Google's worldview will dominate and ruin Motorola, or worse yet the Motorola worldview will infect Google. Google with Motorola inside it is like a python that swallowed a minivan."
To put it another way, I think Google has about as much chance of successfully managing a device business as Nokia had of running an OS business.
I’m not as skeptical as this, but in my view, assuming that Google is not just going to flip Motorola and spin it off again after it’s got the patents, this brings up the biggest question: can the two cultures get along? Motorola is famously stodgy, slow to make decisions, conservative. How will this blend with the more freewheeling West Coast intensity of Google? Maybe the Mobility division was already the wild-and-crazy-guy of Motorola, but I still find it hard to believe that there won’t be significant challenges here.
So far I haven’t seen anyone mention this, which is odd since cultural fit is a) usually one of the first things brought up in large corporate mergers, and, b) the leading cause of them failing.
Things will become clearer in the next few months about what Google plans to do with this acquisition. I think there are some compelling benefits for both brands, but the culture blending question is going to be as big a challenge as anything.