Has Google Botched The Motorola Deal?

I’ve been pondering Google and their Motorola Mobility division, and I wonder if Google has screwed this up. An article on Harvard Business Review puts forward some positions as to why it is a good deal. However, the article has one fallacy in it (that the mobile market is “hits based”. For feature phones it was. Smartphones are more like PCs, with invested content being a barrier to switching), and it overlooks the past year and recent Google product. Here’s my take on where things are right now.

So What About Motorola?

Google has now had the Motorola Mobility group under their umbrella for a year now. In that time, nothing of any substance has happened. The only big news was the large round of layoffs and office closures that was recently announced. Other than that, nothing. It isn’t that Google has been sitting still. They’ve been working on Chromebooks, released a new tablet and released (and pulled back) a media device. None of these have involved Motorola.

Consider the Nexus 7, a device some feel might take on iPad (yeah, good luck with that). Was the Nexus 7 designed and built by Google’s new hardware group? Hope. Google farmed that one out to Asus. Google doesn’t even try to minimize the Asus role, because the Asus name is on the back of the device and on the power adapter. It isn’t that the folks at Motorola haven’t built a tablet before. Remember the Xoom? That’s a Motorola product.

Then there’s the Nexus Q, the on-again, off-again media device that appears to go after the AppleTV. Surely this was designed by the Motorola Mobility guys (since set-top boxes are included in their product inventory)? Again, no. The Nexus Q was designed by a different group inside Google, and assembly is outsourced to some other American organization. It doesn’t appear that the Motorola guys had any involvement in this.

Google spent over $12 billion dollars for a company that is focused, specifically, on building things like tablets and set-top boxes. And they didn’t feel the need to use this $12 billion asset to design or build them? What was the point in buying Motorola if they aren’t going to actually use them to build Google product?

High Hopes Dashed?

I had a degree of optimism when the Google/Motorola deal first came together. I felt that it would be good for Google, and good for customers, because it had the potential for a competitor to iPhone that would compete on design, and not just on price. It would result in Android phones that wouldn’t be the “me too” devices that guys like Samsung and HTC tend to churn out. It could also have given Google a boost in tablets, and possibly even PCs and PC-like devices.

However, a year on, that doesn’t seem to be happening. Instead of beautifully designed phones, with their own style, from the source of Android, all we see are ho-hum Not-Google devices and massive cutbacks. New and exciting products that do come out of Google have nothing to do with their biggest hardware acquisition. To say this is sad and disappointing would be an understatement. But if you look at the history of Google acquisitions, maybe this shouldn’t be a surprise. They have bought hundreds of companies over the past few years, and done little or nothing with a lot the technology they acquired. On occasion we would see a half-hearted attempt to use some recently-purchased IP in a product or service, only to see it marginalized and eventually shut down some time later. Yes, Google has used some of its purchases to their advantage. But of the hundreds that they have bought, only a tiny fraction appear to have produced any real value.

Google paid a substantial sum of money in one go when they bought Motorola Mobility. It’s one thing to spread a few billion on a few hundred companies. Each individual transaction is relatively modest. But to put such a huge chunk down on something, and then not use it to their fullest advantage just doesn’t seem to make sense. Now, maybe there is some grander plan, and it is taking longer to materialize. But this latest round of cutbacks makes me doubt that. I’m not sure Google really had a plan when they bought Motorola Mobility, and if they have one now, it isn’t readily apparent. People are right to question Google on this decision.