Responding to Google’s Acquisition of Motorola

It has been fun to read some of the articles about Google’s buyout of Motorola. It is a very interesting story indeed. First thing yesterday, Dan Lyons (of Fake Steve Jobs fame) posted an articles, suck on it applesoft, which immediately prompted MG Siegler and John Gruber to respond with “Defending Android” and Balls. 

I am very much siding with Siegler and Gruber as they actually presented facts and not a hastily written piece based on seemingly nothing other than Dan’s dislike for Microsoft and Apple.

From my article yesterday you can see that I believe that Google is in trouble. This is Larry’s first big move as Google’s CEO and while I think this partially fixes Google’s patent problems they didn’t come out much better in the end. They now have an unprofitable 3rd rate Android handset maker and 20,000 more employees to manage along with a 12.5 billion dollar price tag, which as Gruber explains is over 2 years worth of profit for Google.

So now what? That is the question everyone is trying to answer. Will Google now make better hardware for their Nexus phones? Will they actually create a Google TV that someone other than a 40 year old living in their parents basement would actually use? Will they use Motorola’s patents to “defend” Android by going offensive (I know, they said they wouldn’t do this but…) after Microsoft and Apple?

I’m not sure, but from a business point of view, this deal solved one problem and creates many others for Google. They just became a much more complicated company and that in and of itself creates problems. I wish Google good luck but I won’t be surprised to see this blow up in Larry’s face.

Update: Horace Dediu agrees with me.

Google buys Motorola Mobility

For 12 Billion dollars! (In Dr. Evil’s voice). Here are the interesting parts of the blog post.

In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we’re thrilled at the success they’ve achieved so far.

I’m not sure how Larry Page measures success but Motorola has been anything but successful. This deal was good timing as Motorola has become just another Android vendor - one that can’t even squeeze a profit out of a handset with free (as in beer) licensing.

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.

There are a lot of things wrong with this. As Horace Dediu at Asymco points out, this strategy has turned out bad for everyone involved. So why did Google purchase Motorola if they plan on keeping everything a level playing field with their Android partners? The next paragraph contains the answer.

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android… Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

Yep. Patent protection. And Google said that paying 4.5 billion for Nortel’s patents was too high. They just paid 12 billion for Motorola’s patent portfolio. Sure they gain some manufacturing capabilities but that is actually a negative as they haven’t realized a profit in 4 years and are trending downward. So Google is actually paying more than 12 billion for the patents because they now have to subsidize Motorola’s failing hardware business.