Google Closes Motorola Mobility Deal; Nothing Different Happens

OK, it’s official: Google formally owns Motorola Mobility (MoMo). Now what?

Here’s what we had to say in August 2011 about the situation:  

• While the deal provides Google with substantial benefits, it is a very dangerous path for Google to embark upon;
• The deal opens doors for HP and Microsoft, and throws both Microsoft and Nokia a mobile-market lifeline, and
• The mobile market will not see significant impact from this deal for at least another year.

We’ve heard from a handful of journalists and clients about this, asking what we think. Frankly, we don’t see how our original position should be changed.

The danger still lies mostly in the opportunity/temptation for Google to treat MoMo with some level of preference as regards Android OS development, licensing, insights, input, and so on. Sure, temptations and conflicts like this can be managed, but as we said last year:

“The biggest friction point is this: Google just became a hardware vendor for its own operating system. That is a huge conflict of interest for any vendor, and one not easily managed throughout the last 20-plus years of IT history.”

Let’s also not forget that Google started coming down hard on Android licensees last year for real or perceived violations/deviations from Google’s vision of what Android should and will be. There is already some resentment and discomfort brewing in the extended Android community. The Google+MoMo relationship in this mix is akin to a CEO adopting one of his less-than-productive section managers. It is at best an extremely difficult situation to manage, and nearly impossible to avoid any perception, let alone occurrence, of favoritism or nepotism.

And, to revisit our August 2011 position again, “Google has not shown itself to be adept at hardware marketing, sales and support. And its decentralized, try-anything, beta-everywhere approach has hurt it in many commercial IT (enterprise and otherwise), markets, including mobility.” We don’t see much that has changed enough to make us reconsider that statement, either. Our biggest concern for Google is that they will naturally use MoMo as an in-house alpha/beta test environment for Android – not favoring MoMo with early releases or licensing terms in any way, but using it as a “model home” to showcase what’s coming and what’s possible with Android,  which could provide MoMo with a perceived advantage over other Android device makers. It is at best a slippery slope to negotiate; bringing in new CEO Dennis Woodside, who excels at negotiating advertising partnerships but lacks technology or mobility provider market experience, does not make this easier for Google or MoMo itself.

So, continuing the “what we said is still what we say” theme to the end, we still think the Google+MoMo deal helps Microsoft, for the reasons stated last August:

• “Microsoft...just became much more attractive to more mobile device makers. If they can make Windows Phone 7 a success with Nokia, then at least some of the mobility vendors currently emphasizing Android will look to expand their OS and developer partnerships. 
• “Finally, we see this deal reducing overall smartphone competition, despite what Google has stated. Three major smartphone operating systems exist today: Android, iOS, and BlackBerry OS. ... With the Motorola deal, all three “majors” will be directly controlled by a mobile device vendor...only Microsoft’s Windows Phone 7 will be the remaining, lone, “independent” mobile OS of consequence.”

What’s changed since last year? HP killed WebOS and Palm devices, removing that potential competition from mobile OS and device markets. So now, it’s the independent Microsoft versus the co-dependent Google+MoMo, the vertically-integrated Apple, and the souring Blackberry.

Microsoft has little hope of unseating or even disrupting Apple at this point. But as the enterprise buyers rethink their Blackberry commitments, Microsoft – with an integrative mobile+desktop approach and unmatched channel strength – can quickly become #3 in smartphone OS and development ecosystem position - and in a much stronger, device-independent position from which to challenge Google/Android.