We're about a week into the news and opinion cycle following Google's bid to acquire Motorola's Mobility group for $12.5 billion in cash. But lots of coverage has missed the point.
Moto's patent portfolio has been one area of focus, and rightly so. Intellectual property has been a key area of competition lately among mobile platforms and that alone makes this a smart pickup for Google.
But there's also speculation about what this will mean for the Android ecosystem, and competing hardware manufacturers that have built quite a bit of value around the platform. These include Samsung, HTC, and Motorola itself (i.e. Droid).
Google has claimed it will keep the platform open though it's now somewhat conflicted, having an ODM horse in the race. This is where coverage has strayed into irrelevant territory -- seeing the acquisition as a way to own a piece of the device hardware market.
That's really the last thing Google cares about. I believe the company when it says it will keep Android open and agnostic for other (competing) device manufacturers to continue building and growing their own market share on its back.
That may sound crazy but here's why it's true: If you step back and look at Google's master plan for Android, it's essentially a loss leader (and a bit of a Trojan horse ) for Google's $40 billion search business and other maturing products whose largest area of growth will be in mobile.
Use of all these products will grow directly from Google's positioning at the OS level. It's therefore much more important for Google to grow Android's market share, than to grow that of its newly acquired hardware business. And make no mistake, the two goals will be at odds.
So if the deal isn't about building a market share leader in mobile hardware, what is it about? There are a few big reasons: the patent issue mentioned above is one, covered to death elsewhere. Another reason can be summed up in one word: Skunkworks.
Google is enticed by tighter integration between Android and the hardware that it powers. The formula is otherwise a bit of a disconnected value chain where ODMs like Samsung build devices around the platform in what is a bit of a technology hand-off.
In each case, this involves a proprietary Android build, such as HTC's Sense or Motorola's Motoblur. These have been criticized as being inferior to a pure Android experience as they're weighed down by "bloatware" and other add-ons (the evil side of "open").
Google's efforts to directly build devices -- first seen in the Nexus One and continuing with annual releases in the Nexus line -- are one way it's sought to tighten up and purify the end product. It's well agreed by many that Nexus S is the best Android device on the market.
The Moto acquisition is the next step in this direction; having a more elegant melding of hardware and software, designed together from step one. It takes the place of having the two cobbled together after the fact with one these bastardized Android builds.
If this new direction sounds familiar, it's because that's Apple's model (and HP/Palm's until recently). Though it has scalability disadvantages compared with Android's openness, it has clear quality advantages in designing and building hardware and software under one roof.
So what this all comes down to is a raised bar for Android-based devices, as this vertical integration should result in better quality. And stepping ever closer to an Apple model means we may finally see a viable single-device iPhone competitor (big maybe).
After sitting back and watching device manufacturers fail to do just this, Google now hopes to step in and set the industry standard for Android devices. Having a hardware shop in-house lets it do that -- for both tinkering around and ultimately launching better devices.
That's going to cause lots more competition in Android land, which is exactly what the market needs. And that's what this deal is all about: A blow torch under the collective bottoms of its top (and highly valued), ODM partners. Call it tough love.
In the end it will be good for Google, good for mobile users, good for third party innovation... pretty much good for everyone.
Image Credit: The Telecom Blog
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