When
Google purchased Motorola in 2011 it was widely perceived as a defensive
maneuver to stock up on the company's intellectual property in the face of
Apple's thermo-nuclear patent war against Google's Android operating system.
Google
may not have appreciated it at the time, but rather than suiting up with
Motorola's IP armor, they appear increasingly weighted down by Motorola's
loss-making baggage.
In a
financial report that broke earlier than Google had planned, it was revealed that losses from Motorola's mobile
division totaled a staggering $505 million for the quarter. Motorola's home
division losses were a not-as-horrific $22 million. In short, Motorola is fast
turning into a major liability for Google's bottom line.
This
has, not surprisingly, led to calls for Google to off-load the struggling
company, something Google is reportedly exploring. Google has, to date,
maintained an arms-length relationship with Motorola lest they offend their
other hardware partners selling Android smartphones, tablets and set-top boxes.
Yet there is another avenue open to Google which may promise to right the ship.
In
short, they could pull a Microsoft and copy Apple.
Microsoft,
like Google, built its empire on software, letting other manufacturers tackle
the hardware (the Xbox being a notable, successful, exception). Yet earlier
this year, Microsoft broke from this tradition with the introduction of the
Surface tablet. Timed with the release of the new Windows 8 operating system,
the Surface is a tacit acknowledgement that Apple's approach to hardware and
software integration delivered genuine value to consumers. Throw Amazon's
Kindle Fire tablet into the mix and it's clear that the new battleground in
tech is between software ecosystems (including operating systems, app stores
and digital content libraries) that are closely fused with hardware.
Other
manufacturers will offer Windows 8 hardware, of course, but Microsoft has
realized that to play in this new arena, they needed to stake their own
hardware mark. No surprise that there are now persistent rumors that Microsoft will build its own
smartphone next.
Indeed,
Google has already stepped down this road: they have partnered closely with several
manufacturers (Samsung, Asus and now LG) to produce Nexus-branded gear to show
off the latest iterations of Android. But Google could do more. They could, in
theory, harness Motorola to the same end. Motorola makes all the products
necessary to compete in the platform war including set-top boxes, smartphones
and tablets. A closer fusion of the two may alienate Google's hardware
partners, like Samsung, but where are they going to go? Android is a vastly
more popular mobile platform than Windows and unless Windows 8 is a smash hit,
manufacturers will need to offer Android tablets and smartphones to stay in the
mobile market.
Moreover,
with the introduction of Google Fiber and the company's continued push into the
TV space, leveraging Motorola's set-top box experience and pay TV provider
relationships gives Google a strategic advantage that neither Apple nor
Microsoft enjoy.
Will
Google do it? Probably not, but in a tech world that is increasing embracing
Apple's model, it's interesting to note that it's now Google that's
"thinking different." And paying a price.
