I just had the opportunity to pen a piece on the matter at Macuarium.com and couldn’t resist to comment on some of the issues involved: the business model angle is too interesting.
Google alleges that the Motorola acquisition will allow it to defend Android against legal challenges based on intellectual property rights. This could be true: Motorola, an Android licensee, was targeted by Microsoft late last year and the judicial counter-volley was spectacular. On the other hand, it could be false: Microsoft itself recently kicked the tyres of Motorola Mobility (itself spun out to facilitate a sale) and refused to fork out the needful. Besides, if Moto really could sue others over intellectual capital (or sell it), it would do it: it sorely needs the money.
No, this operation smells like a different animal. It smells of an attempt at achieving Apple-like hardware-software integration to create an Android “champion” able to take on the iPhone and iPad, and shielded from legal challenges by Google’s deep pockets. It smells of an attempt to change the rules of the smartphone game, where Google was giving Android away as a means of fostering (favourable) competition, toward a first-person approach where licensees are tolerated but not expected to lead the fight.
That is a different business model, and one that comes with a history lesson. Apple attempted just this in the years prior to the return of Jobs. It was called the “war of the clones” (and that was before the Second Trilogy). It tried to push its own Mac OS products, and also to license it to third parties (such as Motorola). It got savaged. Apple only recovered by culling the clones.
Just like in banking, there are some disadvantages to playing for third parties and for yourself at the same time. The third parties are likely to get fleeced, or you are likely to earn less than you could. In a technology licensing situation, this means that either Google will favour its own platform and handset maker and build an integrated, progressively more proprietary, very superior product, or it will find itself paying the ticket for the R&D of all its licensees while they use the savings in pushing equivalent (or better) hardware for less price. I somehow don’t think mobile advertising can pay for that.
In other words, Google’s acquisition could be just an overpaid legal defence trick (if so, Google will sell Motorola Mobility on rather soon). Or it could be a new business model, which promises either expensive times ahead for the web giant, or hard times ahead for its licensees. Myself, I’m betting it will be the second.