Google Buys Moto – Xoom – Zune – or Just Patents

So Google just dropped $12 billion for Motorola for patent protection and what else?

The patent protection makes sense to a certain degree.  MoD fails to understand how buying Moto helps Google with the Oracle lawsuit (it doesn’t) which is really the biggest threat to Android. You have to wonder if a better use of this cash would have been buying Oracle off. Moto for all their patent library was still being sued by Microsoft and Apple.  At best, Moto’s patent suit provides protection from Nokia and maybe Samsung. So from a patent standpoint, Google has bought some protection for Android, but to what degree is still to be determined. It’s been suggested that Moto in negotiating with Google, indicated to Google that Moto might go after other Android partners with their patent warchest. Now, Google has a vast patent pool that seems best suited to defend Android makers in the realm of 3g/4g technology and wireless/cellular technologies. And probably has the patents needed to force some cross licensing agreements with a host of companies.

Now what does Google do with this massive hardware company it just bought for 12 superlarge? There are serious problems with the cellphone business it just bought. Motorola after a strong start in the Android business has seen HTC and Samsung supersede them. Motorola was not even able to protect the Verizon Droid brand from other vendors. It’s been suggested that Google will break off the hardware business as soon as possible but that makes the 12 billion price target look even worse.

However, if Google has bought Motorola Mobility with the intent of making best in class Android phones and tablets, Google has another huge problem. To date no one has been able to balance distributing an OS to partners and developing hardware successfully. Apple in the 90s failed. Microsoft failed miserably with Zune and their PlayforSure MP3 players. Nokia could not do it with Symbian. Inevitably, there will reach a moment where Android’s hardware partners realize that GoogMOTO devices are getting preferential access to Android OS builds and Android software. All the Android vendors were praising this purchase in boilerplate press releases, but both HTC and Samsung have to be giving serious thought to jumping ship to Windows Phone (except Microsoft told Nokia that they would be getting unique access to customize the OS to make their devices different). Samsung might want to think about making Bada a real smartphone OS, and HTC probably is thinking right about now why didn’t we buy Palm and WebOS when we had a chance.

So if the Zune strategy isn’t going to work, then perhaps Google is going to build superior Nexus like phones and Xoom tablets and become the next Apple by owning the product end to end . The major concern with this thought is that being a hardware design company is not Google’s DNA. Google is a web application/services company that uses all of those platforms to sell ads. It’s not a hardware company. It doesn’t do chip set design or hardware innovation. This is potentially an awful fit, AOL/Time Warner bad has already been suggested. Ask HP right now how easy it is being Apple, and it is a hardware company. Apple is struggling with their iAd offering because selling advertising is outside their core DNA. The bill right now starts at 12 billion, operating a capital intensive hardware company could send that bill even higher. Google right now does not have to explain bad financials due to a poor hardware product launches. Nobody today buys anything from Google. They use free Google stuff. Google Wave tanked. Code was deleted. The next-gen GoogMoto tablet tanks and Google could find Best Buy returning $125 million in unsellable hardware like the disaster HP is facing. This whole hardware enterprise is mile and miles away from selling ads.

The real problem for Google right now which this purchase highlights is that they are trying to be everything for every one. They are spending massive cash on Android, Chrome OS, Google TV, etc.  Instead of building all these platform ventures, they should have been focusing on making the best apps for all the platforms that they support. Google should have been approaching Apple to do iCloud for them, to help put iTunes into the cloud. Instead of Google TV, they should have been approaching Apple to get Google apps on the AppleTV. They should have been developing better apps for iOS, RIMM, and then WebOS. Google’s forever poisoned their relationship with Apple, and Microsoft won’t touch their products. Google has landed on a dangerous place stuck between the market’s innovative leader (run by a vindictive genius with a long memory, just ask Adobe) and the market’s previous 1000 LB Gorilla who is spending their warchest like a drunken sailor to be relevant everywhere.  Jobs says Apple didn’t get in search, Google got into phones. Don’t think there’s not a search project hiding in the labs at Infinite Loop. And Apple now has a data center for all kinds of cloud related projects. Apple didn’t publicly have a phone OS in 2006. Or a tablet in 2009.

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