If there is one company I trust to not screw this up it's Google and I think they have a good shot at getting this right. I'm sure their partner companies are going to be a bit ansy to start but they all compete on hardware / price anyhow which this doesn't change. A few points that pop to mind:
A. They already had to compete with Motorola, so they haven't lost or gained a new competitor.
B. They don't pay for Android so Motorola hasn't gotten some new financial edge. Google just has to ensure that all companies still get source releases at the same time. What they do with them is up to them. (aside: I expect we will see MotoBlur disappear with some of its key features rolled into future Android releases)
C. This will allow Google to protect Android much better which is very beneficial to their bottom lines, especially if it keeps patent licensing costs off of their products.
D. Google just has to be sure they don't play favorites but from what I have seen up until now they have been good about that.
E. This may have just brought the competition for who gets to build the next Nexus to an end. (unless the next Nexus is already basically "done" at another partner company)
I think they can get this right... and now hopefully we can get a whole line of nice Motorola hardware with current Android and unlocked boot-loaders, etc. I might have to reconsider the Droid 3 again (more like Droid 4 one day, since 3 is already in the wild as is)
a) there will be at least 1 company focused on android which will be protected with the cloth that is Google's legal team.
b) Google can make Motorola better
c) Google can make hardware to go with their software.
d) Google can finally make Motorola phones running android open.
e) We can finally see what it means for a hardware company to exist with a motto: "Don't be Evil". Sure Google is not perfect, but all other companies have the motto: "Money first, morals second."
f) Google can make an incredible experience which would become the de-facto standard for Android phones. Finally killing off HTC sense.
GOOG is a s/w company and not a manufacturer. The ability to integrate both sides of such different firms is very difficult. This puts both points b), c) and e) off the table.
Point f)? I'm not sure, but I really hope that they can do something while looking at exactly how it will play out on a phone. They did try this with the Nexus though, and that was not something which worked out perfectly imho.
M&A's have a tendency to be non-accretive to the purchaser. This looks like its going to be similar for Google.
Fanboys used to say the same thing about MS when they were working on the first Xbox, and they came out looking pretty silly for it. The first one was a bit clunky, but the second one, especially with Kinect, is gangbusters.
Integrating Motorola won't be as big a problem as you make it out for a company as smart and well funded Google.
I'm not sure that's the example I'd use. They sunk billions in the first on for little to show for it. Billions fixing broken xboxes in the second one and only recently have begun to gather some steam -- and even then it was helped by Sony's numerous missteps.
"Only recently?" If not for the $1B RROD write-down in 2008, Microsoft would have been profitable then. MS has been making money off Xbox ever since that writedown.
Got a cite for that? I think I saw estimates that the XBox project was still 5-10 Billion in the red at that point. Have they been making profits to even cover the interest they could have earned with that size of investment by leaving it in something low risk?
No cite for my specific claim, but I found this Engadget article claiming MS's Entertainment & Devices Division (read: Xbox) was $80 million in the black in 2008:
Are we looking at cumulative Xbox profits from day one? Generally one is interested in a division's ability to generate positive cash flow, no matter the initial cost, because it's assumed that division will generate said cash flow in perpetuity.
> "Fanboys used to say the same thing about MS when they were working on the first Xbox"
Microsoft already had a world-class design and manufacturing group at that point, making critically acclaimed peripherals. And the missing piece, making a glorified PC, was not nearly as cut-throat a business as making a phone. They didn't have to push the envelope and they didn't even try.
Google, having far less experience with consumer hardware, would have a far more difficult time making an already good hardware company better.
And, in any case, all indications are that they wanted a patent pool and are going to essentially leave Motorola Mobility alone for the near term. I'd be surprised if they even exerted pressure to bin or integrate MotoBlur extensions in the next couple years.
>This puts both points b), c) and e) off the table.
I don't see where you're coming from on b/c. Motorola makes great hardware - it would be hard to improve that. What Google can do is provide phones with unlocked bootloaders and the standard "Android Experience" UI. Google can make Motorola better precisely because they are a software company, and they can use that core competency to let Motorola focus on what they do best. (At the moment, Motorola shoots themselves in the foot by writing so much software.)
On e, yes, I think the hardware division will have to stay divided from Google.
>I don't see where you're coming from on b/c. Motorola makes great hardware - it would be hard to improve that.
That's exactly the problem. Google, as a software company, doesn't currently have to worry about a lot of the issues that the hardware side of Motorola does, like supply chain management(both on the production and disposal side), dealing with retail outlets, directly dealing with cellular service providers as a device manufacturer, governmental agency compliance for hardware, etc. Google doesn't have really any experience with this, which means they absolutely need to keep the people that are currently doing those jobs.
Also, from what I've heard from people that used to work there, Motorola's engineering culture is on the "very corporate" side of things. Integrating that into Google's rather loose culture will be difficult, I think. This is especially important because both sides will need to be working with each other very closely.
Best case, Google doesn't change much, and integrates Motorola's hardware chain well. However, if they do exert a lot of control over the hardware side, quality could decline in the short term as the issues I mentioned above get worked out.
Overall, I think it's a much stronger position for both companies. Motorola gets Google's software expertise, and Google gets Motorola's hardware engineering and supply chain.
> Google, as a software company, doesn't currently have
> to worry about a lot of the issues that the hardware
> side of Motorola does, like supply chain management
The purchase comes with the employees that are currently running these things. It's not like Google bought the operation sans the talent, and now has to use current Google employees (with no experience in this field) to run Motorola Mobility.
All they have to do is operate it as a separate business that has to follow certain 'edicts' from on high. If they want to further integrate it into the Google fold they can do it gradually over time.
That's exactly why I said Google's priority needs to be keeping those employees with those skills and talents. As with any acquisition of this nature, people are going to leave Motorola because of this. Google needs to make a lot of effort to identify and keep the key people.
It's important to note that this isn't anything like any of Google's previous acquisitions, both in scale and the nature of the company being acquired. Google usually has absorbed the entire startup that they bought, and ran it as just a new team. They can't do that here. It's too big, and too complex to just do that.
EDIT: I think I'm giving off too negative a vibe here. I do think that this is a very good merger for Google and Motorola, and I think that Google will handle this merger in the best way they can.
I just believe that there are a lot of potential "gotchas" that can(and probably will) snag the companies in the short term.
Remember the 280 North[1] acquisition by Motorola (they were a YC company)?
I don't know what will happen, but I'm optimistic as a complete outside observer. This acquisition was completely unexpected from any conventional/ conservative perspective.
personally, i'm looking forward to the acquisition so we can have Android devices that match up to the iPhone on a hardware level (emphasis on battery life). but the biggest concern i have is how Google is going to deal with the bureaucratic system that they will inherit from Motorola.
i'm currently working in the mobile industry, and a lot of manufacturing companies (Motorola included) indeed have a "very corporate" engineering culture. there are many levels between the devs/test engineers and the customer (whether it be the chip providers, service providers, other manufacturers) and the higher ups within the company. although Google is already a large company, i feel that they make an effort on minimizing the "corporate feel" and that a lot of engineers are attracted to that effort. but with this acquisition, will top-talent engineers get turned off? or will Google be able to minimize/eliminate the inefficiencies between the Google devs and Motorola engineers?
ps: i'm happy to finally be a part of the HN community :)
i think this will be accretive as $39bn of cash was just sitting there collecting minimal interest and motorola is moderately profitable.
google has a strong management team with a pretty successful bolt-on acquisition history. even though this is one of their largest acquisitions, i have faith in the management team to either sell off the hardware component of the business, or otherwise somehow make this transaction a success.
I expect the same, spinning off the H/W component, but if they do that, they can't use it as a shield/target for the other android handset phone manufacturers.
As for the patent portfolio, from what news I've currently read, it seems the patents aren't the most valuable commodity.
I thought they farmed that out to Dell to build. Motorola is a slightly bigger operation. (I know Foxconn will probably ends up doing the assembly anyway, but they'll still have to design the products)
Given that Samsung and HTC have already embraced openness as a policy having "googarola" on that same team will add even more momentum to it. Even more when you consider that arduino is the basis for android accessories. In the near-term it's almost irrelevant if android were a worse experience and android devices were less capable (I don't think that's the case, which is all the better) because ultimately it's about development momentum and the OODA loop. If the android platform can congeal a larger critical mass of talented hackers and developers and they can get into a tighter and stronger feedback-develop-release cycle on their software and their hardware then they will beat the pants off of any of their competition.
I hope you're right. But Google has certainly sold it to its Android partners as "we're going to use their patents to defend your crapware-ridden half-assed locked down handsets and then smother the hardware people with this wet pillow":
Wow, those quotes all sound the same... it's almost eerie.
We welcome today’s news, which demonstrates Google’s deep commitment to defending Android, its partners, and the ecosystem.
We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.
I welcome Google‘s commitment to defending Android and its partners.
We welcome Google‘s commitment to defending Android and its partners.
Those quotes are from the heads of 4 major companies...
It's not just almost eerie. It really is, and makes me think of zombies walking. PR zombies.
Seriously, though, I imagine that there are pretty intense discussions taking place within a number of handset manufacturers right now about how to manage their risk:
* treat (but how? it's a Gulliver situation even for someone like Samsung)
* transfer (almost impossible to transfer the risks in this situation unless you join the MS camp)
* accept (and have your shareholders crucify you if you made the wrong call)
A very brave move from Google (in the Yes, Minister sense)
And do you think the PR guys asked them for a quote? No they did not. They wrote the quote and then asked the company if they would 'approve' it. (sort of quote by inference)
I was exposed early on to this when a PR person wrote up a quote, attributed it to me, and then ran it through the PR department where I worked who 'signed off' on the release although no one actually asked me if I had made that quote. When I protested they said "Oh it sounded like something you would say, should we seek a retraction?" It was a hell of an introduction to this 'known technique' in the PR world. I told them that in the future they had to clear any quote attributed to me, through me, which they were happy to do.
So my speculation is that the PR guys wrote these quotes, asked the partner's PR firm to approve, and they did, because none of the CEOs/GMs whatever have that flag set in their PR department that says "check with me before you approve something with a quote from me in it."
You don't actually think the CEOs said those things, do you? Google's PR people would have written to them saying "can we quote you as saying X?", and they would have written back saying either "sure, that sounds fine" or "no, use this quote instead: ...".
I read the responses, and I felt exactly the same way. The news has been shared with the partners beforehand and all PR responses have been choreographed. I don't know what they would do exactly, though, since Android is the best mobile OS choice they have. Can't touch IOS. Windows Mobile sucks. Symbian is going away. Not an easy place to be.
Sure Google is not perfect, but all other companies have the motto: "Money first, morals second."
You're kidding, right? By law, this is the modus operandi of any publicly-traded company. If you think any different, you've simply fallen for their rhetoric.
I think that Google's interpretation of "Don't be evil" is consistent with money making. They do it because they believe that in the long run, they will be more valuable if they are not "evil". Doing what is morally objectionable may lead to short term gains, but has a high maintenance cost. Not being evil is like having a clean sustainable system design; there is no need for kludges to hide the bad parts.
How would be "killing HTC Sense" not evil? How is Google not evil in requiring real names for G+ and banning people with pseudonyms? How is shutting down APIs (like translation) which developers have grown to depend on not evil? How is monetizing their search monopoly to undercut the business of other companies not evil? Or shaping with their mystical page rank the fates of a whole economy?
And on the other side:
What is Microsoft particularly doing today that they are seen as "evil"?
I have a ton of respect for Google, but companies are neither persons which act moral nor are they nations for which you pledge allegiance. You get no real life karma points for defending them delusionally in Internet flamewars.
You seem to have a very low bar for "evil". I don't see how most of those things (e.g. naming policies, shutting down or charging for free services that turn out to be too much of a burden, being popular enough that their algorithm is important to many business models) are even moral concerns. They might be stupid acts on Google's part, or very inconvenient for some people, but evil is a different kind of thing. You can't just expect others to live up to your own idiosyncratic idea of evil.
What made Microsoft evil: They used to go into acquisition talks with small companies without planning to buy them. They'd learn about their technology and duplicate it themselves.
Another example of evil is cell phone carriers giving users high internet speeds but putting ridiculous caps on them. Or Apple banning apps from the app store then copying their functionality into their own software.
I don't know if Google has done or does anything like that, and that is why people tend to think they're 'better' than other companies.
Therefore by evil what is meant is the company using slimy underhanded tactics on competitors or customers (such companies usually use them on both). Maybe it can be expressed in one word: Cheating. Does the company cheat customers, partners, etc?
Shutting down the translation API wasn't an evil act, it was being used by content farms to steal content from other publishers and get advertising from it.
Having a privacy policy which requires your real name isn't evil. You are not being forced to opt-in.
Is monetizing your core product really evil..? I didn't expect to read an anti-business comment on a site such as this...
The law absolutely does not require corporations to make decisions on any particular basis, and definitely does not require them to put profits first. Please stop spreading this myth, it confuses people and gives amoral executives an "out" for their horrible behavior.
Fiduciary duty is an abstract concept that basically means a duty of trust. If shareholders are told that profits are secondary, you don't violate trust by not putting them first.
Making bomb components and missile guidance systems is not evil in itself. If only evil men made and used weapons, the world would be in very bad shape.
I'm not arguing that the specific weapons mentioned weren't used for evil, I'm just making a general point that all the peaceful people in the world can afford to be that way because there are guns protecting them, so it's not as simple as weapons == evil.
Unless of course the first thing GOOG does is wipe out all the IP and Patents owned by Motorola that have anything to do with... you know, killing people.
It's not his son though, it's a grown man that he legally adopted simply to gain control of some land rights and which he promptly signed over to help build a railway.
Google's more likely to throw Motorola under the bus to advance Android than vice versa. Having Android on 80% of all devices is worth it.
The problem is, to get off of the analogy, that Google will be very tempted to design a great iPhone compete device. It's no secret that the iPhone is the best HW/SW integration on the market. For the first time Google can actually build something with no compromises w/ respect to Android.
I think Google's next play will be telling. Will they:
1) Buy a HW design/integration company - ala Intrinsity.
or
2) Spin off Moto Mobility, but keep share all patent rights (so either company could litigate).
If you see them start recruiting for people/companies like Intrinsity, they're going down the Apple route and partners should be worried. If they spin off Moto Mobility (and don't own much of the resulting company) it will show dedication to Android.
> The problem is, to get off of the analogy, that Google will be very tempted to design a great iPhone compete device. It's no secret that the iPhone is the best HW/SW integration on the market. For the first time Google can actually build something with no compromises w/ respect to Android.
I fail to see how this is a "problem". If Google keeps Android open, others can compete by doing great HW/SW integration as well. Competing via excellence is most emphatically NOT a problem.
Google will be very tempted to design a great
iPhone compete device
Past experience shows that Google doesn't have it in their DNA to build something akin to the iPhone. And the iPhone isn't great just because of how it feels, it's the customers service too. It would be stupid if they tried.
No, your best bet for an iPhone killer is Samsung, if only they would pull their head out of their ass for a moment and realize that the SG II is a disappointment as far as software goes and they should just install the original Android on it. Samsung should just focus on their strengths and let Google worry about the software.
This is Google's best approach - their stated goal for Android was to increase competition in the mobiles market. This strategy worked well (after all, their products are now distributed on most smartphones sold, what else could they want?) and they should just continue this strategy with Motorola -- and let Samsung and HTC compete directly with Apple, making Motorola release good products from time to time, just to keep them under fire.
the Nexus device gets a lot of press as its the first out of the gate with the new build, but realistically, even if that remains as they say it doesn't seem like it would matter much if Google does the rest of it right -- meaning stock Android, and Google updating the SW quickly and over decent time interval.
It seems most likely to me that the Nexus program will remain in place, but Motorola will have multiple "Nexus" type phones in the way that matters to consumers. Not first always, but with all the other properties of the Nexus. At least I hope that is where Google take this. It seems unlikely they would skin Android, and I'd hope they act as best of class in the SW update part of things.
Lots of interesting things here. This would make Google the #1 set top box provider in the country. I'm sure the mfg doesn't have too many degrees of freedom there, but still interesting.
"My son is going to have to bid to get the contract to build the new city building, just like anybody else. He will be on equal footing."
I won't believe it until I see a regular pattern of Moto not getting picked. That goes against too much human nature.
Equal footing in the bidding process doesn't mean that on average everyone gets an equal split. If Moto or any other company deserve to win the bid they should win regardless of how many times they've won it before.
A) But they didnt have to compete with Google so they have a new competitor
B) There is a lot at stake here, a good solution would be to donate android to an independent "Android foundation"
D) Still, google's phones will always be one step ahead with technologies that are hard to compete, like voice recognition, navigation and search.
In any case this could be a phenomenal move, and may even be a big boost for android tablets and other embedded devices, an unexploited area. It sounds like Google would like to try android on anything from cars, tvs and washing machines, but 3rd partners were unwilling to take the risk. Now they have their own hardware division.
B) a foundation would be either a total facade for the current status quo (i.e. Google controlling everything Android), like the JCP is, or would be a really bad idea -- after all, if these phone makers could have created a good smartphone platform, they wouldn't have needed Android in the first place
D) not necessarily; currently Google's partners have access to the latest Android developments before the public release. And I don't think stuff like voice recognition, navigation and search requires special hardware, otherwise all the software and apps do get released.
I actually think that Android phone-makers will be happy, because it is not in Google's interests to fuck up the Android ecosystem just so they can sell their own phones. They are not and never will be like Apple, they will never enjoy the huge profit margins that Apple does -- it is in their best interests however for Google's apps to be the default on all mobiles.
A. They already had to compete with Motorola, so they haven't lost or gained a new competitor.
B. They don't pay for Android so Motorola hasn't gotten some new financial edge. Google just has to ensure that all companies still get source releases at the same time. What they do with them is up to them. (aside: I expect we will see MotoBlur disappear with some of its key features rolled into future Android releases)
C. This will allow Google to protect Android much better which is very beneficial to their bottom lines, especially if it keeps patent licensing costs off of their products.
D. Google just has to be sure they don't play favorites but from what I have seen up until now they have been good about that.
E. This may have just brought the competition for who gets to build the next Nexus to an end. (unless the next Nexus is already basically "done" at another partner company)
I think they can get this right... and now hopefully we can get a whole line of nice Motorola hardware with current Android and unlocked boot-loaders, etc. I might have to reconsider the Droid 3 again (more like Droid 4 one day, since 3 is already in the wild as is)