Staying off-topic: More Google-Moto-Apple

Post by
Scott Francis

So no sooner had I written about Google's unnecessary surfeit of enemies than Google goes out and acquires Moto, likely creating a few more difficulties in the marketplace.? On the surface it seems to:

  1. confirm how weak Android's patent position really was
  2. validate what Apple's execs and fans have been saying about the value of integrated over fragmented ("open") at least in the mobile space.
  3. calls into question the whole android venture.

Maybe #1 and #2 are obvious and don't need further explanation.? But for #3, Horace Dediu of Asymco asks the question I've been asking: "Is Android profitable? The debit column just increased by $12 billion. Good luck with those ads."

Seriously.? Google has been saying Android is profitable.? But I think you have to measure the credit part of the ledger as revenues accrued by Android that would not have otherwise been accrued:

  • Ads on Android that arguably would not have otherwise been sold on another platform
  • Licensing fees (I don't think there are any)
  • Etc.

Horace Dediu goes on to give a better explanation than I did as to the perils Google has entertained:

The lesson (and warning) was that a licensor that is also a licensee makes other licensees uncomfortable. The supplier is also a competitor. This is classic channel conflict and never ends well.

Apple and Microsoft have to be pleased that their patent strategy just caused Google to spend $12B.? Android is certainly no longer free to Google - whether it is free to handset OEMs or not.

John Gruber's Daring Fireball really digs into all the details, and if we're wondering whether there was a real cost to Google for taking the path of aggressively pursuing Android:

Look at Google?s financial results. They reported $8.5 billion in net income this year, and $6.5 billion last year. That?s for all of Google. They?re offering $12.5 billion for Motorola. So Google just spent almost two years of its profits to buy a second-rate phone maker that itself is unprofitable,1 almost went bankrupt, and is arguably only the third-best maker of Android devices, behind HTC and Samsung.

That definitely puts $12B into perspective.? Nearly 2 years of profit.? I'm not sure that Google wouldn't have been better off, financially, just partnering with Apple and other OEMs and taking a more passive approach to Android.? Still, acquiring Moto may be the right thing to do given where Google finds itself today - the best path forward may be to double down on the Android investment.? But an alternate path would be to make Android more open - by opening up the development process and assets and scaling back Google's own financial commitment to it while letting the community drive (making Android a bit more like Linux in the process).

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