Andrew  Burke

Google and Motorola - would you Adam n Eve it?

Imagine the scene, you are in the Garden of Eden-net, being tempted by the Search Serpent to eat from the Tree of Knowledge of Good and Evil in exchange for great wisdom. Do you side with the serpent, become all knowing but be condemned to a lifetime of servitude or stay pure and battle through using only your own knowledge and capabilities? Such is the biblical dilemma facing Motorolas customers

Google and motorola and the temption Partner with who must be the best Internet innovator around and hope to ride on Goggle’s coat tails. Or choose your own path and pray that you do well enough to compete….

We have been aware of Google’s interest in Motorola’s patent portfolio for a while. Over 17,000 of them (plus 7,500 pending) and I’m sure these will offer decent ammunition in their Apple/Microsoft/Oracle war. The question for me is whether Google actually wants the rest of Motorola Mobility’s assets or they just come as a consequence of the patent portfolio. So let’s argue that this cash-only deal is also about acquiring Moto’s manufacturing, hardware and software capabilities and Google doesn’t just flip them to restore their cash balance back towards the mid-thirty billions of dollars.

As you would imagine, I’m going to focus on Moto’s Video Solutions activities and not on the mobility side. Let’s first define those assets. Most significant is the video infrastructure equipment and the broadband, convergence, data, voice and video CPE. Their IPTV set-top boxes power a significant number of Tier 1 Microsoft Mediaroom initiatives worldwide – including at&t – and their hybrid STBs support both Comcast and Verizon’s TV activities. There are the various solutions acquisitions like Securemedia (conditional access), Bitband (video server technology), Dreampark (middleware) and not forgetting Google’s earlier acquisition of Widevine (conditional access). So at first glance a pretty compelling IPTV solutions portfolio but all are sub-scale niche solutions compared to Google’s significant reach. Google has tried to enter the consumer set-top box market previously with the ill-fated Sony and Logitech powered GoogleTV solutions. Both failed to excite the market after the major networks (ABC, CBS, NBC) blocked their content and the rest of the functionality was not compelling or usable enough – leaving Sony mad and Gerald Quindlen (Logitech CEO) out of a job. It also put the TV service providers on notice that Google is after those early adopter cord-cutters in an attempt to start its push to dominate TV advertising and embed Android across all devices.

Apple is the aspired model – a retail device manufacturer that has expanded successfully into becoming the defacto standard for content retailing online with iTunes and has vertically integrated with an SoC manufacturer (PA Semi) to control most of its hardware operations dependencies and create its own unique hardware platform. Google, synonymous with search and destroying all competition in its wake, has expanded firstly into mobile internet – inventing the Android operating system on its way. It has moved into content protection with the acquisition of Widevine and now is a device manufacturer (mobile and TV) with the Motorola acquisition. Both have the infrastructure end to end to distribute OTT but neither generates any content themselves. Buying a network would be the obvious next move for either Google or Apple, but will the SEC allow Google now they have acquired Motorola? Remember Comcast was forced to divest all control of Hulu when it acquired NBC to prevent an entertainment monopoly emerging and this deal may prevent Google from pursuing that path.
larry page comments

However, Larry Page in already setting his stall out in his blog – “With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.” But it is the control of the living room that is really jazzing this strategic heavyweight. And he must break some hearts to get there. Most OEMs (Cisco, Pace, Sagem etc) will now view Google as moving from partner to competitor but that may not be a great problem for Google. Google’s influence extends to the consumer themselves and the latest set-top box technology will allow those consumers to choose whether they want to use Google’s multitude of services and not worry about the OEM’s support or otherwise.

The more difficult relationship to square will be Motorola’s service provider customers. They are not sure whether Google is friend or foe and this acquisition will only accelerate the need to make that call. Google will quickly start to embed Android and their services into their living room technology and I would expect a more compelling GoogleTV 2.0 to hit high street stores fairly soon. So does a customer like Comcast continue to use a technology supplier that is set to compete with them in retail? Sitting in Google’s shoes, I would set my priorities as emulating and beating the Apple, n-screen, end-to-end model first and worrying about placating the existing Motorola customers a distant second. At the same time, Motorola’s current customers are struggling to settle on their own OTT strategy and are fully aware that this innovation giant is both fleet of foot and frighteningly well resourced. Where is their safe haven now? Apple – no too proprietary, Microsoft – no too closed and inflexible, Samsung/LG/Sony – maybe but too limited in distribution and capability, Open Standards – almost certainly and strive for ubiquitous distribution (the little and often approach on multiple screens). HTML5 is a clear opportunity here on top of a Linux base and leverage the power of the cloud to compete against the would-be dominators.

I know that a good broadcast infrastructure (cable, satellite, digital terrestrial) will defend the TV service provider’s position for a good while to come. The challenge though is where those same customers go for their OTT ‘fix’. A revised GoogleTV solution could be a classic ‘cuckoo’s egg’ – planted in the home to offer an Internet video value-add but over time becomes the dominantly viewed device that pushes out the incumbent PayTV solution from the living room. This could be accelerated if Goggle’s live broadcast trials go mainstream and go ballistic if they are successful in buying Hulu!

So will PayTV play the OTT game, go for an open multi-device approach, discover the right business models and deliver exciting solutions and services to their customers? Or will we all be subscribing to Gogglerola services in the future and hailing Larry Page as the new Rupert Murdoch – minus the phone hacking of course…..


COMMENTS

Posted by Charles Clayton, 19 August 2011

They just teamed up with a company that has some sound business principles and huge assets. G has won its battles and has grown through providing good products and services. It is also quite self regulating unlike many other corporates. I don't have a fear of large companies and I think that trying to portray Google as evil is a waste of paper and bandwidth.

Posted by Neil Wilson, 20 August 2011

Does google destroy value while is destroys competition?


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I am currently Chairman of Crisp Thinking, Non-Executive Director of StaffShare Ltd and a partner at Snowy Road Ventures. Previously, I was CEO of Amino Technologies plc after being a non-exec director at Amino and Rawflow Read Andrew 's full bio

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