The Android Ecosystem: A Road with One Less Toll Booth?

August 15, 2011

I read “Motorola’s Sanjay Jha Openly Admits They Plan to Collect IP Royalties from Other Android Makers.” I am reasonably confident that the Googlers knew there would be various monetization plays coalescing around the “free” Android operating system. (I almost type “free and open”, but that would be a bit of a misstatement.) Microsoft is charging Android bounties and collecting. One of the goslings told me that Microsoft is making more from Android bounties than from Windows Phone 7, a fact which I doubt. Now Motorola wants to slap another booth on the Android super highway. Here’s a passage that strikes me as important:

If Google loses in this fight, Android vendors might have to pay $60 per device in patent fees eventually. It’s no wonder many people are worried about Android right now. Amidst this Android patent insecurity, Motorola recently started touting the strength of its IP portfolio. Nothing surprising here. Motorola is one of the oldest players, with one of the strongest patent portfolios in the industry.

Google lose? That’s a thought I had not entertained. If the fees become sufficiently burdensome, then maybe the iPhone and iOS start to look more attractive. Nah, Google has anticipated this and has a response.

What was the response? Google made headlines with its “we don’t have much choice” acquisition of  Motorola Mobility. You can read about the deal in the Official Google Blog and then work through the punditry at your leisure.

I selected one write up as representative of the thinking in the Silicon Valley world of business analysis: “Google’s $12.5 Billion Motorola Mobility Bet: 6 Reasons Why It Makes Sense.” Of the six reasons, one resonated with me–patents. The other five sounded off key.

My take is pretty simple. Google missed on the Nortel patent deal. Tactical cuteness backfired and the price tag jumped to $12.5 billion which is Warren Buffet territory. I think the scale is interesting but lacks the type of Buffet genius for big deals.

So what?

Google’s quick and easy “open source” play is now changing direction. There are even more interesting implications for mobile outfits who may be thinking about how to create a mobile operating system with a unique fingerprint. The fragmentation which Google insists does not pose a challenge may also check its technology road map.

Motorola does not arrive fresh and sweet like an ear of spring corn in Illinois. Motorola brings some genetically modified stuff to the table along with partners, management challenges, litigation, and financial challenges. Google remake Libertyville, Illinois, or will Libertyville, Illinois, do what Illinois does best?

Think Motorola’s late entrance into digital phones. Think the Illinois debt. Think about Illinois politics. Oh, think about Illinois’ track record in generating winners in the digital economy. Think about buying a company like Motorola Mobility because of the options, this one was the best of the crop.

I am thinking and I hazard the guess that Google will be thinking as well. My final thought is that the final stage of the Microsoftization of Google is now underway.

Stephen E Arnold, August 15, 2011

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