Why Google Really Bought Motorola - Business Insider

Google just came out with three new devices, the Nexus 4, 7, and 10?a smartphone and two tablets running its Android operating system.

None of them were made by Google's smartphone-hardware business unit, Motorola Mobility. They're made by Samsung, Asus, and LG.

John Lagerling, director of business development for Android, negotiated the deals with hardware makers. Motorola has no special advantage, he told the New York Times.

"From my perspective as a partnership director, they are another partner," Lagerling said.

Just not a partner deemed worthy, at this time, of making a device that carries the Google brand.

So why did Google pay $12.5 billion for Motorola, if not to get an integrated stack of hardware and software? Read Lagerling's explanation (emphasis added):

The way I understand it is, it?s mostly about the patents, the way you can sort of disarm this huge attack against Android. We talked about prices. There are players in the industry who were unhappy about more competitive pricing for the consumers. They want to keep the prices high, they want to force the price to be so high that operators have to subsidize the devices very highly. That?s not only the Cupertino guys but also for the guys up in Seattle. They want higher margins, they want to charge more for software.

We simply believe there?s a better way of doing it without extracting that much payment from end users, because there are other ways to drive revenues. Patents were used as a weapon to try to stop that evolution and scare people away from lower-cost alternatives. And I think with the Motorola acquisition we?ve shown we?re able to put skin in the game and push back.

(The "Cupertino guys" are Apple and the "guys up in Seattle" are Microsoft, in case Lagerling's oblique references to his competition weren't obvious.)

Now, maybe Lagerling has to bash Motorola a little, downplaying it to keep other Android smartphone manufacturers in the Google camp. But we think that Google's made it pretty clear that it doesn't think much of Motorola's hardware. Motorola has a set-top box business, for example?but that doesn't seem to be a factor in any of Google's TV plans.?It set up manufacturing on the Nexus Q, a quirky video-streaming device?even though, in retrospect, it probably could have used some help, since it ended up putting sales of that device on hold.

When Google closed the Motorola deal, CEO Larry Page praised Dennis Woodside, the longtime Googler he put in charge of the deal. But Woodside's first big hardware launch was a dud. The company is proving more expensive to fix than Google thought. And Motorola dragged down Google's most recent earnings.

Maybe Google will eventually use Motorola to create mobile devices with deeply integrated hardware and software, the way Apple always does and the way Microsoft has started to do with the Surface. But right now, everything Google is saying and doing indicates that Motorola's not up to stuff. It's just a pile of patents, with a flailing business attached.

Source: http://www.businessinsider.com/google-motorola-john-lagerling-android-patents-2012-11

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