Google and Motorola: Will it Blend?

 

The shockwaves of the recent announcement that Google is buying Motorola Mobility, the handset and device division that spun off from the Motorola mother ship not long ago, will continue to ripple far and wide. There are several reasons why this could be a great boost for Android, but also some major concerns about getting the two companies and their product lines to blend well. 

There’s much debate about the reasons behind the acquisition. Was Google looking to boost its patent portfolio to create a Mutually Assured Destruction/Mexican Stand-off scenario (pick your metaphor) in the midst of the tit-for-tat patent suits going on right now? There are arguments on both sides about how worthwhile this gambit is (Yes it is! No it’s not!). There are also arguments that patents are only a piece of the puzzle, and that Moto’s hardware business was also a major part of the logic. I fall into this camp.

Blend the Ecosystem

It seems like years ago that Google’s first phone, the Nexus One, was launched, but it was only 18 months ago. I wrote at the time:

Google’s introduction of Nexus One, a phone to truly call its own, is a completely necessary move for the company. Only by taking ownership of the whole user experience will Google really be able to prove the value of its Android platform.… The lackluster success of the early Android phones has surely made Google realize that they need to take a much stronger role in order to bring all the pieces of the experience together. The catch-as-catch can approach they’ve had so far just isn’t going to cut it. Fragmentation is a death knell for a product like this at this stage of maturity. Google needs to lead the charge with an integrated platform until the experience gap is fully closed. Then it can afford to loosen the reins and let the handset manufacturers, carriers, and third party developers go do their own things independently, safe in the knowledge that they will all come together to create something interesting and valuable for customers.

The underlying rationale here, as I described in that earlier article, is that early in a category’s development (e.g. smartphones, tablets), complex devices, platforms, and ecosystems under-perform user expectations unless they are highly integrated. This creates a gap between the experiences that products can provide and what people want (see diagram). This gap can take time to close as the technologies and platforms improve, and instead of creating a finely blended smoothie, you get a lumpy concoction that’s unpleasant.

Making the platform or ecosystem modular and open too early prolongs the time that a gap exists. Microsoft’s phone OS always suffered from this until a sharp change of course with Phone 7, and Apple quickly trounced them with its integrated offering. The Nexus One was Google’s first step in rectifying its own initial misstep.

The Motorola Mobility acquisition is a huge step further along that progression. Google clearly still feels that the fragmentation and variability of third-party hardware makers (with the frequent intervention of carriers seeking special interfaces, additional apps, and in some cases removing Google’s native apps and services altogether) is leaving money on the table. To be fair, some of the Android handsets have been very good—the Motorola Droids have consistently been strong players—but then there are other products that just completely send the Android/Google brand into the toilet.

This is a cycle that gets repeated in many industries, and the integrated/proprietary vs. modular/open balancing act is one that many companies struggle with as they make strategic choices on investments, alliances, and how to deploy complex products and ecosystems. I devote a significant amount of time to this in my book, Innovation X, as it’s a fascinating area.

The Motorola acquisition also strengthens Google’s position in the new diversity of digital ecosystem touchpoints: set-top boxes, broadband connected TVs, home networking, and phone-based payments (digital wallet). Motorola Mobility already plays in these (mostly immobile) areas, which is interesting to Google because the lines between these products and phones and tablets, in terms of services and content, are increasingly blurred. It’s all about the multi-screen experience today, and making what happens in your home work seamlessly with your devices out on the move. Anybody’s who’s worked in the “smart home” market knows that it’s more dumb than smart, as getting devices to talk together well is really difficult today. Google would love to solve that problem, and is one of the few companies that has the scope and clout to pull it off – even more so now that it has a major player in the hardware endpoints.

Will the Cultures Blend?

Google has said that it will keep Motorola Mobility as a separate company. No doubt this is partly to assuage fears of its other hardware partners that they will be kicked to the curb in favor of the in-house brand. (HTC in particular finds itself in a tough spot now, as both its OS providers now have favored hardware partners—Microsoft/Nokia and Google/Motorola. This latest merger may well push some companies back into the Windows camp as they hedge bets.)

Should Google merge Motorola more fully into its existing business units? In a word: No.

As Google discovered with its early stumbles with Nexus, designing and selling hardware is a really different business than online services, advertising, and software development. Google is amazing at many things, but this does not appear to be one of its talents. Better to keep it under a different brand, with a different team working with the processes it needs to. Which is not to say they should not seek to influence one another, and that there aren’t things Motorola could learn from Google about innovation and development.

Michael Mace has a jaundiced view of this combination:

The same business practices that made Google good in software will be a liability in hardware.  Google’s engineers-first, research driven product management philosophy is effective in the development of web software, because you can run experiments and revise your web app every day in response to user feedback.  But in hardware, you have to make feature decisions 18 months before you ship, and you have to live with those decisions for another 18 months while your product sells through.  You can’t afford to wait for science.  Instead, you need dictatorial product managers who operate on artistry and intuition.  All of those concepts (dictatorship, artistry, intuition) are anathema to Google’s culture.  Either Google’s worldview will dominate and ruin Motorola, or worse yet the Motorola worldview will infect Google.  Google with Motorola inside it is like a python that swallowed a minivan.

To put it another way, I think Google has about as much chance of successfully managing a device business as Nokia had of running an OS business.

I’m not as skeptical as this, but in my view, assuming that Google is not just going to flip Motorola and spin it off again after it’s got the patents, this brings up the biggest question: can the two cultures get along? Motorola is famously stodgy, slow to make decisions, conservative. How will this blend with the more freewheeling West Coast intensity of Google? Maybe the Mobility division was already the wild-and-crazy-guy of Motorola, but I still find it hard to believe that there won’t be significant challenges here.

So far I haven’t seen anyone mention this, which is odd since cultural fit is a) usually one of the first things brought up in large corporate mergers, and, b) the leading cause of them failing.

Things will become clearer in the next few months about what Google plans to do with this acquisition. I think there are some compelling benefits for both brands, but the culture blending question is going to be as big a challenge as anything.

Microsoft Finds its Innovation Mojo

Microsoft is a bit like Tiger Woods at the moment - industry darling that became too dominant, then had a fall accompanied by a thick layer of schadenfreude, and now is trying a come-back. Microsoft is being replaced in the big-bad-wolf department by Google and Apple and finds itself in the odd position of being an underdog, and people love to root for underdogs. In fact I’d say that Microsoft is further ahead on the come-back trail than Tiger is if you look at some of its recent announcements: Bing,Windows Phone 7, the Courier journal concept, and the just-announced IE9. Something interesting is brewing in Redmond.

(And for context, I’ll say that I’m a Mac user for 20 years and in the past have been quite critical of Microsoft’s approach to innovation. But I also like to recognize credit where credit is due, and that’s the case here.)

There are two things going on with their recent announcements that are really interesting, and which hint at better things to come still.

Finding its Innovation Voice
There is a clear editorial voice to what they are doing. In the past Microsoft was often criticized for producing warmed-over versions of other people’s products (the perrennial Windows vs. OS X war), or for taking a “kitchen sink” approach that just stuck every feature imaginable into a product without thinking about how they gelled as a whole. Now they are creating products with distinct points of view that do not try to simply ape other successful ones, or out-do them on feature lists. You may or may not like exactly what each product does, but at least there is differentiation and an emerging personality to what they are doing, something Microsoft has long been lacking.

Systematizing Innovation
They have been able, to an extent, to systemetize an approach to innovation that began (it seems) with the Xbox team. The Xbox, especially the 360, established a fresh, distinctive approach to development that had been lacking at Microsoft. Innovating on behalf of customers rather than by linearly extrapolating what they say, consideration of a whole ecosystem, and then taking responsibility for the whole user experience in that ecosystem.

We see threads of this Xbox approach showing up in most of the new generation of products - Bing, Windows Phone 7, IE9, and Courier. (These are all products more or less at the edges of Microsoft’s business, Office and Windows have not yet been affected so heavily. In fact the Windows advertising campaign flaunts the notion of just doing what customers asked, which these other products are definitely not doing.)

It was looking for a while that the Xbox might just be a one-off innovation high-point for Microsoft. Motorola experienced this with the Razr - a game-changing product that they weren’t then able to convert into a broader portfolio and leadership of the industry. They could not systemetize the innovation process. After a couple of years, other phone manufacturers caught up to Motorola and today they are way back down in the rankings again.

Succeeding once at innovation is one thing, and can just be a matter of luck sometimes. Succeeding at it over and over again the way that Apple and Google do is a whole other ballgame. If current trends continue, this is what we are seeing going on at Microsoft. Given their size, resources, reach and clout, this could lead to some impressive stuff.

The Proof is in the Pudding
Windows Phone 7, Courier and IE9 all have one other thing in common - none of them have been released yet. They look at the end of the day there can be a lot of slip-ups between nice demo and game-changing shipping product. Microsoft has stumbled here before - look at what happened to Vista and Zune. But they’ve taken their lumps and perhaps now are ready. If so, we could be seeing a huge resurgence from the company which, after all, still has huge resources, dollars and reach. If they really can get their innovation groove back, from conception to implementation, then they will be a massive force to be reckoned with once again.

Apple is the Zeitgeist Company

The launch of the iPad yesterday put an exclamation mark on an increasingly obvious point: Apple is the company that has captured the cultural zeitgeist. The massive hype leading up to the event - apparently achieved in a groundswell with very little effort on Apple’s part - shows that they really are the “It” company right now.

Not so long ago, Google claimed that position. The amount of press ink (literal or virtual) that Google has been able to create every single day for the last decade is just astonishing - it is not uncommon to see two or three articles on the same day about some aspect of Google’s business, whether it be a new product or another story about the Googleplex’s free food. No other organization, save perhaps Obama’s election campaign, can claim such a blanket of coverage on such a consistent basis.

But the honeymoon is over and we are in the midst of a mild backlash against Google, and at the same time Apple’s cultural and financial stock has been climbing. No-one sees them as just a maker of over-priced niche products for designery types anymore. They are truly a mainstream mass-culture company that, while focused mostly on consumer electronics, touches into so many other areas of our lives simply because the boundaries between computers, electronics, media, communications and social life have all blurred so thoroughly.

Looking back over the decades, we can see a string of companies that have managed to go beyond being just successful business enterprises and have captured something special in the culture. GM perhaps epitomized this in the 1950’s and 60’s, summed up by the well-known phrase “What’s good for General Motors is good for the country”. GM helped shape the aesthetic and cultural agenda in a way that reached far beyond the automotive realm.

IBM arguably held this position in the 1970’s, and Microsoft in the late 80’s and early 90’s, to be superseded by Google at the turn of the millennium. But none of the tech companies besides Apple have quite been able to win hearts in the same way GM did.

But one thing that all these companies have in common is strong leaders who are not just good business thinkers but are also active in the weeds of product development. Think of Harley Earl at GM, Thomas Watson Jr. at IBM, Bill Gates at Microsoft, Sergey/Larry/Eric at Google, and of course Steve Jobs at Apple. These men all recognized that there is a clear connection between a company’s strategies and the details of the products they bring to market. Ignoring the latter is a good way to scuttle the former.

The iPad is but the latest result of the hand of Steve (with help from a huge team of people of course). The apparent ease with which hype appeared around it is in fact no accident: Apple has invested enormous amounts of work over the years to build a reputation around its products and brand, and that investment is now paying off in spades. Jobs himself is well tapped into the cultural zeitgeist, he transfers that to Apple’s products and strategies, and in turn the company comes to reflect and even steer the zeitgeist.

It’s not magic, but it is hard to do. Very hard. If history is any indication, there is room for only one such company at a time to hold this pre-eminent position, and their time in the sun is temporary. Apple’s winning streak will come to an end, but in the meantime they deserve all the credit they get.

Google's Challenges

Interesting article by Diane Mermigas at Seeking Alpha about the challenges Google is facing as it diversifies into more and more areas, and it rumbles over the line dividing plucky upstart to hated giant monopolist:

Like past monoliths of new growth industries, Google appears to be invincible. But Google is vulnerable just because it is thinly spread in a rapidly changing marketplace where rivals are eating away at the edges and fighting for turf. A major shift in technology or consumer behavior could alter the playing field, just as it once did for broadcast TV networks, music companies, telephone companies and typewriter manufacturers.

Google is locked in its fiercest battles over search, email, office applications, social networking, portals and brand advertising, Web browsers, mobile operating systems, ad servers and exchanges, and operating systems.

Mermigas goes on to list a number of other challenges including: real-time social search, Microsoft/Yahoo search and advertising, digital books, streaming video and video search, mobile search and mobile applications and advertising.

Read more >

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