On Google, Motorola, Microsoft and Apple

Google has sold Motorola Mobility to Lenovo at some kind of loss, prompting a few quick observations.

It matters little whether Google’s Motorola transactions were profitable in themselves. Google can afford it. This is all about strategy and the long term.    

Why did Google acquire Motorola Mobility? Primarily for the patents. The fact that it pushed Google into competing with its Android licensees looks now to have been an unfortunate side-effect. Google has shown no inclination to become Apple and make a virtue of controlling the entire stack from device hardware to web platform.

Why did Google sell Motorola Mobility (though not all its patents)? Maybe because it was trading at a loss, but more because there was no strategic benefit, given that it wants to foster its relationship with OEM vendors rather than undermine it.

Google is not a hardware company. It is an advertising company, but it is now more accurately described as a data company, with advertising the tax it imposes to pay for those data services.

Why does Apple remain a hardware company and not license OSX or IOS to third parties? Because it makes a virtue of controlling every detail of the user experience, and because it enables it to charge a premium price, since to get the software you have to buy Apple hardware (yes there is hackintosh but that is not mainstream).

Why is Microsoft doing more hardware alongside Xbox, with Surface tablets, and most recently with the Nokia acquisition? Because its hand was forced. The Windows brand has been damaged by too much poor quality hardware accompanied with too much trialware put there for the OEM’s benefit (it gets paid) rather than for the user’s benefit. There was too little innovation around tablet hardware for Windows 8. There was too much designing down to a price rather than up to a standard. Hence Surface. As for Nokia, the future of Windows Phone depends on it, since it has most of the market. Microsoft could not risk Nokia turning to Android or dialling back on Windows Phone.

Should Microsoft follow Google and dispose of Surface and in due course Nokia? Maybe, but not while the strategic importance of those two businesses remains.

If Windows Phones develops such a strong ecosystem and diverse hardware base that owning Nokia is no longer necessary, then I’d guess that Microsoft would be glad to dispose of it.

What about Surface, is it still needed? The case is less clear. Some hardware partners, like Lenovo, are now doing a reasonable job with Windows 8 hardware. That might suggest that Surface has done its job. Then again, there is the Windows RT problem. Only Microsoft and Nokia/Microsoft offer current Windows RT devices; and Windows RT is strategically important as the version of Windows that is low on maintenance and high on security, like Google’s Chromebook.

Note that Microsoft has not as yet started to offer conventional laptop or desktop PCs. The implication is that its primary goal is not to compete with its hardware partners, but to do something different that will move Windows forward.

 

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