Posts Tagged ‘Comcast’

By now most readers will be aware that Google is buying Motorola Mobility. I started to write about this when I first heard the news but I wanted to think about it and explore the implications and potential reasons. Time is up. Here are my thoughts.

The most straight forward reason is patent defense. When Google lost out to Microsoft and Apple in the bidding for the Nortel patent portfolio it left Google in a very bad position. Android violates several of the Nortel patents. Google launched an offensive claiming Apple and Microsoft were using patents, as opposed to compelling solutions, as a way to attack Google. We must remember that Google also bid for these patents and, had they won, would have probably used them against Microsoft and Apple. Furthermore, an offer to join with Microsoft and Apple in acquiring the patents was rebuked by Google. If the purchase of Motorola Mobility is indeed a defensive play then this is nothing more than another round of that old patent game “I’ll cross license mine if you will cross license yours.” Considering the large amounts of cash Google is sitting on, this might be a very sensible move.

Could there be more to the acquisition than patents? Google has made cell phones in the past when it was jump-starting Android. But, should they be a cell phone producer? In the PC space Apple has been a small closed ecosystem compared to the loose and very diversified Microsoft ecosystem. The result was a larger, cheaper and more diversified hardware and software ecosystem for Windows (Microsoft) compared to OSX (Apple). Recall that, at one time (Apple II), Apple dominated the desktop space. The diversity of the Microsoft based environment resulted in Apple becoming a niche player. Today, despite Apple’s early lead, there is a strong possibility that Android will be the Windows of the smartphone and tablet space. I see no reason for Google to try to “out Apple” Apple. Think of the strange relationship that is going to exist with companies like HTC and Samsung. In the recent past, market pressure pushed those companies towards Google. Apple was closed to them. Microsoft Windows Phone 7 was open but Nokia was clearly customer number one and in a special, preferred customer, position. Now Google is not just a supplier but a competitor. I think Microsoft is secretly happy about all of this. It makes their relationship with Nokia look tame by comparison.

Could this be herd instinct? Apple makes the iPhone. HP bought Palm. Microsoft is in bed with Nokia. RIM makes Blackberry. Perhaps Google fell victim to the “everyone else is doing it” syndrome. Somehow I doubt it. The people at Google are nothing if not sharp. Still, it has happened at this level before.

One possible reason for the acquisition might be to push NFC. NFC requires that very specific hardware be placed inside smartphones. The Motorola Mobility arm of Google could push this. However, I think NFC can be effectively pushed without making the phones themselves. I don’t buy this as a reason for the acquisition.

That brings me to one final reason for the purchase – set top boxes. I have discussed how the real goal is a very broad and unified ecosystem. The TV is a big part of that. Google could merge GoogleTV into the Motorola Mobility set top box units. As a competitor in the set top box space they might be in a good position to drive their ecosystem. I have argued before that consumers don’t like extra boxes and hence AppleTV and even external game boxes (PS3, Wii, Xbox) are interim solutions. The one external box that has some life left is the cable box.  Google could merge the cable box, GoogleTV and Android games into one piece of hardware. Moving between cable product, internet streams and applications could be made very unified and essentially transparent to the consumer.

Summary: This acquisition is all about the patent portfolio and using it as a counter to Apple and Microsoft. However, Google is left with a hardware business that competes with key customers.

My recommendation: If I was willing to tell Apple what to do then why not another multibillion dollar company that is highly profitable? So Google, here is what you should do. Sell off the mobile device arm of Motorola Mobility but keep set top boxes. Keep all of the patents and just license them to the entity acquiring the cell phone business. Finally, merge GoogleTV into the cable box and make GoogleTV fully compatible with Android games. Use your new found cable box presence to drive a broader ecosystem that is more unified than what consumers have now.

When most people talk about device convergence they are talking about the smartphone. There are actually parallel convergence trends at play and they will eventually run into each other. I mentioned the TV having the potential to pull the media player into the set itself. Now I want to step back just a little and look at that physical ecosystem surrounding the TV. There is the cablebox, the game console, perhaps a media player and maybe even a Slingbox. My system has a TV with a DVR (cable box), Wii, PS3, and a Slingbox.At one time there was also a Netgear media player but that was a less than positive experience. There are two things that immediately stick out with respect to my setup. First there are a lot of wires. Secondly, a lot of capability exists only in one place. The cable box in the bedroom lacks a DVR. I can’t play content recorded on the living room DVR in the bedroom. U-verse would solve that issue but I would have a slower internet connection. I can’t play Wii or PS3 games in my bedroom; nor can I watch Netflix or stream movies off my file server. The tough question is how all of this can be merged into one device, the TV, that can be replicated in each room and networked together. The path is going to be jagged and have many different paths along the way. This means it is a major trend. Let’s outline some potential pathways to my goal. I’m going to start by throwing some things out. The first is the DVD player. As streaming gets better, services like Netflix will diminish the importance of the DVD player. I’ve already discussed the media player merging into the TV. AS for the DVR that’s more difficult because of resistance form companies like Comcast together with Hollywood. I can dream of a Comcast box that resides on my network and serves up video to all of my TV’s while also being my cable modem.  Eventually there will be a single high bandwidth connection to the internet and all movies and TV shows will be streamed to your TV. What about gaming on the Wii and PS3? That’s harder. There is a path but it happens in a couple of stages. Look at how iOS devices are attacking portable gaming. Now look at Apple TV. Why oh why can’t it run apps? It cries to be a big screen version of the iPad.  Well, your TV won’t take touch input but it could take input from your iPhone or iPad. Apple TV doesn’t have to be a great system for the serious gamer. The PC is the serious platform for those guys. The PS3 and the Xbox 360 fit somewhere between the Wii and the PC. Similarly, Android or Google TV could perform the same function running on a or a media box. Once Apple TV has games the only remaining step is to integrate it into the TV. The same is true for the Google platforms. Oh yeah, I haven’t covered the Slingbox. Once your media streams over the internet when you want it rather than on a fixed time schedule, the Slingbox becomes superfluous. It feels weird to write that because, right now, I love my Slingbox and can recommend it highly. However, times keep changing and I don’t see it surviving.