A Viable Contender in the Mobile Ecosystem: Google and Motorola

Yesterday’s announcement that Google is purchasing Motorola’s mobility unit for $12.5B created a storm of speculation and musings on why the deal was a “must have” for Google. Just weeks ago, Google lost the bidding game on Nortel’s mobile patent portfolio to Apple, RIM and others. Their bidding strategy, which included monetary amounts reflecting scientifically-significant numbers, showed a Google that did not seem serious about winning – and stopping just inches short of mocking the process. The Motorola patents are a solid win for Google in this deal, but patents are only part of this equation. Here’s why this deal works now, and in the future for Google:

Strong platform to further develop a unified Android

Google may be enjoying rocket-propelled growth of Android penetration in the marketplace, but it’s fractured. They remain the only viable competitor to Apple for an “ecosystem” play, encompassing hardware, software, apps and value-added services. Since Android is an “open” platform, many iterations exist. The transaction will give Google some leverage and a channel for unifying Android in the future, and provide a more cohesive baseline for developers and consumers.

Massively reduced cost in developing tablets and other form factors

Google has a less than stellar history in bringing hardware to the marketplace. Motorola knows how to effectively and efficiently design, develop, manufacture, and launch winning devices on a global scale. This expertise will serve Google well in the mobile space initially, and perhaps on an expanded scale as Google pursues more in-home, lifestyle strategies for creating revenue – such as Google TV.

Supplier and channel relationships

Motorola knows the supplier space well, and represents an alternative relationship to the relationships Google has fostered through Android and its mobile applications. This transaction should add a needed dimension to Google’s interaction with the players who bring the ecosystems to market, and will add leverage to future opportunities for pushing Google-based standards and revenue initiatives. Remember, Google still remains a search technology and advertising company at its core. This relationship expertise, and the acquisition of the executives who built the relationships, will be critical to Google’s success.

Access to the Motorola Solutions business

Google has plenty of options in bringing applications, cloud services, and business solutions to a broader audience. The Motorola Solutions business has enjoyed strong results and maintains a potent base of clients in the private and public sectors, giving Google a solid path of entry if terms and conditions can be made attractive for both parties. Also, for Motorola Solutions, Google represents a much less expensive think tank for experimenting in unified communications, collaboration and social media strategies. There is plenty of upside for both organizations to make this compelling once the deal is complete.

NTP Sues Apple, Google, HTC, LG, Microsoft and Motorola

The company that sued BlackBerry maker RIM for patent violation and incited enterprise panic in 2005 is at it again.

Richmond, Va.-based NTP Inc. filed suit July 8 against Apple Inc., Google Inc., HTC Corp., LG Electronics Inc., Microsoft Corporation and Motorola Inc. in federal court. NTP alleges the six companies infringed on eight of its wireless e-mail delivery patents and wants the companies to pay licensing fees for using the technology.

There’s precedent from NTP’s suit against RIM: The BlackBerry maker was found to have willfully infringed NTP’s patents and the verdict was affirmed on appeal. RIM paid NTP $612.5 million to settle its patent infringement lawsuit in March 2006, which included a perpetual, fully paid license going forward.

If the court finds NTP’s new claims to be valid, the six manufacturers and developers named in the suit must pay the fees or cease use of the technology.

Telwares believes settlements and fees are the most likely outcome. As in the RIM case, NTP has little interest in stifling smart phone sales or use; its revenue will come from licensing fees.

So enterprises shouldn’t worry about losing their iPhones, Android handsets or Windows Mobile phones. The real question is whether licensing fees will increase device and service costs for enterprises, according to Telwares experts.

NTP is a privately held intellectual property firm and claims its founder, the late Thomas Campana Jr., invented wireless e-mail in 1990. NTP already has licensing agreements with RIM, Good Technology Inc., Nokia Inc. and Visto Corporation.

“Use of NTP’s intellectual property without a license is just plain unfair to NTP and its licensees,” says Donald Stout, NTP’s cofounder, in the company’s press release. “Unfortunately, litigation is our only means of ensuring the inventor of the fundamental technology on which wireless e-mail is based, Tom Campana, and NTP shareholders are recognized, and are fairly and reasonably compensated for their innovative work and investment. We took the necessary action to protect our intellectual property.”

Motorola 4Q08

The facts: Motorola loses $3.6B, suspends its dividend, CFO leaves business, 1Q09 loss projection guidance running 2x analyst expectations.

I distinctly remember sitting at a breakfast conference in New York City just a few weeks after the launch of the Moto RAZR.  It had every ounce of the drama that you would expect from something truly original, maybe even groundbreaking. So let me ask you – when was the last time we felt that kind of anticipation? iPhone. Android. Bold. Storm.

Given that list, is it surprising that Motorola posted a dismal 4Q earnings report? Not really. There’s not much that wasn’t anticipated. The size of the loss, and the 1Q09 guidance were far worse than analysts expected. However, I will go back to the original sentiment: when did you last feel market anticipation, similar to the iPhone, from a Motorola product? I would have to go back to the time of Geoffrey Frost, the Motorola CMO who died unexpectedly in 2005. It is not a well kept secret that he was the driving force behind the MOTO craze. Soon after his passing, the buzz stopped and it seemed as if the creative juice was gone from the organization. I think the buck stops here for root cause – this is unfortunate for not only Motorola, but the marketplace.

We will wait and see what happens in Q109, and if they an execute against the revised plan.