Tuesday, August 16, 2011

Thoughts on Google + Moto

Google purchases Motorola for 12.5 billion in a defensive move to get Motorola's patents. Motorola has 19,000 employees, Google has 29,000.

The reactions across the board have been about the patents, the employee count, and Google taking a risk with hardware. Highly risky, yadda yadda.

Patents--yes. The rest of it is speculation, of course.

Here's my quick take, for what it's worth:

  • This is not a merger, it's an acquisition. Because of this, cultural issues, employee issues will be minimal. 
  • This is chess, not checkers. They've made the first of a number of moves, some of which are acquisitions, some of which are internal technology, and some of which are partnerships. To look at this as anything but a strategic first step is simplistic. 
  • Google's search business is under significant threat from Twitter, Facebook, Bing, and any answer discovery tool out there. 
  • Twitter does not--currently--have a compelling revenue model. And they know it, and Wall Street knows it, which means an IPO will be tougher.
  • Google will buy Twitter. Or it should. The value of the signals is worth at least 12.5 billion. Very few companies have the ability to monetize that, though we are trying. 
  • Microsoft is not dead, and it is incredibly relevant. 
  • Google will indeed make a phone, and I'll guess it will be at least competitive with the iPhone. Regardless, the Motorola acquisition gives a very expensive design shop. I could see Eric Schmidt moving over to manage it, restructuring it, and giving the Google vision guys proper access to exploit the best of Motorola's teams, ideas, and facilities. 
  • Google's phone partners will not jump ship. They might shop around, but I doubt they'll lose more than one or two minor players. Why? Android matters. IBM licensed PC architecture to dozens of companies, while selling their own as well. 

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