Re-tuning the picture for GoogleTV
The company faces the opposite problem with GoogleTV, its nascent effort to provide an open platform for Web-connected TVs and set-top boxes. It has worked to date with Sony and Logitech using Intel chips. Samsung and Vizio have GoogleTV products in the works, the company said at Google I/O earlier this year.
To date, Motorola has not emerged as a GoogleTV partner. It would be a strong candidate given its solid work on Android and its strong connection to carriers that have resisted GoogleTV to date. But given the acquisition, Google may feel a need to keep more distance.
The same may apply for Google's newly launched Android@Home initiative to help penetrate more consumer electronics products, including home automation systems.
In lieu of any concrete details Google and Motorola executives issued generic statements of being "excited" about work in areas such as set-top boxes.
Sanjay Jha, who will remain as chief executive of Motorola, said set-tops are going through a transition from QAM to IPTV protocols which play to Google's strengths. "There's a great convergence ahead between the mobile world and set tops," he said on the conference call.
Google's chief financial officer said the Motorola acquisition should be "mildly accretive the moment the deal closes" and will be handled as a separate business with segmented financial reporting. Given Google's poor experiences with its Nexus phones, Motorola's Droid smartphone managers should be glad the company will keep its distance.
But Wall Street analysts have already starting hammering Google execs about getting into a "non-core business" with Motorola. They know such hardware businesses with their complex supply chains and rapid product cycles are anathema to Web companies today.
The analysts likely will exert strong pressure when hardware profits do not keep pace with those of the Web giant.
It remains to be seen just how Google will balance the very different dynamics of Web and hardware businesses. Indeed, it would seem insofar as Motorola does open the door to any corporate synergies, Google will only be able to take advantage of them at the expense of its relationships with competing Android OEMs.
Motorola employees can now rejoice at being part of the Internet giant, one of the most sought-after employers in Silicon Valley. Most likely the biggest celebrations will be with their competitors.
Apple, Microsoft and others fighting the on-rush of Android likely are pleased to see disrupted Google's business model of being a neutral supplier of free mobile software. It is not the legal victory they were seeking, but it nevertheless represents a formidable set of new challenges to Android's continued success.
In the end, Larry Page's tenure as chief executive and the future of Android may be measured by the outcome of his bold bid for Motorola's patents.