That’s No Lemonade. That’s a Space Station.

Thursday, 30 January 2014

Ben Thompson, “Google’s Tasty Lemonade”:

It’s good to see one of the more tiresome myths of the last couple of years — that everyone is trying to be like Apple, just look at Google buying Motorola! — get put to bed once and for all.

I wouldn’t argue that Google wants to “be like Apple”, but the idea that Google doesn’t have its sights set on producing its own mass market consumer electronics would be a lot more compelling if they hadn’t just bought Nest for $3 billion, and hadn’t spent the last year hyping Google Glass.¹ They dumped Motorola because they couldn’t make it work — Motorola’s post-acquisition devices were, if anything, even less popular than the ones it made pre-acquisition. Motorola has lost a billion dollars a year under Google, give or take.

Speaking of Samsung, Re/code reported this morning that the leading Android OEM will dial back its OS differentiation efforts in favor of a purer — and more Google-centric — Android experience. Another win for Google.

While Re/code attempted to paint the latter deal as some sort of intimidation on Google’s part, it seems obvious that the reason Google “won” both of these deals was Motorola: specifically, Google likely offered to get out of hardware if Samsung cross-licensed their patents and stopped pseudo-forking Android. Given Samsung’s dominant position in the Android ecosystem, the Motorola bargaining chip very well may have been worth several billion dollars.

And don’t sleep on Lenovo. I’ve long considered them the most likely global Samsung challenger.

The only part I agree with here is not counting Lenovo out. I do think Lenovo could use Motorola’s innards to stake out a share of the Android market. But given that, why would Samsung want Google to divest itself of Motorola? Under Google, Motorola flailed. Under Lenovo, it seems more of a threat to Samsung. From Samsung’s perspective, Google selling Motorola to Lenovo is bad news, not good news. Samsung may well have been uneasy about Google buying Motorola back in 2012, but not after seeing it flounder the past 18 months.

I don’t have first-hand sources familiar with the Google-Samsung negotiations, but a solid second-hand source echoed exactly what Recode reported — Google told Samsung to fall in line, abandon the ambitious new “Magazine UX”, or else Google would cease licensing its closed source apps for Maps, Gmail, YouTube, etc. — exactly the sort of strong-arm tactics Ron Amadeo reported on at Ars Technica back in October. I don’t think it was much of a negotiation at all; Samsung has little to threaten Google with, and Google has much to threaten Samsung with. Samsung’s only options would be to abandon Android for Windows Phone or Tizen, or pull an Amazon and fork Android, losing access to all of Google’s proprietary bits. None of those options are good for Samsung, at least not today.

Samsung is far and away the leading Android handset maker, but what leverage does that give them over Google? None, until and unless they have a feasible alternative OS strategy. As it stands today, especially with Galaxy S4 sales falling short of Samsung’s expectations, when Google tells Samsung to jump, Samsung asks “How high?”

As for Google’s acquisition of Motorola, I fail to see how it was anything less than a multi-billion-dollar mistake. Their patents have proved toothless in court, and their devices have been disastrously unpopular. I see not a single way that Google is better off for having owned Motorola, and several billions that it is worse.