Google and Motorola: Will it Blend?

 

The shockwaves of the recent announcement that Google is buying Motorola Mobility, the handset and device division that spun off from the Motorola mother ship not long ago, will continue to ripple far and wide. There are several reasons why this could be a great boost for Android, but also some major concerns about getting the two companies and their product lines to blend well. 

There’s much debate about the reasons behind the acquisition. Was Google looking to boost its patent portfolio to create a Mutually Assured Destruction/Mexican Stand-off scenario (pick your metaphor) in the midst of the tit-for-tat patent suits going on right now? There are arguments on both sides about how worthwhile this gambit is (Yes it is! No it’s not!). There are also arguments that patents are only a piece of the puzzle, and that Moto’s hardware business was also a major part of the logic. I fall into this camp.

Blend the Ecosystem

It seems like years ago that Google’s first phone, the Nexus One, was launched, but it was only 18 months ago. I wrote at the time:

Google’s introduction of Nexus One, a phone to truly call its own, is a completely necessary move for the company. Only by taking ownership of the whole user experience will Google really be able to prove the value of its Android platform.… The lackluster success of the early Android phones has surely made Google realize that they need to take a much stronger role in order to bring all the pieces of the experience together. The catch-as-catch can approach they’ve had so far just isn’t going to cut it. Fragmentation is a death knell for a product like this at this stage of maturity. Google needs to lead the charge with an integrated platform until the experience gap is fully closed. Then it can afford to loosen the reins and let the handset manufacturers, carriers, and third party developers go do their own things independently, safe in the knowledge that they will all come together to create something interesting and valuable for customers.

The underlying rationale here, as I described in that earlier article, is that early in a category’s development (e.g. smartphones, tablets), complex devices, platforms, and ecosystems under-perform user expectations unless they are highly integrated. This creates a gap between the experiences that products can provide and what people want (see diagram). This gap can take time to close as the technologies and platforms improve, and instead of creating a finely blended smoothie, you get a lumpy concoction that’s unpleasant.

Making the platform or ecosystem modular and open too early prolongs the time that a gap exists. Microsoft’s phone OS always suffered from this until a sharp change of course with Phone 7, and Apple quickly trounced them with its integrated offering. The Nexus One was Google’s first step in rectifying its own initial misstep.

The Motorola Mobility acquisition is a huge step further along that progression. Google clearly still feels that the fragmentation and variability of third-party hardware makers (with the frequent intervention of carriers seeking special interfaces, additional apps, and in some cases removing Google’s native apps and services altogether) is leaving money on the table. To be fair, some of the Android handsets have been very good—the Motorola Droids have consistently been strong players—but then there are other products that just completely send the Android/Google brand into the toilet.

This is a cycle that gets repeated in many industries, and the integrated/proprietary vs. modular/open balancing act is one that many companies struggle with as they make strategic choices on investments, alliances, and how to deploy complex products and ecosystems. I devote a significant amount of time to this in my book, Innovation X, as it’s a fascinating area.

The Motorola acquisition also strengthens Google’s position in the new diversity of digital ecosystem touchpoints: set-top boxes, broadband connected TVs, home networking, and phone-based payments (digital wallet). Motorola Mobility already plays in these (mostly immobile) areas, which is interesting to Google because the lines between these products and phones and tablets, in terms of services and content, are increasingly blurred. It’s all about the multi-screen experience today, and making what happens in your home work seamlessly with your devices out on the move. Anybody’s who’s worked in the “smart home” market knows that it’s more dumb than smart, as getting devices to talk together well is really difficult today. Google would love to solve that problem, and is one of the few companies that has the scope and clout to pull it off – even more so now that it has a major player in the hardware endpoints.

Will the Cultures Blend?

Google has said that it will keep Motorola Mobility as a separate company. No doubt this is partly to assuage fears of its other hardware partners that they will be kicked to the curb in favor of the in-house brand. (HTC in particular finds itself in a tough spot now, as both its OS providers now have favored hardware partners—Microsoft/Nokia and Google/Motorola. This latest merger may well push some companies back into the Windows camp as they hedge bets.)

Should Google merge Motorola more fully into its existing business units? In a word: No.

As Google discovered with its early stumbles with Nexus, designing and selling hardware is a really different business than online services, advertising, and software development. Google is amazing at many things, but this does not appear to be one of its talents. Better to keep it under a different brand, with a different team working with the processes it needs to. Which is not to say they should not seek to influence one another, and that there aren’t things Motorola could learn from Google about innovation and development.

Michael Mace has a jaundiced view of this combination:

The same business practices that made Google good in software will be a liability in hardware.  Google’s engineers-first, research driven product management philosophy is effective in the development of web software, because you can run experiments and revise your web app every day in response to user feedback.  But in hardware, you have to make feature decisions 18 months before you ship, and you have to live with those decisions for another 18 months while your product sells through.  You can’t afford to wait for science.  Instead, you need dictatorial product managers who operate on artistry and intuition.  All of those concepts (dictatorship, artistry, intuition) are anathema to Google’s culture.  Either Google’s worldview will dominate and ruin Motorola, or worse yet the Motorola worldview will infect Google.  Google with Motorola inside it is like a python that swallowed a minivan.

To put it another way, I think Google has about as much chance of successfully managing a device business as Nokia had of running an OS business.

I’m not as skeptical as this, but in my view, assuming that Google is not just going to flip Motorola and spin it off again after it’s got the patents, this brings up the biggest question: can the two cultures get along? Motorola is famously stodgy, slow to make decisions, conservative. How will this blend with the more freewheeling West Coast intensity of Google? Maybe the Mobility division was already the wild-and-crazy-guy of Motorola, but I still find it hard to believe that there won’t be significant challenges here.

So far I haven’t seen anyone mention this, which is odd since cultural fit is a) usually one of the first things brought up in large corporate mergers, and, b) the leading cause of them failing.

Things will become clearer in the next few months about what Google plans to do with this acquisition. I think there are some compelling benefits for both brands, but the culture blending question is going to be as big a challenge as anything.

Why iCloud Will be as Important as the iPod

Apple’s World Wide Developers Conference keynote last week will be remembered for two things: the bloodbath of disrupted developers and apps it left in its wake, and that it was as important for cloud services as the iPod was for digital music, and that the iPhone was for smartphones.

The Developer Bloodbath

Despite the many cheers from the crowd of developers at the keynote, I reckon there were several hundred third party developers and apps collectively put on notice (and maybe put out of business) by the various announcements. As the NY Times wryly put it, “How do you know if you’ve created a really great, useful iPhone app? Apple tries to put you out of business.” (The Times provides a handy list of apps now scrambling for a second act.)

In truth, quite a few of the things that Apple announced - such as a basic to-do list app, and ways of storing web articles offline for later reading - have become such fundamental needs for so many people that they deserved to be part of the core OS. Unfortunately they are also the bread and butter of many niches developers who saw the same need and leapt to fill it in the intervening years. They will have to rethink and improve what they do, and many of them will I’m sure.

Such is life in the shadow of an ecosystem behemoth. Apple giveth (App Store to give independent developers more visibility and access) and Apple taketh away (obviating the need for those apps in the first place).

Apple has been pretty consistent in adopting good ideas from third parties into its core offerings. Perhaps most famously, Apple introduced the Dashboard feature (a precursor to the iconized app view on the iPhone), to loud complaints of it ripping off a third party developer, Konfabulator who had created something very similar.

As problematic as this can be, it’s all part of Apple’s plan. Chetan Sharma put it succinctly: “Apple’s goal is to commoditize the software, Microsoft’s goal is to commoditize the hardware, Google - both”

Apple has high tolerance for making software free, even if it makes life painful for its developers, because it makes almost all its profit on hardware. For the time being at least, Apple has enough strength and/or momentum relative to Google, Microsoft, media companies and service providers that it can thrive with this approach.

The Mainstreaming of Cloud Services

The announcement of iCloud was met with both enthusiasm and incredulity.

Apple has been firing on all cylinders for years with hardware and software, but has consistently stumbled with services, whether it be the expensive and lackluster MobileMe (the launch of which even Jobs had to admit at the keynote was “not our finest hour”), or the weak reception to its music “social networking” service Ping. (This isn’t a new phenomenon - anyone remember eWorld?) The only service area where Apple has really sung is with its retail stores.

With iCloud, Apple is cinching up the ecosystem it has painstakingly built up, cinching it so tight that it will become increasingly difficult for others - even ones as big as Google - to crack open.

MobileMe was an expensive, under-performing sideshow, but iCloud aims to reach deep into all the other Apple devices and make them all work together better. What was announced on Monday is surely only a hint of what lies ahead in the next 18 months for iCloud, iOS, and OS X all finally getting in sync.

Ironically, iCloud aims to improve on what was arguably the worst part of MobileMe - iDisk, a basic cloud storage feature. Given Jobs’ obvious frustrations with MobileMe, I can’t believe he would let yet another half-baked attempt out the door, especially not one that is now a major strategic piece of the puzzle. Based on the massive data center Apple has invested in, they’re not joking around.

Since the iPad launched, its lack of a file system has meant it’s not a true laptop replacement. One of the brilliant ideas about Dropbox is that it essentially puts the file system in the cloud and moves it off the device entirely. iCloud apparently opens the door for the same thing, and with even superior integration. Today with near ubiquitous broadband and 4G/LTE networks starting to roll out that offer home broadband speeds while mobile, this suddenly becomes a workable solution. (Bandwidth caps, tiered pricing, disappearance of all-you-can-eat data plans? Yes, there are flies in the ointment, but the longterm trend is clear.)

Linking Cloud, Apps, Devices, and OS’s

Consider two things that were discussed separately in the keynote: journaling in the next rev of the OS, Lion (which means no more saving - a file is continuously saved as it’s worked on), and continuous cloud syncing. Voila - you have your most up-to-the-second work constantly saved to the cloud, and made available on every other device.

My feeling is that iCloud will prove to be similar to IBM launching its PC in 1983. Prior to that point, the PC market was highly fragmented and dominated by niche players, and had little mainstream appeal. The arrival of IBM on the scene gave PCs a stamp of credibility and stability, and they gained sharply more acceptance. IBM made PC’s “easy” to get into, made them relevant, and created the archetype which others would mimic for decades.

Apple pulled off the same feat with mp3 players and smartphones, for largely the same reasons. So it will be with iCloud. Cloud services are not new (neither were mp3 players or smartphones), and the fact is that much of our critical data already lives in the cloud, via various web apps, service subscriptions, and email. But until now the various services have been poorly integrated, and offered by startups that many people don’t feel comfortable handing their data over to, whether for security or long-term availability/stability reasons.

They haven’t been ready for the mainstream, and iCloud will come to be seen as the turning point which changes that. For consumers who don’t yet get the relevance of cloud, the media syncing across devices provides the carrot to get into the concept.

MG Siegler looks at the different approaches to the cloud being taken by Apple, Google and Amazon, and notes that “Apple’s belief is clearly that users will not and should not care how the cloud actually works.” Exactly. This is what Apple does best - take complicated things that most people don’t care about, and makes them easy and understandable for a mainstream audience.

Microsoft Finds its Innovation Mojo

Microsoft is a bit like Tiger Woods at the moment - industry darling that became too dominant, then had a fall accompanied by a thick layer of schadenfreude, and now is trying a come-back. Microsoft is being replaced in the big-bad-wolf department by Google and Apple and finds itself in the odd position of being an underdog, and people love to root for underdogs. In fact I’d say that Microsoft is further ahead on the come-back trail than Tiger is if you look at some of its recent announcements: Bing,Windows Phone 7, the Courier journal concept, and the just-announced IE9. Something interesting is brewing in Redmond.

(And for context, I’ll say that I’m a Mac user for 20 years and in the past have been quite critical of Microsoft’s approach to innovation. But I also like to recognize credit where credit is due, and that’s the case here.)

There are two things going on with their recent announcements that are really interesting, and which hint at better things to come still.

Finding its Innovation Voice
There is a clear editorial voice to what they are doing. In the past Microsoft was often criticized for producing warmed-over versions of other people’s products (the perrennial Windows vs. OS X war), or for taking a “kitchen sink” approach that just stuck every feature imaginable into a product without thinking about how they gelled as a whole. Now they are creating products with distinct points of view that do not try to simply ape other successful ones, or out-do them on feature lists. You may or may not like exactly what each product does, but at least there is differentiation and an emerging personality to what they are doing, something Microsoft has long been lacking.

Systematizing Innovation
They have been able, to an extent, to systemetize an approach to innovation that began (it seems) with the Xbox team. The Xbox, especially the 360, established a fresh, distinctive approach to development that had been lacking at Microsoft. Innovating on behalf of customers rather than by linearly extrapolating what they say, consideration of a whole ecosystem, and then taking responsibility for the whole user experience in that ecosystem.

We see threads of this Xbox approach showing up in most of the new generation of products - Bing, Windows Phone 7, IE9, and Courier. (These are all products more or less at the edges of Microsoft’s business, Office and Windows have not yet been affected so heavily. In fact the Windows advertising campaign flaunts the notion of just doing what customers asked, which these other products are definitely not doing.)

It was looking for a while that the Xbox might just be a one-off innovation high-point for Microsoft. Motorola experienced this with the Razr - a game-changing product that they weren’t then able to convert into a broader portfolio and leadership of the industry. They could not systemetize the innovation process. After a couple of years, other phone manufacturers caught up to Motorola and today they are way back down in the rankings again.

Succeeding once at innovation is one thing, and can just be a matter of luck sometimes. Succeeding at it over and over again the way that Apple and Google do is a whole other ballgame. If current trends continue, this is what we are seeing going on at Microsoft. Given their size, resources, reach and clout, this could lead to some impressive stuff.

The Proof is in the Pudding
Windows Phone 7, Courier and IE9 all have one other thing in common - none of them have been released yet. They look at the end of the day there can be a lot of slip-ups between nice demo and game-changing shipping product. Microsoft has stumbled here before - look at what happened to Vista and Zune. But they’ve taken their lumps and perhaps now are ready. If so, we could be seeing a huge resurgence from the company which, after all, still has huge resources, dollars and reach. If they really can get their innovation groove back, from conception to implementation, then they will be a massive force to be reckoned with once again.

Apple is the Zeitgeist Company

The launch of the iPad yesterday put an exclamation mark on an increasingly obvious point: Apple is the company that has captured the cultural zeitgeist. The massive hype leading up to the event - apparently achieved in a groundswell with very little effort on Apple’s part - shows that they really are the “It” company right now.

Not so long ago, Google claimed that position. The amount of press ink (literal or virtual) that Google has been able to create every single day for the last decade is just astonishing - it is not uncommon to see two or three articles on the same day about some aspect of Google’s business, whether it be a new product or another story about the Googleplex’s free food. No other organization, save perhaps Obama’s election campaign, can claim such a blanket of coverage on such a consistent basis.

But the honeymoon is over and we are in the midst of a mild backlash against Google, and at the same time Apple’s cultural and financial stock has been climbing. No-one sees them as just a maker of over-priced niche products for designery types anymore. They are truly a mainstream mass-culture company that, while focused mostly on consumer electronics, touches into so many other areas of our lives simply because the boundaries between computers, electronics, media, communications and social life have all blurred so thoroughly.

Looking back over the decades, we can see a string of companies that have managed to go beyond being just successful business enterprises and have captured something special in the culture. GM perhaps epitomized this in the 1950’s and 60’s, summed up by the well-known phrase “What’s good for General Motors is good for the country”. GM helped shape the aesthetic and cultural agenda in a way that reached far beyond the automotive realm.

IBM arguably held this position in the 1970’s, and Microsoft in the late 80’s and early 90’s, to be superseded by Google at the turn of the millennium. But none of the tech companies besides Apple have quite been able to win hearts in the same way GM did.

But one thing that all these companies have in common is strong leaders who are not just good business thinkers but are also active in the weeds of product development. Think of Harley Earl at GM, Thomas Watson Jr. at IBM, Bill Gates at Microsoft, Sergey/Larry/Eric at Google, and of course Steve Jobs at Apple. These men all recognized that there is a clear connection between a company’s strategies and the details of the products they bring to market. Ignoring the latter is a good way to scuttle the former.

The iPad is but the latest result of the hand of Steve (with help from a huge team of people of course). The apparent ease with which hype appeared around it is in fact no accident: Apple has invested enormous amounts of work over the years to build a reputation around its products and brand, and that investment is now paying off in spades. Jobs himself is well tapped into the cultural zeitgeist, he transfers that to Apple’s products and strategies, and in turn the company comes to reflect and even steer the zeitgeist.

It’s not magic, but it is hard to do. Very hard. If history is any indication, there is room for only one such company at a time to hold this pre-eminent position, and their time in the sun is temporary. Apple’s winning streak will come to an end, but in the meantime they deserve all the credit they get.

Google's Growing Pains of Becoming a Solutions Company

Things are a bit bumpy with the introduction of the Nexus One, with some customers complaining about difficulty of getting the phone running on T-Mobile’s network, slow connection speeds, and complaints over T-Mobile’s pricing policies for existing customers. The press is all over it:

Nexus One a Test of Google’s Customer Service

Nexus One Complaints Mount, Honeymoon Over

Google Nexus One Leaves Customers Sour

And so on… Ah, schadenfreude

This is the other edge of the solutions sword: when you set yourself up as a provider of holistic solutions and ecosystems, customers want one throat to choke when something goes wrong. Their expectations go way up about how everything is going to work, and they want a real person to talk to when it doesn’t.

Having people available to talk to is not one of Google’s strengths.

John Battelle as usual hits the nail on the head:

[H]ow many real live customer service reps does the company plan to have tasked to this product? That, to me, is a Very Important Question. It’s the essential human question that drives Google. I bring it up all the time. Community. Media. People. How do you make people scale?! How does Google, a company driven by algorithms and scale, find its Voice?

If I were Google, here’s what I’d do:

• Ditch my left brain rationality and get on the empathy train as fast as possible. Customers want to know they are being heard and understood, and that someone (a real someone, not an algorithm) is paying attention). We have to have real people lighting up the forums and manning the support phone lines, and keeping frustrated customers up to date on what we’re doing to fix the problem.
• Get Eric Schmidt, Marissa Mayer, Sergey and Larry out in front of this. Get them out there apologizing, being humble, saying that they are attending to this personally. Doesn’t matter if we don’t think Google is to blame - customers don’t care, they just want the problem solved, and we put ourselves out there with the target on our back, so it’s us who they’re shooting at
• Wrangle HTC and T-Mobile so that we can all be on the same page, and provide unifeed fixes. But Google should be the front, it’s our phone, and we own the problem. We’re promising an integrated product, we need to service it in an integrated way. All for one, one for all.

I’m confident that Google will get through these teething pains. But it is a good lesson for any company that wants to set itself up as a real solutions provider, and stretch into pieces of the ecosystem that it has not engaged in before: be prepared for a whole bunch of new issues, complaints, and expectations from customers that you’ve never had to deal with before.

This requires getting all parts of one’s own company working together, as well as all partners who helped bring the ecosystem to life. Not easy, but absolutely necessary. Especially, as is Google’s case, that they are playing catch-up to a market leader.