Google’s Motorola Acquisition – Is about Patents & Product Strategy

Posted: September 3, 2011 in Uncategorized

Google announced its intent to purchase Motorola Mobility for $12.5 billion. While Google assures its other Android licensees that the platform will remain open and license-free, product strategists at Samsung, LG, and HTC are certain to revisit their Windows Phone hedge strategy. I think two key reasons for Google to take the risk of alienating its other hardware partners:

  • Intellectual property rights (IPR) protection: The purchase will provide Google with a lot of patents: around 17,000 of them issued and another 7,500 pending. Google brings little to the table in the form of patents relevant to handsets and tablets, forcing Android licensees to beef up their own portfolios in the legal derring-do that, for example, has Samsung Galaxy tablets locked out of the European market by Apple lawsuits. Motorola’s rich collection of patents greatly strengthens Google’s position at the IPR table. But it could also make the battles over patents nastier and more costly.
  • It’s a multidevice, multiconnection world: Consumers are no longer reliant on one dominant device like the PC for their connection to the content, commerce, communications, and comfort that the Net provides. Instead, they have multiple choices sitting in front of them at any moment and are often connected to more than one — today it’s the PC, tablet, phone, and TV, but connections are beginning to pervade the car and myriad devices in the home. Android is present in most of these devices today and aims, with GoogleTV and Android@home, to be in all of them. Excepting the PC, Motorola has products in these market segments today and is the only large original equipment manufacturer (OEM) exclusively reliant on Android for its mobile devices.

Acquiring Motorola Mobility gives Google a strong IPR position across more than just smartphones and enables the company to craft experiences that provide continuity across multiple screens. But, by entering into the hardware business, Google risks significantly weakening other OEMs’ commitment to the Android platform going forward.

What I really want to highlight is something more profound which is “Product Strategy.” To you, the Google/Moto deal is just one signal — however faint — coming through the static noise of today’s M&As, IPOs, and new product launches. But if you tune in and listen carefully, two things become crystal clear:

  • The lines between entire industries are blurring: Google, and some of the other firms, are just high profile examples of companies that are diversifying their product portfolio, and the very industries in which they play. There are several instances of this over the past “digital decade.” What’s different now is the increased frequency of the occurrences
  • The pace of product innovation and consumer adoption is accelerating — quickly: Think about the new products that launched in just the past couple of years: the iPad ( millions already sold within the first year), the Kinect (8 million sold in first 2 months), the Kindle, the Nook, Square etc. But it’s not just about high-tech products. Have you had your Chobani yet today? New products are practically going to zero to billion dollar products in instants knocking down big companies.

If you’re a product strategistin any industryyour job has changed forever. The typical process of incremental product innovation won’t cut it anymore. You must fundamentally change the way you think about product innovation. It’ll be a long and strange journey, but here’s how to get started:

  1. Forget what you know about traditional competitors. If you think you have a rock-solid understanding of your biggest competitive threats — think again. You’re probably wrong.
  2. Learn as much as you can about adjacent innovations. Look around the fringe of your organization and your industry. There are likely to be several pockets of adjacent innovations all around you. If you can’t see them, you’re not looking hard enough. In fact, the next big disruption in your industry will be the result of the unexpected convergence and application of those adjacencies.
  3. Learn how to control the chaos of idea overload. If you calibrate your R&D spend to stay within your traditional industry guardrails, you will fail to see the big adjacent opportunities that may be staring you in the face from the outside. To be clear, this doesn’t mean spend more on product development. It means spend differently, in otherwise unexpected ways.

Whether you believe me or not, I strongly encourage you to read James McQuivey’s blog and latest report called, “Innovating The Adjacent Possible.” After reading it, think again about the Google/Moto deal. Is it really just about smartphones and patents? Sure, those are the obvious plays, but I think it’s also a strong offensive move in the war for control of the digital home — an adjacent space for the Android OS . I guess that’s a topic for another day.

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