Did Google Buy Motorola Mobility to Fix a Strategic Mistake?

The proposed Google-Motorola Mobility transaction has created more fodder for columnists, industry analysts, and in-the-know bloggers than any technology event in recent memory.  The event itself is actually beating down the frenzy of a new iPhone launch, which is scheduled for September, October, or who knows.  Whenever it is, Apple will sell a lot of them.

Most of the columnists have concentrated on the strategic implications of the transaction.  Is it defensive with Google wanting to build up a stack of mobility-oriented patents?  Absolutely, but $12.5 billion is a lot to pay for protection.  Even the Mafia doesn't charge its most needy customers that much.  Is it offensive by giving Google the ability to build integrated products - like the iPhone and iPad - without creating "walled garden" Android operating system?  Sure.  Other providers can still use Android and modify its capabilities as they see fit.  Note, however, that HTC and Samsung can't be too pleased from a business perspective since Google is likely to give Motorola significant home court advantages over time.  From a legal perspective, HTC and Samsung have to be thrilled, because the halo from those patents covers them as well.

In reality, the best perspective I have seen is from Horace Dedui, an ex-industry analyst for Nokia, who wrote in a blog post for the Harvard Business Review that Google bought MMI to correct a big strategic mistake.  It's an interesting and provocative take on the transaction.  The debate over open vs. closed systems in IT and communications will go on forever, but there is no doubt that the most money has been made in technology when companies create large platform plays that customers purchase lock, stock, and barrel.

Over the last 20 years, there have been several major technology platform waves:

• ERP - SAP, Oracle, Baan, and PeopleSoft built integrated application suites that made large- and mid-sized companies much more efficient.
• Systems & Network Management - Large computing behemoths, like HP, and smaller companies, like Tivoli, built products to tame the data center chaos caused by the wide roll-out of client-server computing.  In this space, big companies, like IBM and CA, rolled up the smaller winners in order to maintain their dominant data center presence.
• The 3 letter acronym rush - In the late 90s and early 2000s, big CRM, SCM PLM, and DCM players emerged, including Siebel, Documentum, and Dassault Systemes, to fill in the gaps that ERP vendors weren't satisfying.
• Search & Cloud - Throughout the 2000s, an increasing percentage of corporate infrastructure and consumer activity moved to the cloud.  In business, Salesforce became the standard for managing go-to-market activities, and, to expand its market, Salesforce has opened up its platform to enable vendors and customers to build additional applications using its tools.  Google created the ultimate search engine and has built productivity, social networking, payment, and reference tools on top.  Dozens of other companies, including Amazon, Sharpcast, Concur, and Intuit, have built tools that make consumers and businesses much more productive.

The biggest platform play of all time was and is Microsoft Windows, which runs on close 90 percent of the world's desktop computers, and has enabled Micorsoft to create office productivity, data center, and development tools that are category leading.  Microsoft not only created incredible shareholder value for itself, but also made tens of thousands of other companies successful by providing a way for entrepreneurs and established companies to build on top of its platform and nurturing the best of its partners to greatness along the way.

The companies struggling to become winners in the Mobile Platform race want to be the Microsoft of the 21st century.  To become the Mobile Platform winner, companies like Google, Apple, Microsoft, and Nokia have to accomplish five things:

• Conquer the Market:  Building the platform is critical, but ensuring that tens of billions per year are spent on tools and applications that create a platform standard creates the leader.
• Transform behavior:  The Mobile Platform winner unifies things that didn't work together before, enhances existing tools and applications, or provides a much more functional replacement.  In mobile, examples could be - creating new types of computing platforms that replace laptops in corporations, changing the way consumers consumer media, or inventing new applications that improve personal and corporate productivity.  You see evidence of all three in the iPad ecosystem today.
• Create quantifiable benefits:  In the business world, customers have to chalk up a win – for example, more revenues, lower costs, better efficiency, or improved ROI/TCO.  Away from work, consumers have to save time and money and gain more personal enjoyment.
• Makes lots of companies rich, not just the platform provider:  The more big companies a platform spawns, the better.  Apple, Microsoft, or Google should have a hand in creating thousands of 7, 8, and 9 figure revenue companies that make founders rich and customers happy satisfied.
• Generates customer commitment:  On the corporate side, the Mobile Platform provider needs to lock in customers for 10+ years.  On the consumer side, buyers need to purchase the devices with the same mobile platform through every refresh cycle.  It should be painful to switch out dozens of applications and productivity tools.

Certainly, it appears that, in the battle for mobile dominance, Apple has a clear lead, not in necessarily devices sold, but in mindshare, wealth creation, and business and consumer satisfaction.  In MMI, hopes to gain the ability to ape Apple and become the platform leader for any company or consumer that isn't deeply attached to the Apple ecosystem.

While Apple has the lead, long-term platform winners tend to be very practical - rather than iconoclastic - companies.  Platform winners also tend to be relentless executors more than producers of the best products with all the best features.  There's an old adage that the best product only wins about 25 percent of time.  The rest of the time, the winners delivered the best "total package" of product, sales, support, brand image, and trustworthiness.

Therefore, in Mobile Platforms, look for a long-term battle with the three, obvious combatants - Apple, Microsoft, and Google - battling it out till the end.  The winner is hard to predict:

• Apple brings beautiful products, strong support, and reliability, but my-way-or-the-highway doesn't work for everyone.  A more "practical" Apple would be a bigger winner.
• Microsoft has access to 90 percent of the desktop computers in the world, a proven ability to work on something until it gets it right, and a highly practical, unflappable culture that is tough and resilient.  Plus, it has boatloads of cash and smart people.  It's never wise to bet against cash and smart people.
• Google knows the Cloud better than anyone, almost everyone uses multiple Google products, and it is a Cloud-only company.  It has to win to maintain and enhance its shareholder value.

Unlike other platform battles, the winner won't be chosen in the next one to two years.  The battle will go on longer than the typical land war in Asia.  It will be a wondrous thing to watch.