Here we go again. The mobility world is changing with Motorola Mobility being acquired by Google for $12.5 billion. This was widely reported this morning when I woke up. Doug Barney from Redmondmag.com concludes that this move from Google might anger device manufacturers. My personal belief (that many other analysts support) is that Google woke up to realize that it might be good to make money on the phone business and not have it “free” as it is now. The fallacy of open source might have finally caught up even with Google….. It could be that Google executives also realized that the winning formula is about ecosystems and not only about the operating system as Galen Gruman conclude in his blog entry today.
I have stated in many of my writings that I do not believe in the open source model for an ISV and there are many reasons for it. One reason is obvious: the more success you get, you will have patent trolls suing your ass with our without reason. I have seen it so many times and it is frightening. Yes, large companies do the same thing to each other, but I guess the reasons are little different. Large companies can afford lawsuits but for the small ones this can be a death sentence.
Another reason has to do with valuation of the company in case you want to sell it in the future. There is no question that a company with real IP has more value that the one that assembles things from pure open source. In some cases this might be OK, but if you want to build something that has real value, some pieces have to be closed from competition to view it. I have been part of software organizations that have been sold (both as CEO and as Chairman of the Board) and there is no question in my mind that the buyer is interested in where the code (and algorithms) came from. I am sure there is a place for open source as well… If I had to start a company today, it would not be based on open source.
The announcement from Google to acquire Motorola is has caused a stir in the marketplace with speculation of whether Microsoft is now going to buy Nokia to have the same situation with Google. One blog entry suggested that even RIM might be a target now, but based on CNBC analyst interview this morning, RIM does not bring any additional value to the table so the market does not expect them to be bought up. This is going to be a race between Apple iPhone, Microsoft Phone and Android.
How should we now read the market and the intentions from these three players? Nokia’s share shot up 10 percent today: maybe Nokia will also be bought and or Android will be loosing attractiveness to players such as HTC and Samsung that are now going to compete directly with Google in hardware design and manufacturing. Interestingly, I read today from the news that Apple has ordered 95 million iPhones for the fall and Samsung is going to be one of the largest manufacturers, which makes this game very interesting. Samsung and Apple are fighting for the same markets and are in fact even in a lawsuit on patent infringement but still doing business together. Go and figure out……
The Business Insider blog entry today concludes that the deal between Google and Motorola might end in a disaster mainly because of Google stabbing HTC and Samsung in the back by now competing against them. At the same time, Microsoft now became the only big player that does NOT manufacture its own handsets and this could potentially be really good for Microsoft and Microsoft Phone future. It could be that Microsoft ends up also acquiring Nokia going forward, but this is purely my own speculation. Some bloggers from ZDNet think this would be the most logical option for Microsoft. It seems that the embedded software/hardware design ala xBox Kinect could work well where Microsoft would design the best handset to be optimized with Microsoft Windows Phone operating system. This is probably what the Nokia-Microsoft partnership is trying to do.
Another interesting perspective that Galen Gruman provides is to claim that Android really isn’t open source and now with the Motorola deal we are most probably going to see more closed sub-systems within Android that Google will not disclose from algorithm perspective. Gruman also concludes that the Android open source system development does not have an iron fist to make decision like it has in the Linux development environment with Linus Torvalds in the helm. Failed attempts such as Moblin, Maemo and MeeGo are examples of open source mobile platforms that never really got the traction that the platform needed.
What today’s acquisition confirmed to me was that the future of smartphones really does not have anything to do with just to operating system, but it is about software ecosystem and how software developers, handset manufacturers can manage the user experience. Nobody besides Apple is making really serious money on smartphones today as the entire market has matured and margins have come down.
IT IS ALL ABOUT ECOSYSTEMS AND FIGURING OUT WHERE EVERYBODY WILL PROVIDE VALUE.