On Motorola and Google TV

Mari Silbey —  August 15, 2011 — 18 Comments

There are a thousand and one ways Google could move forward with today’s announced acquisition of Motorola Mobility. Certainly Google will use Motorola’s mobile assets to further its Android ambitions, and this is a big shift in the landscape for mobile players including Samsung, HTC, and Apple. However, I’m far more curious about what this means for Google on the IP video front. Last year I posted my skepticism about the Google TV launch over on the Motorola blog. Read the excerpt:

I believe that Google may have a chance at being successful in TV, but not ultimately by offering only an over-the-top solution… On the other hand, could Google make a go of it in TV by working within the cable and telecom model? It’s certainly possible. Particularly since that model is moving toward IP (not Internet) delivery. In my very personal opinion, Google is experimenting on the retail front, but that doesn’t mean that’s where it will stay.

Google has a fascinating opportunity now to become a serious player on the pay TV front if it so chooses. Motorola’s cable/telco network technology, consumer hardware base, and software solutions all give Google a working platform in the TV biz. Perhaps even more importantly, Motorola’s relationships in the traditionally insular cable industry give Google a new place at the table. Throw in Google’ Gigabit network experiments, and you’ve got a tantalizing combination of assets. It’s certainly a far different picture today than Google presented just last year. Talk about a Google TV reboot.

18 responses to On Motorola and Google TV

  1. As I wrote on Twitter… Dr. Seuss and the residents of Whoville would be proud… “I look forward to welcoming Motorolans to our family of Googlers.”

    Regarding the transaction itself, I believe it to be primarily for Moto’s large patent portfolio as possible insulation and leverage against the Nortel consortium. It’ll be interesting to see what Google does with Moto’s cable division – I wouldn’t be surprised to see that spun off given the respective parties emphasis on mobile.

  2. that’s an interesting take, one i hadn’t thought of. thanks Dave…

  3. “Regarding the transaction itself, I believe it to be primarily for Moto’s large patent portfolio as possible insulation and leverage against the Nortel consortium.”

    That was certainly my first thought. It explains why Google was able to be so cavalier and whimsical in the Nortel auction.

    “It’ll be interesting to see what Google does with Moto’s cable division – I wouldn’t be surprised to see that spun off given the respective parties emphasis on mobile.”

    Perhaps. It’s certainly not the main course in the meal they purchased here.

    But why wouldn’t they want to keep it? As Mari discusses, it does provide some leverage for their Google TV hobby.

  4. I think the cable division was already spun off?

    http://www.geek.com/articles/mobile/motorola-completes-split-now-two-separate-companies-2011015/

    Which means this is a mobile play only. I would bet STB patents remained with the other side of the business.

  5. “I think the cable division was already spun off? Which means this is a mobile play only.”

    Read your own link a bit more closely, and I believe you’ll find that you are incorrect…

  6. No doubt this is primarily a play for Moto’s mobile assets, and I seriously wonder how much Google understands of what it’s getting on the cable front. You’ve got to figure they’ve done their due diligence, but there’s so much hidden inside of Motorola, it’s hard to know if Google will be able to find and leverage all of the valuable pieces on the TV/cable side. Or if they’ll even bother to try.

  7. Chucky is right: to my surprise, Motorola Mobility includes the cable TV systems as well. This will create some interesting antitrust questions. I could imagine a scenario where the US government would require Google to spin off the cable division into a separate company, especially considering its big presence in cable modem technology.

  8. “I seriously wonder how much Google understands of what it’s getting on the cable front.”

    They have a Google TV team. I’m sure it’s been brought to management’s attention.

    “it’s hard to know if Google will be able to find and leverage all of the valuable pieces on the TV/cable side. Or if they’ll even bother to try.”

    “If they’ll even bother to try” is indeed the question. The STB pieces obviously aren’t anywhere in the vicinity of the prime mover for doing the deal. But given that ‘teh plex’ loves to throw money at conceptual projects and see what sticks, I’d bet they’ll be more likely than not to give something a try at some point. After all, they do seem to want to put Android into the lean-back space…

  9. What about this one. Google buys MMI, then sells the hardware business, mostly the handset business to HTC for say 65% of the deal size. Gives HTC financing at 3.75% for the next FIVE years to pay it back. Goog gets all the patents, IP, set top box business, and gets about 75% of the cash back in five years. Also, would probably be able to maintain some ownership/management influence to make the HTC/Motorola handsets that Goog wants for android?

  10. It’s an interesting situation.

    My guess is that there’s a strong advantage for Google to retain Motorola Mobility just because of the company’s ability to generate future patents that will help protect Android.

    Personally I don’t think it’s good for Google to own any hardware business, but their hands are tied because of all the Android litigation.

    They’ll make the best of the situation by using Motorola Mobility to enter the set top box market and load it up with Google TV type software. They’ll also have a stronger ability to control the hardware design of Android phones instead of just helping in the development.

  11. Via the execrable Todd Spangler:

    “As for what Google will do with Motorola Mobility’s Home business — the biggest supplier of set-tops in North America — Page had this to say: “Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.”

    So I think we can now say with certainty that Larry is aware of the situation.

  12. color me “duh”

    I stand corrected (man I need a vacation…)

  13. “enter the set top box market and load it up with Google TV type software.”

    Perhaps… their MSO customers may or may not be interested. As it is now, many don’t run Motorola front end software – Verizon FiOS TV and AT&T U-verse on Moto hardware are easy examples. I can’t imagine changes in this division any time soon (beyond the many months it’ll take for this deal to close, anyhow).

  14. Agree with you Dave. Don’t care that much about what happens in the mobile space, where its purely an “inside baseball” patent play mostly.

    In the TV space though, a Google entry has the potential to be really interesting. Whether Google handles it properly is another question.

    I assume all the readers of this blog are aware of all of the features that STB companies like Cisco or Motorola have developed, the UIs they’ve developed etc, all to see them ignored by the cable companies. Generally the cable cos (at least in the past) didn’t much want any of those features. They just wanted boxes that were cheaper, and boxes that were identical between multiple vendors so they could pit them against each other.

    So yes, even if Motorola/Google developed STBs with Google TV in them, there’s a reasonable chance that MOST North American cable co’s would simply ignore them. They’d either stop buying Motorola STBs completely (just buying more Pace models, something they’re doing more of anyway) or they’d toss the Google TV firmware on the floor and load up their own. Unless Google could come up with some incentive for them…

    Like what? We’ll share advertising revenue? We’ll let you use our fiber? What?

    One possibility would be really interesting though–a retail DVR. Yes that means cable card and tuning adapters and everything, but it could create a viable Google TV platform. A replacement for the moribund Tivo. Active development. An App platform. Over the top services up the wazoo. A company that can really put some money into pushing the FCC or Congress around to get their way on AllVid or whatever. Something cool could happen.

    Or not. Google has shown an unwillingness to date to piss off the media companies that control the purse strings, and an inability to negotiate the right terms with them for access. Will that change with the acquisition of Motorola?

    I’m placing my bets on them keeping the (money losing) STB division. It certainly wouldn’t make things any worse….

  15. Hey Dave, can you maybe link to this Megazone story:

    http://www.gizmolovers.com/2011/08/12/eff-campaign-to-stop-the-fcc-from-granting-integration-ban-waivers-to-cable-msos/

    I think the EFF effort should get all the exposure possible.

  16. “Hey Dave, can you maybe link to this Megazone story … I think the EFF effort should get all the exposure possible.”

    Seconded. Protecting CableCARD with extreme vigilance remains the only bit of leverage against MSO complete control.

    “I’m placing my bets on them keeping the (money losing) STB division.”

    I’m working from memory here, rather than any link I can refer to, so I may well be wrong. But if my memory is correct, Motorola’s current STB division is profitable, not “money losing”, albeit with very slow revenue growth.

    (But even if the STB division is indeed losing money, I don’t see that as having any influence whatsoever in Google’s decision-making process. They don’t mind losing money on projects where they see long-term potential. In other words, I’d bet the same way that you’d bet.)

  17. Like Glenn said, “Google has shown an unwillingness to date to piss off the media companies that control the purse strings, and an inability to negotiate the right terms with them for access. Will that change with the acquisition of Motorola?”

    The end result of this could be that the cable cos start to go other places for their set top boxes (e.g. Cisco, TiVo perhaps). Even before Google does anything, the perception may be enough to push some MSOs to other hardware providers.

  18. The Hub,

    It doesn’t have to be Tivo (though that would be nice), there are lots of cheap STB vendors waiting in the wings or already in the process of displacing Cisco/Motorola in North American markets. Pace already surpassed Motorola as the #1 worldwide seller, and the worldwide market is slanted much more away from Motorola/Cisco than the US market. It could even move quite quickly if they were motivated.

    But hey maybe Google will find the magic that Apple seems to have in these negotiations, balancing their own needs against those of the media and cable cos and building something different than what they’re buying but still getting them to buy it. I don’t expect it, but I do want it.

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