So What Should Motorola Do Now?

96 thoughts on “So What Should Motorola Do Now?”

  1. Hi Om,
    Sorry for the strong language, but that sounds like a dumb idea. Android is a free OS (no cost to Motorola) that has great developer support.
    Motorola acquiring Palm and trying to build its own OS means it will need to keep updating it and will somehow need to convince outside developers to support the Pre – painfully hard.

    I think Nokia and Blackberry need to fight over Palm in the hopes of surviving over the next few years (I just played with the BB Storm and the apps suck).

    Motorola needs to focus on developing good hardware and getting it out there. The software game is over. Going to be hard for any phone manufacturer to come up with an OS to beat Android.

    1. Not that three or four hundred engineers cost much for several years of effort! Free!

      Ultimately, it will all be mobile web and the OS will cease to matter for the most part. That is a long way off, and we perhaps have truck loads of value to kill in the market between now and then. The scenario is much like publishing. 85-90% of the publishers are about moving physical product, and yet they want to be profitable with that dead overhead. Sorry, there is much cutting to be done, and those that survive will execute on the downside.

      If I were Elevation, I would hold em for just a bit more. There are going to be some panicky folks running around by the end of summer. I would also create a tablet prototype BTW!

  2. Motorola is gunning for a sale and is not going to invest in Palm. The costs would be too high, and they are currently busy cleanly slicing a line between all pieces of intellectual property.

    If the premise is that a device manufacturer is at the mercy of the OS provider ala Windows, that should have been anticipated! This is the benefit and the curse of Android and Chrome. Services are likely more important, and Motorola is making an effort there as well on the Moto proper side.

    The question is, are we at the point were mobile web can prosper? I don’t believe so at least as far as a mobile application ecosystem. Palm is second most advanced mobile OS from a usability perspective, but we are talking 12 months before such a combined effort bears fruit, particularly with Moto on the other end.

  3. Motorola and its investors need to realize that their time is up. Today’s mobile industry game is fundamentally different from the one Motorola is familiar with. Jha really didn’t have any other option but to go with Google. But then Google has a history of stabbing its partners in the back. Just ask Mozilla/Firefox. This is why others such as mobile carriers have always been wary of Google. They are determined to eat everybody’s lunch. Time for some regulation please (at least stop them from taking over AdMob). HTC is weak and subservient and will serve Google’s goals very well. Google really wants a true hardware commoditization of the mobile phones or for that matter any other device that connects to the Internet (just like the PC world which they know how to dominate). Whatever Motorola and Palm or others can come up with, HTC can as well. Moto-Palm combo will hardly change the game. The two are both weaklings. The only mobile maker who can challenge Google (other than Apple) is Nokia. Nokia has the reach and distribution (at least as of now). But unfortunately Nokia doesn’t have nearly as much software savvy as Google and have enough legacy hardware and software platforms to worry about to mount a relevant challenge. Bottom line: There is going to be one, probably two major vertically integrated players in the industry – Apple and Nokia. Rest will all be also-rans. Which suits Google just fine.

    1. OldMobile wrote: Google really wants a true hardware commoditization of the mobile phones or for that matter any other device that connects to the Internet (just like the PC world which they know how to dominate).

      And that is bad why? If anybody can free the hardware from the grip of carriers and make high-quality handsets freely available to the masses, they have my vote and the votes of countless enlightened techies and average public. If that anybody is going to be Google, so be it. Why should they be stopped?

    2. google did not stab mozilla. google had to pick up chrome because the folks behind mozilla/firefox visited redmond one rainy day and suddenly became too friendly to microsoft — somewhat like this blog.

    3. I agree with most of the points , but please do not bring Nokia into the mix. They were great , but they are slow now.
      I would say APPLE, PALM and RIMM will be the future players. Both know a thing or two about software and hardware.

      Google is a confused company headed by restless people. They can sing and dance as long as the “SEARCH” is making money. I am sure Microsoft will get the better of them soon.

    4. Google still pays over 90% of Mozilla’s bills. Just like Motorola still sells a lot of droids because of android. Without google both Mozilla and Motorola would be (near) bankrupt

  4. The Nexus One is by no means a revolutionary device. It’s off the shelf parts using an off the shelf OS.

    I will give you that MotoBlur doesn’t appear to be popular. Motorola is going to have to survive on vanilla Android.

    But the Nexus One is just proof that the Android phone market is going to be like the old PC market – cut throat, undifferentiated, fast moving. Not proof that HTC is going to dominate. Unless Google gives their devices exclusive access to updates, all Motorola has to do is build a better device.

    1. Don’t count Motorola out by any means. Even now, the biggest reason I would buy a CLIQ, Backflip (yet unreleased model), or Droid over the Nexus One is form factor. There are people out there who like slider keyboards, and even though one can approximate one by typing on a touch screen, there will be people who much rather have a physical keyboard than try to see if their fingers hit the right place.

      Sometimes touchscreen keyboards go off calibration, and most new phones do not have a way to recalibrate their screens. I’ve had a touchscreen phone where when I went to type a “p”, it registered an “o”, even at the edge of the screen. A hardware keyboard helps in this department.

      Don’t count Motorola out yet. They do need to catch up with HTC and start putting out Dragonball speed phones, but they did an extremely good job of getting Android devices into peoples’ hands with the Droid advertising.

  5. Interesting perspective. Not sure it’s a question scale but a question of user experience and applications. Palm should port their webkit and UI to Android. Why fight it? There is not much room for the OS platforms.

  6. Wow ,
    Om I hope you didn’t come up with this from thin air.
    On a second thought , there is a fair possibility of this happening. But who will be the boss of the combined company, clearly not Jha.
    If he wanted to do one good thing , he should kick the other CEO out get Jon as co -CEO.

    That ,in my book is a perfect revenge. Besides , take my word for it, SAMSUNG will stab (they stab every company they partner with for that matter) Google once they get a hold of the inner workings ofthe android to their own BADA (or whatever)(

    Overall, this deal will keep Google in check. APPLE might be happy about it too.

    Folks write good things about android, but I will go on one limb and say , the whole android thing will fail in two years.
    Period.

    1. Sure , but can they support JAVA in the future?
      I guess it can be done may be difficult.
      SAMSUNG has a habit of partnering with companies , learn the tricks of the trade then dump them for good. They did it in the TVs to SONY. They made chips for iPhone, and now planning to use them for their own phones.

      The are the best match to Google.

      1. Thanks cak,
        I will have my mommy here with me.
        What do you want to discus ? heap size ?
        or low level interpretation ?
        Perhaps may be allocating the memory ?
        Or may be how the chip interpret the logical expressions ?

        Hokay, you are smart.Cheer up intelligent human.

  7. Om,
    There are a couple of key assumptions in this piece I question.

    1) You site Dell, MS, and Intel as the past model – but it isn’t that simple. HP, Acer, and others have done well with hardware. There is no reason to assume HTC will be the only major hardware vendor for Android.

    Motorola could easily share the market with HTC and others. The Nexus got plenty of attention this week, but it is primarily the processor that did it. The Droid already has a better screen and a (stupid) keyboard. But the next generation will no doubt be better… HTC’s G1 certainly leave folks assuming HTC will own this market. The Droid is effectively Moto’s first Android phone and they did pretty darn well with it. Better than anyone prior and since on a first gen Android phone.

    The second question is can the market support Palm and yet another phone OS? I suspect not. As many before commented, Android is free and has some strengths. iPhone is more polished and has a headstart. RIM? Microsoft? strong players with some key strengths that make their products matter. Palm? no.

    Plus we are probably near the peak of the appstore frenzy. Future apps will move toward HTML5 cloud apps and live in the browser. That is what Google really wants. The OS actually becomes less important and “valuable” and keep in mind it is free now.

    1. Dave

      Point #1: All the money in the PC boom went to Intel/Microsoft and then to Dell, which for a long time was king of the hill. I was there. I covered them and they were printing money.

      Point#2: Motorola can be Acer or whatever of the phone world and start to live with low single digit margins. Good luck and good night.

      Point#3: If Motorola seriously wants to play, it needs to control its own destiny.

      Point#4: So the OS you backed is being used by a device made by a rival and is promoted by the OS creator on its website that is visited by hundreds of millions of people. Tell me if you don’t have a disadvantage.

      Think of it this way — you are focusing a lot on features of their products. Long term, they are going to be at the mercy of Google. Seriously — they need to be thinking long and hard if they want to bank of a partner, as someone earlier said is know to shank their partners.

      I am on the other side of this equation. Google wants to suck all the profits out of the mobile ecosystem and good for them. In the case of Motorola, they need to be thinking about the world with eyes wide open.

      1. Great points !!! Om. Motorola needs to define it’s own destiny.

        What happened to the motorola set-top box biz. Is it a separate company now ?

        Keep it up Om !!

      2. This is completely different from Microsoft approach. Microsoft always stayed away from hardware and build a ecosystem for its Windows OS.

        What is google trying to do over here. Build it’s own Services biz and keep hardware vendors on it’s mercy.

      3. Om,
        Thanks for the detailed response.

        The PC boom was long ago, Dell changed the model to indirect and did quite well – but so did many others. Packard Bell (acquired by NEC), Compaq, HP, and many others.

        The advantage of open source is they don’t have to be dependent on Google. They can take the source and run it it. (though I do see that as the Appstore model declines for the more open html5 web, the OS becomes less important).

        They have so many wifi devices at Moto – radios, phones, etc. Why not leverage that Android expertise into something very broad for Moto?

      4. Sure, it’s a disadvantage at this point. If however the next Nexus is a Motorola one, that would reverse, wouldn’t it? So perhaps this setback would motivate Motorola to come out with a better phone than Nexus One. May be that’s what Google wants as well? to push the Android eco-system ahead at faster pace?

  8. DaveM – Out here in the hinterland we are so far away from living in the cloud you can barely see it from here unless you’re in a major city. My guess is 3-5 years. And even then will the bandwidth be able to keep up with the media and demand? The app store frenzy will continue.

    1. Thanks PXLated,
      The appstore is largely due to a limitation of the current browsers. On our desktops, we install clients less and less and instead run things in the browser. I am not running a GigaOM client (but I am sure it would be thoughtful and provoking if I did).

      Some apps and some plugins can be downloaded from websites, but Apple doesn’t allow this right now. I expect the next generation of browsers for mobile to be more like the browsers on our desktops and expect to see a reduction with the clients we need to install. Web apps like twitter and Facebook should just run in the browser.

      That’s what I meant by the cloud… If you can do it in the appstore, you should be able to do it in the browser, even in the hinterlands – coming soon.

  9. 2 laggards don’t make a leader.

    Also, people with Gulfstreams at thier disposal don’t usually show up to placate a partner that just knifed them in the back – not unless they want to, or it’s in their best interests.

    1. First both these guys are not laggards , unless you changed the description in wikipedia :).

      Second, you have no idea what to do when you are caught up in a situation like Jha. Usually there is some fire when folks like Om post something like this. Hokay.

  10. Palm is in good position. They have a great OS and a good phone, let’s see what VZ can do with it, as well as ATT. I have had to trade in my BB for a PRE because Rimm’s OS seems antiquated in comparison to iphone and pre. I always thought RIMM should buy PRE..it would stop the slide in their stock price and over time add to it. RIMM has already lost in market value what they would need to pay for Palm because they no longer have an exciting phone. Anyone mention blackberry at CES this week? It is looking to enter an IBM downward spiral…just like Dell did after being the King for a long time.

    OS is special and the market cap is low enough someone is going to grab it. the longer they wait, the more Palm gets out there with VZ and T, the more expensive a takeover will be. The stock is down from 18…put a 20 dollar offer on the table and buy Palm for about 3.5 billion and the market will reward you.

    Though, I do think the first takeover price ends up being a bid.

    Glad to find your blog.

    1. I like the Pre and WebOS, but I always figured either RIMM (as you said) or MSFT would buy out Palm to get an OS when either of those companies could not update the old platforms they are valiantly trying to prop up now.

      As much as Motorola might need to buy Palm, I doubt they will ever realize this, where I see a good chance of those two companies coming to that realization sooner rather than later (this year or next).

  11. MOTO BLUR is a commendable effort, they have tried to differentiate and they used the MOTO brand, unlike HTC who is just playing ODM for everyone that knocks on their door. I agree with OM, Moto has got to innovate, Blur was a good start, but that is not enough in this dirty race to catch up with the iphone. There are only a few places to change – Hardware ( moto is strong), OS (too late to do anything here, so go open) , Apps (decent bet by Jha to go with Android apps on this one)
    Here’s my suggestion – Jha should goto MIT and grab the complete Sixth Sense project and be the first one to implement the concept completely, that can propel a differentiation and a solid innovation pipeline ( but alas – I think the inventor said he would make it open source! )

  12. No way no how. Motorola has gone through a whole lot of phone OS’ many of which they integrated at the same time and has undergone a wholesale restructuring at every level to just do Android. They cannot make another shift like this. Their best options is to make better Android phones than anyone else and support them better too. Everyone at Motorola knows they are simply trying to get Mobile Devices in shape to sell so Jha can get his humungous bonus.

  13. Om,
    Buying palm wont turn the tide for Moto. Google has a high margin cash cow biz that can subsidize all sorts of things. So it can outlast Apple, Moto, MSFt et al.

    When Danny Sullivan asked at the Nexus announcement why Google was doing it, they had no answer. Cause the real answer is to cut off Microsoft at the pass.

  14. Magic 8 ball says- No Moto Pre + Pixie

    Moto was up against the wall, they executed when they had to, and they executed well. Droid is good, droid has the two holders one for car one for bedside which show the realize key aspects of the “mobile” market. People will accesorize, when they go home they will have their communicator within reach, when they travel they want to access functions like GPS, turn by turn etc.
    Motorola did well to articulate that kind of grokk.
    Google does not really care about mobile (you are mostly correct there).
    Google wants to see the cats herded, they want Android for a variety of reasons to have the best chance to be seen as a unified family of devices, even though its not. Reminiscent of Palm OS with Sony, Handspring, Handera et al. It was hard to compete against Palm, but Sony did ok, Handspring did pretty well.
    If Moto can come up with something like the Apple Dock Connector, and a unified vision or style that can last two phone generations (20 months) then people will have some reason to move from one moto to another.
    Unity is the key. Moto has no need of Palm to unify.

  15. Om – Looks like you are hell bent on running google down – simply not understandable. Motorola was not under any illusion that Google would just exclusively support them on Android – quite frankly the market is so big – so long as Motorola keep selling well – Google would be forced to support them more and not otherwise. The opportunity for Motorola is in developing various hardware, quite frankly in expanding the frontiers of mobile and related devices leveraging Android and in enabling creation of relevant, sophisticated apps for their customers This crazy idea of everything vertically integrated wont work for long – people in real business understand this very well. By your same logic Motorola should be upset with Verizon for supporting RIM, Palm & may be Apple in future and others! I see that somehow you are so anti-google that forces u to examine all through that prism! Google has made fantastic moves with Android likewise Motorola as well. Two years from now – it would be seen that both Google and Motorola did take the right steps and they would be commended for that.

    1. This crazy idea of everything vertically integrated wont work for long – people in real business understand this very well.

      Really ?

      Pick the biggest ( I mean BIG) phone companies in terms of revenue Nokia, Samsung, RIMM, APPLE, three out of these four are such “vertically integrated” companies.
      I am not sure what other real business you are talking about here.

      1. I meant vertical integration across industries. The mobile phone industry ecosystem has been holding consumers for a ransom and Google must be commended to break that. Since the smartphone industry was new, the models of RIMM, Apple were tolerated – not anymore as the industry grows and reaches millions around the world. One look at Apples gross profit margin is enough to show who benefits in the real sense with this vertical integration! Call out any other industry including the sister industry – PC industry to see the difference!

      2. Not to go back and forth , but I do not call it a “ransom”. Vertical integration made it possible.
        If you asked Steve Ballmer to make a phone that plays a 3D game three years back , he would be laughing at you. Now we are playing 3D games while talking on the phone.APPLE showed that with vertical integration you get the best out of hardware and software. And now PALM just announced their phone can do 3D games. Android is fully a year ahead and still no API support for the GPU ?
        The things is consistently inconsistent in terms of features and hardware combination. The screen sizes are between 3.2 inch to 4.0 inch (SONY Rachel)
        I can clearly see a train wreck in couple of years.
        PC industry was almost dead till last year. Because they lacked innovation. The PC industry stagnated on Intel,Microsoft and the other cookie cutter hardware manufacturers. Take an example of the mouse and keyboard. We are still stuck with the similar featured mouse that is to be found in the early 90s. And APPLE’s latest mouse is totally different from their own mouse from the 90s.

  16. Disagree that Motorola should acquire Palm.

    Motorola’s never shown that it can develop good software. Ever. Good hardware – yes! I think Motorola should put its energies into developing the best, most usable (RIM-like keyboards come to mind) smartphones running on Android. No hardware maker is going to be able to add value on the software or services parts of the smartphone ecosystem; all that’s left to them is to make the most usable hardware and “round off” the “rough edges” of Android where necessary, like fixing the memory issues, Motorola making bigger memory cards usable, etc.

    Smartphones have stratified to a 4-way race for software – iPhone, RIM, Android, and in a very distant 4th place with rapidly-shrinking market share, “everyone else” including Palm, Microsoft, Symbian, etc. Motorola buying Palm won’t change that equation at all.

    Put it this way… what OS do you think is going to be running all the smartphones that will emerge in the developing nations now that there’s enough horsepower IN the phones to be able to do voice recognition for the illiterate population? Hint… it’s not going to be an OS with an onerous licensing fee or lack of support for native languages.

    I think what’s really going to tip the balance is that Android is rapidly mutating into devices spanning from smartphones to netbooks, and there’s no hint that RIM or Apple (other than the rumored tablet) is trying to flank Android in that role.

  17. Sorry to say, the whole premise of this post is shakey. Google is not in the exclusive deals business. There is nothing that says Google will sell only HTC devices on their web store. If Motorola wants to beat Nexus One, all it needs to do is make a better device and sell it through the Google web store. They will reap all the benefits of the humongous Google home page marketing, like HTC is doing now. That is the simple, elegant and first principles way of doing things. Buying Palm is unnecessarily complicated and doesn’t guarantee anything for Motorola. It would be like a floating man grabbing a partially sunk boat.

    This is the brave new world of open competition. Handset makers can no longer hide behind the safety of exclusive deals with big carriers. The only way to win is to innovate and come up with a better device.

    Of all the people in the world, I expected Om to appreciate Google’s efforts in fostering this competition. Instead, he terms it ‘back-stabbing’. Commenter Chitra above is probably right. Om’s prejudiced attitude towards Google keeps him from seeing the true picture. That’s a dangerous place for a journalist to be in. I remember Om’s first post in response to Google’s first Android announcement – lukewarm and critical. Now even he admits that Android is an unstoppable juggernaut.

    Careful Om, lest you lose the balanced perspective!

    1. Google my friend, is not “our friend”.
      They are a great company that does “SEARCH” well.
      Probably the best at their core business.
      Its not an exaggeration to say that the world will stop if google site goes down.
      But their attempt to make money at the cost of the privacy and tie the customer with their products can be termed as “Greedy”.
      A greedy company can do anything (back stabbing) to make more money.
      Some fine examples of this behavior are
      The CEO sat on the board of APPLE for long time before they announced their own mobile platform.
      They worked long with Mozilla before dumping them for Chrome.
      Oh wait a sec , my memory is getting short, didn’t they do the same to YAHOO back in the day ???

      If you remember, they are following the blueprint of another reformed but used to be greedy company called Microsoft.

  18. Om, Palm and Moto seem to both be wounded ducks, but that doesn’t necessarily mean they are good fit. Motorola has talked about spinning off their mobile division for at least 1 1/2 years. I can’t see them doubling down on a Pre acquisition, unless it meant a spinoff was more digestible to investors. If not, then I don’t see a Palm deal happening.

    The reality is that its not in Google’s interest to lock out Moto. They had the hot phone for a month. Now its HTC. Next month, it may be somebody else. That’s the nature of Android. Get used to it, Moto.

    Jha’s performance has left a lot to be desired. His attempt to play Steve Jobs at the Droid unveiling was unfortunate. And now his performance at the Google event was ridiculous. That’s not how you strengthen a relationship with your most important partner. If Google is playing nicer with HTC today, that just means Moto has work to do to strengthen ties with Google and build a better phone. If Jha can’t do that, then maybe he’s not the guy for the CEO job.

  19. Palm would be an outrageously expensive thing to buy – $4, $5, maybe even MORE =billion=.

    Any company dumb enough to spend that kind of money on what Palm has to offer should have their stock shorted into the ground.

    I’m surprised, BTW, that so many pundits keeps saying that Palm should be bought. Is there NO FINANCIAL SANITY left in the author ranks?

  20. I guess I have to wonder how much has to do with Motorola paying it’s American workers higher wages than anything else. We’ve seen the American economy gutted to build the infrastructure of Asian countries that pay their workers far less. None of the cheap Android makers you see will be American companies. As an American, I’ll pay more for a phone that is at least engineered and designed by Americans and I’d pay even more for one manufactured by Americans.

    1. iPhone tries hard to show that it was designed in CA. But the fact remains that most of its components were manufactured in China/Taiwan and the assembled in China. It is almost impossible to find a phone that was designed and built in a western country. Gone are those days and if you have one such phone do treasure it.

  21. The way I read this article it is actually HTC against Motorola, Not Google against Motorola. Motorola has to build better device. Google Nexus One software wise is not better than Droid. Moreover, Motorola has Blur experience on the top of standard Android so in theory and practice Motorola’s software offering on Android is better than Google’s. So, it is hardware, performance, look, industrial design etc. And that comes to HTC. Fighting hardware war by buying software WebOS and running away would not solve the problem. If Droid is better looking, thinner and faster than Nexus One why would one buy Nexus One over Droid? It is the same software after all and Motorola will add Blur sometime soon to top it off…

  22. I do agree that this was a crappy thing for Google to do to Motorola. The Droid has been a big hit and it was said that Google was working very closely with Motorola on it. Then they turn around and partner with HTC and release their own phone. I think that’s really really crappy of Google to do. The Droid is “the” Android phone (it’s much better than the Nexus One – only advantage the Nexus has is Android 2.1, which will be coming to the Droid soon).

    However I highly disagree that Motorola should buy Palm. Palm is going nowhere. The Pre has been a failure. I think WebOS is a good mobile OS but the marketshare doesn’t lie. It has something like 1-2% of the US mobile market – not good. Android has more than 10%, almost half of which is the Droid.

    Motorola switching to Palm / WebOS would put them back at least a year in terms of doing anything visible to the customer. They can’t wait that long. Android is the future of mobile computing and they need to stick with it. Buying Palm would be an absolute disaster.

  23. any way you look at it a difficult situation for motorola.. i think they were trying to differentiate their andorid offering vs. vanilla android.. google sees that, and that is a problem in their ecosystem… wondering how microsoft kept such “innovation” in check during the early days of MS-DOS and windows..

    anyway, i think motorola should continue innovating and coming up with “innovation”. the only suggestion i can make is to NOT think of splitting the company… this can only help execs who are title hungry and some investment bankers..

    use the other divisions (dividling) but still there carrier relationships to deliver stuff that GOOG/HTC cannot…carriers want that… this is what RIMM is doing… NOK should do the same…

  24. Totally agreed, Om. Putting aside the execution risk, the writing is plainly on the wall. Motorola gets hardware, has money and distribution, and Palm gets software.

    More to the point, if Motorola doesn’t doing something like this, they are between a rock and a hard place since they can’t go back in-house and build yet another software ecosystem, and it’s not like they are going to look at Symbian, Windows Mobile or anything else.

    In case of Palm, they have a wafer-thin window of time to remain in the game as a material player. I have got to believe that Elevation is playing the chess board for a Nokia or Palm outcome at a rich valuation, knowing that if they fail to pull it off this year, they crash into a wall…of irrelevance.

    Mark

  25. Om, your dead on. Everyone needs to be kept honest. Apple doesn’t want to push Googlewear but will have to because Google is in the hardware biz. Verizon never wanted to give this much power to Google but it needed a partner because of Apple and At&t joining forces.

    By buying Palm it could dedicate more $ to compelling hardware to match the beauty of Palm’s software. That would be compelling.

  26. Part of Motorola’s problem’s is that it is perceived by many to be a hardware company. It lacks software endurance credibility. I would suggest to Motorola to create a very strong programming platform along with a good software download server for their mobile phones like Apple and Google do. Regardless of the phone Motorola is selling, it should be compatible or have a clear migration path from the old. Right now Motorola lacks creditibility on that front.

  27. There’s an opportunity for someone to fork Android and make a more open community-supported version.

    In much the same way that a desktop Linux distribution as tightly controlled as Android couldn’t survive long, I think we’ll soon see Android forking and community-based versions outperforming google-based ones.

    I think Motorola should partner with Red Hat to make the community-friendly Android fork. If nothing else it’ll send a message to Google that if they backstab their partners, it’s even easier to stab them right back with F/OSS forks.

  28. This is such a great debate. I have been of the opinion of late that Nokia needs to buy Palm to resurrect their business by making a serious Smartphone. Those here who have suggested that Palm and RIMM belong together… I don’t see that one. RIMM needs to be more open. It may take 5-7 years, but I don’t see a long term future for BB/RIMM.

    Motorola and Palm together is an interesting idea. However, unless they can divide dev over two platforms, I’d say Android has a much better chance for long term success.

    I have to ask – did Google really “screw” Motorola by also partnering with HTC? I’m a MotoDroid owner and I like the product but perhaps Motorola needs to look at it’s designers and compare to the elegance that other company’s like Apple and HTC have produced. Motorola hasn’t produced an edgy design since the RAZR. Yawwwwn. If HTC beats Motorola because they are producing sexier designs faster – Motorola deserves their fate.

    1. I agree with the long term future for RIMM. They can still be back in the game if they have a solid browser, 3D gaming support and a decent touchscreen phone (STORM is not a good example). I was thinking Nokia might buy PALM, but Om came up with this rather “New Strategy”.
      Motorola should pull the plug on Android. Android as a platform will be a mess in two years. They still haven’t created a decent SDK for gaming support. PALM did that in less than a year after releasing their Pre. Folks should understand that PALM has some serious talented folks at present. And looking at the way they are keeping on top with updates/ features / releasing in multiple countries only APPLE can match them. Google for all its brainy folks still operates as a testlab.

  29. You simply have no idea what you’re talking about. Motorola doesn’t need software – it has Android, which doesn’t cost them a cent. The fact that another manufacturer (this time Google, or HTC however you see it) has come out with a device with that same software is a BONUS not a setback.

    Everything in the mobile arena is about apps, and there is only so much room for mobile OS’s if you want to attract developers. This is why Palm is dead – no one is going to develop for an OS that runs on so few devices. That is the power of Android, and Motorola merely needs to step up and create excellent hardware. If they want to differentiate on software, they can create a theme on top of Android like Sense from HTC. All the strengths still remain.

    I’m sure Motorola is pissed off that Google released their very similar phone so close to their release date. However, that’s life regardless of whether you’re running Android or not. Competition’s a bitch. The Droid is still quite a different phone (hardware keyboard for one, if you’re into that) so I’m sure they’ll still sell.

    Oh, and people who have their own Gulfstreams to fly around in still need to get from the airport to the venue, hence the traffic part.

  30. What about the possibility of Google Acquiring Moto? Makes lot of sense for Google to acquire its own handset manufacturing & distribution channels to make its Vertical integration complete.

  31. This idea of a marriage between Motorola and Palm is one that I don’t really understand. As a maker I haven’t seen a lot of adoption of the Palm Pre platform and that is a relief – having yet another platform to try to develop for may help exercise emerging ideas in mobile app development but largely it is just a frustration. Motorola seems to be on a safer track by concentrating on the hardware – even if they can’t have their own little fiefdom. They do benefit from Android more than it hurts them – although likely as not they will be losers anyway in the end. The other scenario of moving to yet another platform would marginalize them in the same way that it will soon marginalize Nokia. I still can’t quite forgive Motorola for the Razr in any case :-). I went straight from that to the iPhone.

  32. Well if google will not Selle Nexus One HTC will so it dont decrease the Competition. Google is not Manufacturing it, its just marketing it and as HTC being most Successfull Company to Sell Android Device and Being oldest Partner in Android Game i Consider Google to Pick HTC to manufacture there Second Dream Device as appropriate.

    Motorola DROID is good Device but hard to conrfigure. We in a Test lab of CDMA Operator in India have ask Motorola to give some Handset to test in Operator and was not Successfull even to get 1x Data or EVDO Data Network configure. Nether Motorola have help. We still after 2 month only activate Voice calling on it and SMS. But in case of HTC all Device can be Programed in CDMA like cutting Cake.

    Motorola have to Develop fine Software for CDMA Configuration and more Vibrant Distribution Model. and Atleast some Good Looking Handset. Where is that Motorola who Produced RAZR V3. We want RAZR type look with some Good Configuration tool which can enable Programing CDMA device to activate it other then USA network.

    1. Interesting insight.
      Making a true world phone (GSM + CDMA) at a cheaper price is probably the key to MOTO’s future.
      I highly doubt they will sell a million Droids in any part of the world other than USA.

  33. I don’t get the whole “Android costs nothing, so Motorola shouldn’t buy Palm” argument. The fact that Android “costs nothing” should be the loud warning in Motorola’s ear…it means everyone can use it, and Motorola has to compete solely on hardware. Om’s argument (and one I agree with) is that if Motorola wants to be a player, they need their OWN hardware/software solution, to set them apart. Playing the me-too game won’t work for them-they can’t compete.

  34. But what’s preventing Motorola from making Android OS “their own” and doing what they would do with sole ownership of WebOS? It seems like Android OS’s biggest problems are UI polish and multitouch (and hardware-specific performance issues? which Motorola should be able to help Google improve on) so why can’t Motorola make their own skin and license a multitouch patent (if they haven’t done that with their Android phones already)? Set an example with a few choice apps, produce some HIG documentation, make a better version of apps that don’t compete well with the iPhone’s. Isn’t this the whole point of Android being an open OS, to make it available to companies that are willing to invest the resources? If Motrola hasn’t taken advantage of that and are letting Google take on the majority of the burden of software development, then I don’t see how they could manage Palm better or how they can feel slighted because of the Nexus One.

  35. I agree with Om. You guys haven’t seen the end yet. Wait till you get Android phones made by the likes of some Shenzhen Light Electric works, Wuhan Maritime corporation and such Chinese manufacturers. That will drag the margins way way down for Androiders.

  36. Om,

    You sounds dangerously like Sramana Mitra in this post – throwing out investment recommendations based on consultant-like arguments.

    I think the MOT-PALM combination is unlikely on a couple of counts (much like the DELL-PALM, and NOK-PALM combinations that were the major stories of 2009).

    1) At $12.5, PALM is priced north of $3b on a fully diluted share count. MOT (the parent company) has $7b of cash on their balance sheet. In 2008, their mobile division accounted for ~$3.5b (of $27b) in assets, $12b revenues and $2b operating losses. It’s unclear to me why they’d essentially double (or triple, according to the speculators who argue for a higher stock price) their outlay on mobile devices to purchase a company that has a track record of wasting money to overpay engineers (it’s telling that the core design comes from the team that bankrupt Helios).

    Basically, you’re indicating that MOT, a company that has been focusing on network rollouts (both cable and wireless) should burn most of their their hard earned cash on supporting a failed wireless team.

    2) The argument for PALM seems to be based around WebOS and the team. Well, if you consider PALM’s outlay over the past two years – it essentially cost them $400m to develop the software at the team. Even if you attribute some premium to the urgency factor, it’s hard to justify a price tag north of $800m for the whole shebang. It’s understandable that you & Mitra cut your teeth at the end of the 90s, but $3-4b on failing companies isn’t quite the way things are done nowadays.

    3) You define WebOS as a success. The only proof of such is company profitability. PALM has been unable to demonstrate this. Jon R. helped develop the iPod and take costs out of the design process. He lacks the sales & marketing support that Jobs and others provided. Somehow, I don’t think MOT is a natural fit to “unlock” the value of PALM’s decent technology, given their marketing blunders.

    Basically, the only people who benefit from such commentary are Elevation Partners, Goldman Sachs (by helping with ridiculous financings), and the day traders.

    The people who hurt are those who have their money managed by Elevation Partners, Capital World, Fidelity, Blackrock & T Rowe. Gun slinging managers who see PALM as a mini-revival of the late 90s.

  37. Sorry Om, but you have it backwards. Palm should buy Motorola. Motorola has lost its way in the handset business while Palm has found its way forward with an excellent product.

  38. Motorola needs to focus on being the premier hardware manufacturer for Android users. They have relationships, HW skills, reach etc. This market position is still open, They can, and must, beat HTC to it. They need to assess whether HTC has an unfair advantage in this race given their coziness with Qualcomm and Google.

    Moto+Palm for another integrated/vertical solution? That position is not available for Motorola. They could try it, but they would fail.

  39. My thesis is that the Palm should start offering additional services around the device. In effect creating more revenue streams. Some services that would make a lot of sense to me:

    1) 411 – either free or freemium

    2) Call tracking, call management – e.g Skydeck

    3) Security – a subscription based service around security. Encryption of SMS, email, voice mail etc.

    4) Advertising – Google is going to get a large % of the ad revenue from the web pages viewed on Palm devices, because of the Admob deal. Can palm offer advertising on the home screen in a non-intrusive manner?

    5) Storage – pictures, video, sms, email

  40. I don’t get it. It doesn’t tell the price of the Nexus One for AT&T service?
    “N” for the Nigel
    “E” for the Elephant
    “V” for the Vibrator
    “E” for the… uhh…elephant
    and “R” for you are Ridiculous!

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