Google’s Motorola Acquisition Targets Living-Room Dominance

You’d have to be in industry blackout mode not to have heard about Google’s plan to acquire Motorola Mobility for $12.5 billion — which some have taken to calling the “deal of the year," apparently having forgotten about the Comcast-NBCUniversal and the planned AT&T-T-Mobile USA tie-ups. But while most people are focused on the impact of the deal on Android mobile devices, I would point out that the end game is probably a lot bigger than that. And it will require Google to get in bed with service providers.

The acquisition gives Google a bit of patent protection (the Android OS is under fire, after all) and a solid footing in the lucrative mobile hardware biz. And sure, Motorola has been a big Android supporter, most notably with the top-tier Honeycomb-based Xoom tablet. But Motorola Mobility also has a big install base of broadband cable modems, DVRs and set-top boxes, which is a lucrative business where it has a leading market share and which it is unlikely to abandon. So think Google in the connected home. Think even more Google ubiquity. Think TV, Internet, mobile, and Google being right in the middle of everywhere that those areas intersect. But it’s a market area dominated by cable, satellite and IPTV carriers — playing there will require a big change in strategy for Google.

It’s one the company is apparently willing to make: Motorola is "a market leader in the home devices and video solutions business," said Google CEO Larry Page in a blog post. “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," including pay-TV operators.

And whoop, there it is. Laid out in seemingly passing terms. But put simply, Motorola gives Google an attractive footprint to leverage – if it wants to – Android-based middleware on a number of different fronts within the digital home. And developers would find writing for TVs – a nascent market – a whole lot more interesting with an automatic incumbency to leverage, don’t you think?

"Google ... had its foray into this space with Google TV seen widely as an experiment," explained Kevin Burden, vice president and practice director for mobile networks at ABI Research. "A tie-up between Google and Motorola could give Google the expertise it needs to be taken seriously and gain an eventual foothold in content deliver to the home."

Of course, not everyone thinks TV will be a big push for Google. “IDC believes that Google TV still has opportunities in the retail consumer electronics market and the acquisition of Motorola should not distract Google from refining its offering for connected TVs and similar devices," said IDC.  

But let’s face it, IDC: Google has been trying – and failing – to capture the connected home opportunity with the ill-conceived Google TV gambit. Google TV aims to search fro online video and bring it to your television, and has made content companies nervous about cannibalizing existing pay-TV revenue, and about piracy. Google found itself with a whole host of content blocking, with no backup from the carrier community, which meant that there’s not much to index and stream. So it hasn’t found much consumer support. In fact, Google partners like Logitech and Sony have been dropping pricing on Google TV products by more than 50 percent.

Google has tried to paint itself as operator-friendly (if issuing statements that Google TV is meant to “complement" operator strategies counts), but its image as rival has been hard to shake. That’s been the case ever since it bought up a bunch of dark fiber, launched a Wi-Fi network in California and released the Nexus One mobile smartphone, Google branded, that cut carriers out of the distribution chain. Lest we forget, the Nexus One was sold with a la carte connectivity plans online through a Google hosted site. It didn’t last very long.

But Motorola knows how to partner with operators, and it’s been doing so not just via set-top boxes and mobile devices but also when it comes to enabling TV Everywhere. That’s a handy synergy to have when you’re Google, and powering mobile devices one of your main games, and when your OS is widely considered the best hope for overtaking Apple’s dominance in the smartphone and tablet landscape.

I think that for consumers, the smart money is on cool Android apps to start peppering the middleware landscape. Look for search to be integrated into programming guides. Look for Google to leverage Google+ to target social TV.  And, natch, expect a lot more targeted advertising initiatives. On the dark side, watch for rising privacy concerns as Google infiltrates every communications medium in our lives — it might sound like hyperbole, but … it probably isn’t. I am loathe to indulge my conspiracy side, but I’ve heard Eric and Larry talk about their dreams for Google, and let’s just say that I can imagine a day when your Internet-connected TV is sending stats on how much milk you buy to the Googlebrain for slicing and dicing and long-tailing ad strategies.

Bottom line:  Oh it will indeed. For the deets of the deal, please click here.

**Don’t miss our upcoming free Webinar, “ Consumerization in the Enterprise ,” with Yankee Group analyst George Hamilton. Find out how consumer cloud applications and mobility are changing the enterprise work landscape and why, and what the challenges are. Tuesday, August 23, 2 p.m. ET. **