Layoffs lead, but the real story is who is leading and what role Motorola Mobility will play in the Android Ecosystem.
Most of the $12.5 Billion Google paid for Motorola can be attributed to the value of the patents it acquired that it needs to defend against patent litigation from companies like Oracle and Apple.
Observing the agony of the RIM turnaround, and with Google’s appetite for patents at least partially sated, one wonders why Google would keep the Motorola Mobility hardware business, which has lost money in 14 of the last 16 quarters.
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To answer the question, look at two very intriguing Motorola Mobility leadership appointments made in May: Dennis Woodside as CEO and Regina Dugan as senior vice president of Advanced Technology & Projects.
If there were “made men” in the Google family, Woodside would be one of them. He started his Google career nine years ago, ascending from running the country operations of the U.K. and Benelux, to driving the growth and investment throughout Europe, and finally returning to run Google Americas. Reading Woodside’s official biography, two points are clear about him: he spent most of his career at Google building the search and advertising business, and he has the credentials to run a large and complex multi-billion-dollar business.
Regina Dugan, PhD, interestingly comes to Motorola from the Defense Advanced Research Projects Agency, or DARPA, where she had two tours of duty, one in the late 1990s as a project manager investing $100 million in diverse research programs and as DARPA Director from July 2009 until she joined Google. Just prior to the Motorola acquisition, she led the annual $3.2 Billion R&D defense agency. In between DARPA assignments she was a partner in a venture fund. During her directorship, Darpa adopted the tag line “creating and preventing strategic surprises.”
This is a space race with Apple to create a more compelling experience that results in the consumer picking an Android mobile device off the shelf instead of an iOS mobile device. It’s Dugan’s responsibility to lead her team to take the risks in R&D and cull a few game-changing technologies and implement them quickly as Android features gaining for Google a competitive advantage over Apple. In other words, creating and preventing strategic surprises.
Its Woodside’s responsibility to make certain that Motorola Mobility not only contributes profits to Google, but ensures that Android succeeds in delivering mobile search and advertising market leadership to Google. Google needs to be certain to lead rather than cannibalize its Android partners. Google won’t drive Motorola Mobility to produce embarrassingly rich, Apple-like gross margins, but rather to increase Android innovation that leads to embarrassingly rich mobile search and advertising revenues. Google’s partners will benefit from Motorola’s Android innovations, though they may need to enter into license and cross-license agreements with Google to do so.
It is unlikely that this 4,000-person layoff will be the last as Motorola reduces the number of devices it sells and reduces the complexity of its supply chain. Motorola will behave more like Apple, with fewer but highly anticipated, high-profile and strategic product introductions. Google’s Android allies will be the beneficiaries of Motorola innovation through direct licensing and strategic supply chain management.
Be careful not to interpret the Motorola Mobility acquisition by Google as if it were a private equity transaction. If Motorola Mobility can be right-sized so that it is profitable and it contributes to Google’s dominance of the mobile search and advertising market, it will be a huge success.
