First, let me make two assumptions so that we are all on the same page:
1. Google will soon divest a variety of Motorola business units,including the TV set-top boxes.
2. Google will keep the smartphone/tablet business, and perhaps somerelated items.
With that out of the way, let's discuss Google's constraints andoptions with respect to how it can plan an Android product portfoliofor smartphones, tables and related devices.
The first issue is the most difficult one, and indeed the most painfulone to ask and answer, and that is: What are Motorola's capabilitiesanymore?
Consider this: In the last six months, Google's
hardwarepartners have accomplished this:
Asus made a Nexus 7 tablet starting at $199 Samsung made a Nexus 10 tablet starting at $399 LG made a Nexus 4 phone starting at $299 Acer made a Chromebook (laptop) starting at $199
It is hardly controversial to say all of these are better andmore cost-effective devices than anything Motorola has produced.
Even if Motorola had not been distracted by the pending (August 2011to May 2012) merger with Google, could it have profitably engineeredand manufactured any of these four devices at these kinds of prices?
This type of capability breaks down into several dimensions:
: How quickly can Motorola cough up a new design anddeliver the finished product?
: Can the fit and finish compete with Acer, Asus, Samsung, et al.?
: Can Motorola accomplish any of this at a competitive price?
Obviously these three things hang together, to some extent. You canalways have at least one out of these three. However, even two out ofthree is not good enough -- this is the big boys' game now, so youcannot tolerate falling behind on a single metric.
All of these prices for the newest Google gear listed above has beenclass-leading, and widely lauded. It also appears that most of thiswork has happened in Asia. Yes, it's true that I'm not saying thatall or most of the work needs to happen in Asia, but there is onething here that is a bit suspicious to me, and that's Chicago.
Motorola is primarily in Chicago. When it comes to producing a pieceof $199 cutting-edge portable computer that only months earlier usedto cost $399 or $499, Chicago is not what comes to mind. When I closemy mind and try to imagine Chicago in the 2013 mobile computingeconomy, the only thing that comes to mind is a
car from EastGermany, ca. 1977: Bureaucratic labor, high cost, moving slowly.
, LG and Samsung move quickly. They can engineer adevice from scratch and bring it to market in four months. Googlebragged how Asus did the Nexus 7 in four months. Now they are talkingabout Motorola taking at least 12 to 18 months to bring a device tomarket. Getting Motorola into shape to compete against Asus or LGseems as difficult as preparing a hobby tennis player for playing inthe Wimbledon finals against Bjorn Borg.
Then add whatever disruption resulted from the pending merger. Hasthis set back Motorola's execution capabilities further? Who knows?Either way, it raises the question: Can Motorola ever recover fromthis, to catch up with LG, HTC, Samsung, Acer and Asus on the abilityto engineer a $199 device in four months or less?
Actually, considering this first hurdle alone, it makes me almost toodepressed to get to stage number two in this equation. If Motorola isfundamentally too incapable or just too slow or too expensive, what'sthe point of keeping it alive at all?
Second Constraint: Ecosystem Commitments
Eric Schmidt in particular has been very vocal about Google'scommitment to the hardware partners and ecosystem as a whole. He hasbeen very clear about the fact that Google is a fair player, and willnot give its own hardware department (Motorola) any leg up. This is atall order, sort of like saying that you won't favor your own child.
So far, all the evidence is that Google has been more Catholic thanthe Pope on this end. It seems to have treated all of its partnerswith a perfect firewall and arms-length equality. But can thiscontinue?
What is the point of owning Motorola if there are no synergies? Thereis something inherently contradictory here -- an equilibrium thatcannot hold: Either Google integrates Motorola, or it gets rid of it.
So far, Google has worked with very few Nexus partners -- HTC,Samsung, Asus and LG. Currently three of them are offering productsimultaneously. Will it simply add Motorola to this roster, perhapstogether with others? If so, we get back to point No. 1 above --Motorola's ability to compete on price, quality and doing it on time.
Another Approach: Differentiated Hardware
In June this year, Microsoft justified to the world its entry into thecomputer hardware business by saying that it wanted to build new formsof hardware that the other Windows computer makers simply weren'tdoing. If Motorola can't compete on price, perhaps that's the optionhere as well.
What would be examples of such hardware differentiation? I offer 4paths, most of them not mutually exclusive:
1. The one area into which Motorola had already waded is biggerbatteries, with the Droid Razr Maxx. Given its success and customersatisfaction, Motorola should clearly expand this principle of a muchbigger battery to all mobile devices going forward. Sell everysmartphone with an integrated 4,000 to 5,000 mAh battery, so that thedevice lasts two to three days under heavy usage.
2. Copy the BlackBerry form factor. Is there anything more obviousthan this? Motorola had taken a couple of steps in this directionbefore, but they were underpowered, had low-resolution screens, wererunning ancient versions of the Android OS, had horrific battery life,and the keyboards weren't even that great. These are relatively easyfixes, in the big scheme of things.
3. Make every Android pure Nexus. All Motorola Androids should getits software updates directly from Google. This is the onlyacceptable way for Apple, and Google/Motorola shouldn't acceptanything less. It doesn't matter if these devices are actually named"Nexus" or not, as long as this is what it is in practice. But what'sthe harm in using the excellent Nexus name anyway?
4. Google glasses and other accessories.
has to make the new Google eyeglasses that are anticipated to hit the first 8,000 or sobeta testers in the first half of 2013. It might as well be Motorola,no?
In summary, it's not clear what Motorola Mobility is even capable ofdelivering in a competitive time-frame, at a competitive cost,anymore. Is there anything Motorola can do that Samsung, LG, HTC,Asus, Acer,
and others somehow can't engineer faster and cheaper?
We had better see some results here soon, or else I will assume that Chicago just isn't a place that's competitive anymore.
At the time of publication, the author was long AAPL and GOOG.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
This contributor reads:
On Twitter, this contributor follows: