What Will Be Google's Android Strategy for Motorola?

NEW YORK ( TheStreet) -- What kind of smartphones and tablets could Motorola's Mobility division build for Google's ( GOOG) Android strategy going forward?

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 some related items.

With that out of the way, let's discuss Google's constraints and options with respect to how it can plan an Android product portfolio for smartphones, tables and related devices.

The first issue is the most difficult one, and indeed the most painful one to ask and answer, and that is: What are Motorola's capabilities anymore?

Consider this: In the last six months, Google's other hardware partners 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 and more cost-effective devices than anything Motorola has produced.

    Even if Motorola had not been distracted by the pending (August 2011 to May 2012) merger with Google, could it have profitably engineered and manufactured any of these four devices at these kinds of prices?

    This type of capability breaks down into several dimensions:

    1. Timing: How quickly can Motorola cough up a new design and deliver the finished product?

    2. Quality: Can the fit and finish compete with Acer, Asus, Samsung, et al.?

    3. Cost: Can Motorola accomplish any of this at a competitive price?

    Obviously these three things hang together, to some extent. You can always have at least one out of these three. However, even two out of three is not good enough -- this is the big boys' game now, so you cannot tolerate falling behind on a single metric.

    All of these prices for the newest Google gear listed above has been class-leading, and widely lauded. It also appears that most of this work has happened in Asia. Yes, it's true that I'm not saying that all or most of the work needs to happen in Asia, but there is one thing here that is a bit suspicious to me, and that's Chicago.

    Motorola is primarily in Chicago. When it comes to producing a piece of $199 cutting-edge portable computer that only months earlier used to cost $399 or $499, Chicago is not what comes to mind. When I close my mind and try to imagine Chicago in the 2013 mobile computing economy, the only thing that comes to mind is a Trabant car from East Germany, ca. 1977: Bureaucratic labor, high cost, moving slowly.

    Acer, Asus, HTC, LG and Samsung move quickly. They can engineer a device from scratch and bring it to market in four months. Google bragged how Asus did the Nexus 7 in four months. Now they are talking about Motorola taking at least 12 to 18 months to bring a device to market. Getting Motorola into shape to compete against Asus or LG seems as difficult as preparing a hobby tennis player for playing in the Wimbledon finals against Bjorn Borg.

    Then add whatever disruption resulted from the pending merger. Has this set back Motorola's execution capabilities further? Who knows? Either way, it raises the question: Can Motorola ever recover from this, to catch up with LG, HTC, Samsung, Acer and Asus on the ability to engineer a $199 device in four months or less?

    Actually, considering this first hurdle alone, it makes me almost too depressed to get to stage number two in this equation. If Motorola is fundamentally too incapable or just too slow or too expensive, what's the point of keeping it alive at all?

    Second Constraint: Ecosystem Commitments

    Eric Schmidt in particular has been very vocal about Google's commitment to the hardware partners and ecosystem as a whole. He has been very clear about the fact that Google is a fair player, and will not give its own hardware department (Motorola) any leg up. This is a tall 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 than the Pope on this end. It seems to have treated all of its partners with a perfect firewall and arms-length equality. But can this continue?

    What is the point of owning Motorola if there are no synergies? There is something inherently contradictory here -- an equilibrium that cannot 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 product simultaneously. Will it simply add Motorola to this roster, perhaps together 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 the computer hardware business by saying that it wanted to build new forms of hardware that the other Windows computer makers simply weren't doing. If Motorola can't compete on price, perhaps that's the option here as well.

    What would be examples of such hardware differentiation? I offer 4 paths, most of them not mutually exclusive:

    1. The one area into which Motorola had already waded is bigger batteries, with the Droid Razr Maxx. Given its success and customer satisfaction, Motorola should clearly expand this principle of a much bigger battery to all mobile devices going forward. Sell every smartphone with an integrated 4,000 to 5,000 mAh battery, so that the device lasts two to three days under heavy usage.

    2. Copy the BlackBerry form factor. Is there anything more obvious than this? Motorola had taken a couple of steps in this direction before, but they were underpowered, had low-resolution screens, were running ancient versions of the Android OS, had horrific battery life, and the keyboards weren't even that great. These are relatively easy fixes, in the big scheme of things.

    3. Make every Android pure Nexus. All Motorola Androids should get its software updates directly from Google. This is the only acceptable way for Apple, and Google/Motorola shouldn't accept anything 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's the harm in using the excellent Nexus name anyway?

    4. Google glasses and other accessories. Someone has to make the new Google eyeglasses that are anticipated to hit the first 8,000 or so beta 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 of delivering in a competitive time-frame, at a competitive cost, anymore. Is there anything Motorola can do that Samsung, LG, HTC, Asus, Acer, Sony ( SNE) 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.

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