Google Acquires Motorola Mobility: The Big Picture

Well played Google, well played. The post-Schmidt giant has been busy competing against Facebook, competing against Facebook again, and now buying their very own mobile handset manufacturing outlet.

“It’s About the Patents!”

Prior to the Motorola Mobility purchase, Google’s weak hand of 701 patents pales in comparison to Microsoft, who was granted 3,121 patents just in 2010. Acutely aware of its vulnerability to patent lawsuits, Google is staffing up on patent lawyers, clerks and legal experts. Just one month ago, Google’s job openings included a number of patent-related positions, including a patent agent, patent counsel, patent docketing clerk, patent litigation counsel, patent paralegal, and a strategic patent licensing and acquisitions manager. So it seems likely the move was focused squarely on shoring up defenses against patent trolls. Afterall, Google stacked up enough legal firepower needed to put up a strong legal defense. Google also recently criticized Microsoft and Apple of trying eviscerate Android with a patent guillotine rather than competing in the market.

Buying Motorola means buying Motorola’s patents, as Google specifically pointed out in its blog post today. You can almost feel the disdain for our absurdly screwed up IP patent system in the writer’s prose:

“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.”

The Android Satellites

While Google has been left untouched, Apple filed a number of rather lame-ass motions targeting Android device makers Samsung and HTC. Even Techcrunch railed against Apple’s actions (shocking!). Oh, and Microsoft also decided to pile up on HTC too. Care to guess whether HTC’s top brass is supportive of Google’s latest acquisition? Let’s see what they have to say about this:

I'm Smiling on the Inside.


“We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.”
– HTC CEO Peter Chou

Oh I bet you do Peter.

HTC isn’t the only party to take sides: virtually every other handset maker chimed in with either enthusiastic praise, or at least cautious optimism. Regardless, the biggest winners (other than Google) are the smaller satellites in the Android galaxy, who would probably be forced to walk into Microsoft’s waiting arms. The Motorola acquisition is not just lawsuit insurance – it’s market marginalization insurance.

The True Mark of Genius is Turning Disadvantage Into Advantage.

Picture this: you walk into a Verizon store in the future, determined not to buy an iPhone. You have a few choices, here, but it boils down to the Google-Motorola dynamic duo or Windows Mobile on Nokia phone. Ah, yes Nokia; The company which Microsoft invested in earlier this year. They did so to ensure a locked-in downstream mobile handset licensee for Windows Mobile. Nokia, who has a trickle of a market share in the two largest mobile markets in the world.

"Wait they bought Motorola, which means we're stuck with.. aww shit."

I suppose it’s a sweet deal for struggling Nokia, who was quick to go to press today:

“This further reinforces our belief that opportunities for the growth of Nokia’s smartphone business will be greatest with Windows Phone. Additionally, with our respective intellectual property portfolios, Nokia and Microsoft are working together to build and nurture an innovative ecosystem that benefits consumers, operators, developers and other device manufacturers.”

In other words, there are meetings happening in Redmond right now focused on how to make the best of a competitive disadvantage.

The Freedom to Run Android

You know what else Google now owns? 29% of the Android market in the U.S.

That’s a large enough share to drive Samsung and HTC to deliver user experiences consistent with Google’s vision, or else Motorola will. The mobile handset makers are probably wondering if Motorola will enjoy special benefits or access to Google itself. While Motorola is playing down the possibility, it’s likely Motorola will be the reference standard. That means a previously toothless Google couldn’t do much to combat rampant skinning which leads to Android phones with confusing interfaces which look like ass. Google’s primary advantage over the iPhones has been hardware selection. Apple’s competitive advantage over Android has always been the kind of slick user experience only possible with end-to-end control of the product. The Motorola acquisition allows Google, at least on paper, to have it both ways. I wouldn’t be surprised if Google starts making noise about how handset makers should compete on hardware horsepower and quality build, etc. If I were Larry Page, that’s what I would do. That and pick up a shiny new Tesla.

Learning The Lessons of GoogleTV

Earlier in the year, GoogleTV became a casualty of an entertainment industry which withheld critical support for the internet television devices. Google’s management apparently learned from that painful experience that locking down technical talent isn’t enough to come out ahead. It also appears Google is no longer willing to lead its from behind, but rather drive their partners kicking and screaming towards a a better user experience. All it cost was 12 billion. The price appears to be worth it.

Google+ Games is Here

In June 2011, a reference to “Google+ Games” appeared the fledgling social network’s code, suggesting Google would strike at Facebook’ gaming cash cow.

Fast forward to today, a Google+ Games icon began showing up in a number of users’ profiles. The Google+ team is rolling out a few early previews to a small group to test out the new service.

The Google+ games project is launching with 16 new games, including titles from Playdom (City of Wonder), Rovio (Angry Birds), and Zynga (Zynga Poker). Here’s a screenshot form the google blog listing the initial game offerings:

The significance? Facebook levies a fee of 30 cents out of each Dollar for games on its platform. Google’s proposed cut is a measly 5 cents, which strikes directly at Facebook’s cash cow. According to an analyst at Privco’s, Facebook relies on gaming for over a third of its revenues. Since fiscal 2011 revenues stand at 3.8 billion, we’re looking at a 1.25 billion Dollar salvo launched at the Palo Alto social network. The move likely draws a collective cheer from game developers and consumer advocates, who’ve railed against Facebook’s rather large revenue share. This was a market itching for competition.

If I were to guess at what’s next, I’d say Facebook will adopt a wait and see attitude, and drop its revenue share rates if Google begins to make serious inroads into casual gaming. I’d also bet we’ll see the impact of Google+ games on Facebook’s mammoth revenues in short order, one way or another. But the biggest winner seems to be Zynga, who now looks forward to an IPO where it can boast a viable alternative to a Facebook dependency to boost valuation numbers.

Oh, and if you haven’t gotten the “gaming icon” on your Google+ feed yet, here’s a video to rub salt in the wound.. er.. I mean to give you a preview of things to come.

Incidentally, since Google+ is now in gaming, can music be far behind?

Using Google+? Have an iPhone? Here’s How to Cure Android App Envy.

Since you’re reading this blog, I’m pretty sure you are aware of Google’s release of the long-awaited Google+. I’ll resist the banal references to a “Facebook killer” and I’ll also post additional thoughts as a user when I have time this weekend.

Unfortunately, a native iPhone app is in iTunes review limbo, even as a Google+ Android app was ready to go on release day. But there’s no need to have app envy. If you simply point Safari to plus.google.com, you’ll be able to access Google+ within your iPhone, providing you access to nearly everything available on the web or on Android phones.

Even better, all you geek-chic iPhone users can enjoy the convenience of an “app” right now, by following three simple steps. First, navigate over to plus.google.com within Safari on iOS as above. Next, notice the menu bar at the bottom of the screen up there. Click the share icon (third from the left). Now click on “Add to Home screen” as shown below, to the left. You’ll see an icon show up which looks exactly like the one shown below to the right (in the lower right hand corner of the icon grid).

There's our icon!

Congratulations, you’re all set. You may have noticed I mentioned iPhone users can do “almost everything” within Safari – yes, there are two minor limitations. The HTML5 version you’ve just linked to from your apps pages will not run Huddle (group chat) nor upload photos (thanks Hillary Hartley for the pointer). However, core Google+ functionality is all there, including  Stream, Circles, Profile, and Notifications (within the app).

Enjoy.

Update 2011.7.20: The new iphone app is available. No need for a hack now.

Inside the Google Gaming Hivemind

I’m sure you’ve noticed Google’s been on a bit of a shopping spree of late in the casual gaming space. First Slide, then Social Gold, Adscape Media, and now Social Deck. The rumor floating about is that Google is currently building a social network of their own to be named “Google Me” focused on social gaming and casual play as a direct broadside to Facebook’s success in drawing in gaming revenue and mindshare.

I’m hearing from a trusted source (sorry can’t name the person) that the project is focused on casual play as a differentiation angle, because let’s face it, simply providing a Facebook look-alike isn’t likely to draw a large army of switchers.  They’ll have to improve upon the original or create a new niche. That would make sense in light of Google’s pickup of Mark DeLoura, a gaming industry veteran with a resume including the likes of Ubisoft (more on that hire in a bit).

Former Facebook CTO Adam D’Angelo poured fuel into the rumormill fire on a Quora thread with the following (emphasis is his):

  • This is not a rumor. This is a real project. There are a large number of people working on it. I am completely confident about this.
  • They realized that Buzz wasn’t enough and that they need to build out a full, first-class social network. They are modeling it off of Facebook.
  • Unlike previous attempts (before Buzz at least), this is a high-priority project within Google.
  • They had assumed that Facebook’s growth would slow as it grew, and that Facebook wouldn’t be able to have too much leverage over them, but then it just didn’t stop, and now they are really scared.

So that’s the buzz (no pun intended) on the possibility of a Google Me project.

However…

There are mixed signals. Google CEO Eric Schmidt was fairly ambivalent on heavy gaming investments when asked about it at the Techonomy summit. Now I mentioned I’d return to the hire of gaming veteran Mark DeLoura. He delivered what was considered  a strong debut presentation he gave at GDC Europe showing off the Chrome Web Store for the first time. A few key slides DeLoura focused on showed games such as the popular game Plants vs. Zombies coming to the store in fact. Then he leaves Google after just 4 months on the job, quite suddenly and unexpectedly.

What Does it All Mean?

So we have some mixed signals but also  This post is my attempt to connect the dots here and what it means for you if you’re a game developer. I’ll note that I have had nearly no contact with Googlers and this is unabashed speculation on my part. However, I think you’ll see that when we tie together a good deal of publicly available data, a coherent picture comes into focus. Here are three data points to consider:

1. Apple Does More Paid Apps, Google More Free Apps -  Take a peek at this chart of the day, courtesy of SAI and Pingdom:

The difference might be due to a number of factors – for example, one is a walled garden while the other is an open source platform. It’s possible in the minds of many consumers open source and “free” are synonyms. In short, for Google to make a strong monetization push, they’re better off leveraging a free to play model than an app purchase model.

2. Mobile games are flying off the shelves

Take a look at 148 Apps.com, and count how many of the top ten paid apps are games. Yep, that’s 8 out of 10, and yes, the two non games are in the 9th and 10th spots. Of the top 20 grossing applications, a full 16 are games – same percentage. The takeaway is hard to ignore: if you’d like to make money in the mobile space, develop a game rather than an application. In-app/game purchase numbers are harder to quantify, but our own data across publishers suggests virtual goods in games are likewise outpacing in-app purchases by a similar margin.

3. The Hottest of the Hot are Free to Play Games

There’s been some speculation about free to play games and the amount of investment going into those games, and some (understandably) wondered whether a new bubble is forming.  It’s understandable considering Disney paid $563 million for Playdom, the sector’s third largest developer, last month, and as CNBC says, “That price could escalate to $763 million if the unit hits performance targets over time. The bubble argument falls flat when you consider there are real revenues behind the investments – poised to hit between $2 billion USD to $7 billion USD by 2015. The payback periods of some gaming investments might be measured in 2-3 years by worst case estimates, and even be measured in months the most optimistic estimates. That hardly sounds like a bubble.

EA's Battlefield Heroes - a free to play game

It’s about the Mobile Free to Play Games

Put all of the above data points together and think about what it means for Google.  I’ll wager Google’s logic goes something like this: ” We’ve become the default repository for the web’s data. The next frontier is mobile game data, which will drive web gaming and stands to become even more lucrative based on early returns. It’s not a bubble, it’s the real deal, and if we don’t move in quickly, we may ceed that position to Apple.”

Hence the Google pickup in three substantial areas of game development and publishing, including the trifecta of game development studios, game publishing infrastructure, and monetization/currency/advertising platforms.

Again, this is all wildass speculation on my part – what do you think?  Comment away below!

Facebooking the Web: Opportunities and Threats

I have mixed feelings about Facebook’s new Open Graph Protocol. More on that in a moment, but here’s the quick summary, right from the Open Graph documentation:

The Social Graph is made of three basic components:

The Graph API, which is an open protocol allowing web designers to make website pages more “facebooky”. Setting this up is pretty easy, just add meta data information to your pages as defined in the developer’s guide, and Facebooks’s spiders do the rest. Here’s a sample bit of code from Facebook:

<html xmlns:og="http://opengraphprotocol.org/schema/"
xmlns:fb="http://www.facebook.com/2008/fbml">
<head>
<meta property="og:title" content="The Rock"/>
<meta property="og:type" content="movie"/>
<meta property="og:url" content="http://www.imdb.com/title/tt0117500/"/>
</head>
...
</html>

What’s in it for FB? Mostly a salvo against Google in the search space, once Zuck and crew enable advanced searching functions on the above meta data.

Social Plugins allow web developers and designers to easily add Facebook objects to web pages. Imagine “Liking” your favorite sports team’s website, and you have the gist of it. The Like button in the graphic above is one example, as is a social bar which makes any web page “social”, according to Facebook.

What’s in it for FB? Enabling website operators to add social elements easily is laudable, but of course Facebook’s real goal is to create the world’s largest database of preferences. Not just preferences in Facebook, but all over the web. The best part is their cost of doing so is zero since they’re distributing the work to everyone on the web. Brilliant strategy.

Docs.com is the third piece, and is Facebook-Microsoft’s joint project enabling social sharing of  Microsoft office docs with your Facebook friends. To use it, sign up at Docs.com.

What’s in it for FB? The official answer is it gives both Facebook and Microsoft a competitive product rivaling Google Docs. But the real goal here is to extend Facebook beyond the web and onto your desktop.

Opportunities and Threats

  • Actionable Recommendations.  Facebook “likes” were fun but useless. Until they enable discovery of new web content. Pandora.com now uses Likes to allow you to discover new music similar in style to those which you prefer. I’m sold – the new Pandora is awesomely accurate. That said, authenticate users your site “owns” via Facebook makes them no longer your users, right? On a related note, finding a coworker’s open Facebook page and liking questionable content is a great prank.
  • Social CRM Perhaps Google is threatened by Facebook, but salesforce.com‘s management should really be concerned. Facebook’s move likely to enable what many are calling “Social CRM”. Part of the reason my company uses Highrise as a CRM system in our company is it ties in contact social graph information automatically, without much data entry. Imagine using a CRM system where you look up contacts rather than manually entering them as you do now. Open Graph positions Facebook perfectly to dominate the next generation of CRM.
  • Weak Links Paradox Many of us have “friended” people we don’t know on Facebook because we simply want to be polite and sociable, but OpenGraph allows your friends to share some personal information outside of Facebook. That means some jackass who you barely know could expose your info without you knowing about it. Some are already pulling back their adding weak links to their social graph – and isn’t the strength of weak links the whole point of Facebook?
  • Single Point of Failure. The Interwebs is grounded in the idea of routing past single points of failure, however adding Facebook objects to every web page increases reliance on a single point of failure. Disconnect there. Besides, building a business on a social graph you do not control is asking for trouble.

Final Thought

If you’re going to integrate Social Plugins on your site, Facebook provides step by step instructions to adding Like buttons here. But beware, some buttons are evil…

Edit: Chris Messina also chimes in with this excellent post identifying the problem of a single point of failure for web content.