Motorola’s path forward
Google may have paid too much for the Motorola IP, but more pressing is what Google intends to do with Motorola going forward. While Samsung pushes the Android smartphone envelope with four and 8 core mobile processors and massive 1080p screens, Motorola seems stuck with last year’s products: dual core processors and 720p screens. Motorola’s product offerings are at best commodity level in a crowded commodity market, and the lack of new exciting products almost a year after the acquisition says that they really didn’t have anything that was new or exciting in their product pipeline when Google took over.
Does it make sense to continue Motorola as a subsidized commodity Android phone maker? I doubt that Google’s Android manufacturing partners think so. Google needs to salvage the valuable parts of Motorola and quickly jettison the rest. Motorola had R&D and engineering expertise that could be put to work on more advanced projects within Google. Perhaps some manufacturing expertise could be retained for limited run boutique items that mainstream Android manufacturers wouldn’t be interested in, but I don’t think cranking out more Droid Razrs is worthwhile.
I question whether the brand name itself is worth saving. It has an archaic quality that harkens to a bygone era of vacuum tube electronics. It doesn’t really fit in with the digital age.
What to look for in the Q2 earnings report
With an entire year having elapsed, hopefully Google will drop the excuses for the continuing Motorola losses, or preferably, not have any more losses. A year of restructuring should be enough. If Motorola is to continue as a hardware brand, I would also look for new product announcements that actually lift Motorola above its Android brethren. The Google/Motorola X Phone is rumored to have hardware specs equivalent to the Galaxy S4, as well as other features that enhance its value.
Most importantly, Google needs to articulate a clear strategy for Motorola, rather than comforting platitudes about synergy between hardware and software. If Google’s management doesn’t deliver the above at a bare minimum, then investors should question Google’s ability to make effective use of Motorola and call for shutting down Motorola and simply assimilating its remaining assets and personnel.
In fact, I consider this the most likely outcome, following a couple more quarters of Motorola muddling through with continuing losses and unremarkable products. Shutting down Motorola is likely to depress Google shares only temporarily, however, since Google’s advertising business continues to grow on the strength of burgeoning mobile ecosystems, Motorola will not have been a disaster, merely a missed opportunity.
The article Google’s Motorola Acquisition: The Anniversary Assessment originally appeared on Fool.com and is written by Mark Hibben.
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