Motorola and Google could impact Chicago innovation

Google’s acquisition of Motorola for $12.5b could be a huge event for innovation in Chicago and is as much about the history of the mobile industry as it is about the future. The company that invented the mobile phone lost considerable luster over the past decade. What was once one of the greatest engineering firms in the world – an engine of innovation and patents few corporations in history could match – had become just another hardware manufacturer, competing with the likes of HTC and Samsung but losing badly to Apple in a market where hardware and software integration is becoming an obvious advantage.

Google’s acquisition announcement may come as a surprise, but it’s actually not very shocking. It’s the most obvious move for both Google and Moto, a marriage preordained when Moto Mobility split away as an independent business, adopted Android as its exclusive software platform, and dangled those 17,000 patents (and another 7,000 patents pending) as a lure. Motorola needs Google’s leadership if it has any chance of rising above the other hardware manufacturers, and Google needs Moto’s patents to protect the future of Android.

Motorola knew it needed more software integration and expertise and they’ve been cultivating stronger relationships with Chicago’s innovation community. Several members of the advanced research team from Motorola are regulars inside TechNexus, meeting and greeting and interacting with dozens of startups that flow through those walls each week. We’ve had many behind the scenes conversations with Motorola to identify the app developers, entrepreneurs and engineers that might help them better understand and integrate location-based-commerce, social and other services into their unique flavor of Android and stand out in the market.

One of the great missed opportunities for the Chicago tech community over the past 20+ years has been the relative lack of a cluster of related tech companies that just never really grew around Motorola. But under Google’s leadership, Chicago may become a major battleground in the mobile industry wars, and the opportunity for a cluster of innovative startups and ideas could result. Think about the possibilities for a more tightly integrated Groupon or Grubhub into Android/Moto devices, and then imagine hundreds of similar business opportunities. Motorola doesn’t just make mobile phones, and Android isn’t just software for your smartphone. The possibilities for a boom to Chicago’s entrepreneurial and engineering community is very real, and this acquisition could provide significant fuel.

Navteq – the Chicago company that pioneered navigation and the location based services platform – still sits here in our backyard. They’re becoming fully integrated into Nokia as a business unit, where a partnership with Microsoft already exists. It’s not hard to imagine a mega acquisition for Microsoft resulting in another integrated hardware and software play.

Apple lost the early days of the PC war by betting on an integrated OS and hardware, but they’ve made a strong case that mobile is different, and clearly have out innovated everyone else with the iPhone. Now Google moves to acquire a hardware leader in Motorola. It’s possible Microsoft isn’t far behind with Nokia. WebOS from Palm ended up in the hands of HP (though I’m skeptical they can leverage it, and probably should acquire RIM/Blackberry to complete their expertise). Samsung and HTC are the big losers right now in the Google/Motorola deal… their decision to standardize on the “open source” and independent Android OS finds them now in direct competition with Google.

More people on planet earth carry a mobile device than have indoor plumbing – more than 65% of the world’s population is tethered to a mobile subscription. At the rate of adoption, within four years that number will rise to more than 85%… there will be more mobile devices than people who have shoes. It’s an astounding market, and the battle for corporate dominance is just beginning.

Battle lines are clear and the big guys are at war. Patents – in particular a treasure trove as rich as Motorola’s intellectual property, are a necessary weapon to allow further innovation. Google was too young of a company to have a strong patent portfolio, but their competitors were threatened enough to team up to fight Android on this front (the unholy alliance of Apple and Microsoft in acquiring Nortel patents was a major shot across the bow of Google’s ship).

But the mobile market is not just about the history of innovation, and these patent plays are just about opening the door for future ideas and competition. With Google’s acquisition of Motorola, much of that future innovation could come from Chicago.

 

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