Focus, Focus, Focus

I had commented on the Google acquisition of Motorola Mobile as at best problematic and at worst a very bad decision. Google is really in the service business. Namely people get a service from Google, search or ads, and they do not have to assemble it, it comes prepackaged. There is no inventory needed and the infrastructure is generally unseen.

The product business is quite different. Motorola Mobile is in the product business, it makes things, and the customer really does assemble them, and you need inventory. The customer sees  your product for better or worse.

The culture between a product and service business is dramatically different. One sells boxes and the other the "experience" Google is great at experience, and the box business is really tough, it is competitive and one really wonders of Google made the right choice.

The patents were worth the price, the operations of the company may very well not be worth anything, in fact as we see this week they may be costly.

As the NY Times noted:

The challenges of making money in a mobile world were not the only reason that Google’s net revenue and earnings per share fell significantly below analysts’ expectations. Motorola Mobility, the ailing cellphone maker it recently acquired, is bleeding money. 

 This was not a surprise for me, the surprise is that it did not happen sooner.

As the Times continued:

Google executives took pains Thursday in the conference call with analysts to reassure investors that it was prepared for the challenges from mobile, and that it was already shifting its business models to adjust. 

“Monetization on mobile queries right now is a significant fraction of desktop,” Larry Page, Google’s chief executive, said. 

He said Google was exploring new ways to make more money as people increasingly used phones and tablets in addition to and instead of desktop computers, and said it was “uniquely positioned to get through that transition and to profit from it.” 

“I am not worried about this in terms of our business at all,” Mr. Page said. “I think it’s an opportunity for us.” 

The problem is that you do not have to own the farm to get the milk. One should focus on what one does well, and do it again and again, always improving it. Going astray always gets you in trouble.

Further the release of the quarterly filing the way they did should result in significant staff changes in the Finance Department, specifically extreme measures and replacements with those who understand the consequences. Too many free lunches make people sloppy.