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Motorola Mobility Must Have a Screw Loose

By Rich Smith - Updated Apr 6, 2017 at 10:45PM

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Will Motorola Mobility ditch Android in favor of its own OS?

Precisely how dumb is Motorola Mobility (NYSE: MMI)?

Last night, a gaggle of tech sites began reporting that the former cell-phone superstar -- which ultimately fumbled the ball on cell phones so badly that Motorola Solutions (NYSE: MSI) tossed it overboard -- has begun developing its own operating system. In multiple reports (repeating each other nearly word for word), the story is told of how Motorola became disenchanted with Google's (Nasdaq: GOOG) Android operating system. It's upset with getting sued by Oracle (Nasdaq: ORCL) over alleged patent infringements, and disappointed at Google's lack of "support" for the product.

Perhaps most damning, websites including TG Daily, Information Week, and Daily Tech cite apparently the same anonymous source alleging Google is "shooting itself in the foot" by allowing hardware manufacturers to tinker freely with Android – rather, I suppose, than impose some Apple (Nasdaq: AAPL) -like "do not touch" policy on the OS. And so Motorola Mobility has begun building its own OS, in anticipation of the day when it will dump Android in favor of an in-house product.

Great idea, Motorola. Just brilliant.
But here's the thing: It's precisely this freedom to innovate (plus the fact that Google gives the OS away for free) that has so many smartphone makers rushing to adopt Android. It's the reason Android now boasts more U.S. market share than either Apple or Research In Motion. And it's precisely this large target audience that has developers flocking to write Android-based apps.

Take away the Android OS, and Motorola loses the market share. Lose the market share, and the app developers will scatter. And once that happens, what will Motorola be? Answer: Palm.

It's hard to overestimate the danger here. Four years unprofitable before Android revived it, Motorola will likely lose its last chance at regaining profitability if it decommissions Android. Indeed, if Motorola goes down this road, I fear it could suffer Palm's fate.

It won't matter how good of an OS Motorola ultimately builds, you see. (By all accounts, Palm's webOS was a fine product.) If Motorola loses scale in the quest for independence, Mr. Market will slap it down just like it did Palm. And seeing as Hewlett-Packard (NYSE: HPQ) has already bought itself a smartphone maker, and the OS to go with it, I wonder … who would be left to rescue Motorola from its mistake?

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

HP Inc. Stock Quote
HP Inc.
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Alphabet Inc. Stock Quote
Alphabet Inc.
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Apple Inc. Stock Quote
Apple Inc.
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Oracle Corporation Stock Quote
Oracle Corporation
$90.05 (1.25%) $1.11
Motorola Solutions, Inc. Stock Quote
Motorola Solutions, Inc.
$254.97 (1.74%) $4.36

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