Brick and Mortar is Dead! Long Live Brick and Mortar!

David Byrd : Byrd's Eye View
David Byrd
Chief Marketing Officer for ANPI

Brick and Mortar is Dead! Long Live Brick and Mortar!

In the late 90’s it was popular to refer to physical stores as “brick and mortar”. Furthermore, those companies that had physical presences were the future dinosaurs of our economy. The era of the Internet and IP communications was beginning and it would unstoppable as the choice for consumer purchases. Therefore, it is a little bit ironic when the greatest known virtual presence on the planet decides to purchase a “brick and mortar” asset. Google’s acquisition of Motorola Mobility has been defined as defensive in its conflict with Apple, Microsoft and Oracle. Perhaps, that’s true and worth spending $12.5 billion for nearly 20,000 patents, but that would mean Google would need to spin off the physical assets at a potential loss.

Motorola Mobility is a declining brand with running in the pack products. Yet, the purchase gives Google the opportunity to compete in the physical world backed by an incredible virtual presence. In the late 90’s I consulted with the CIO of a global company with hundreds of stores but no online presence. He was seeing new entrants on the web and was concerned with how to defend his business. At the time, I insisted that the physical properties would continue to be valuable but he needed to establish an eCommerce presence quickly. In preparation for the Christmas season, the company built an eCommerce website and closed many of their stores. Overtime they learned to integrate the website and the stores business processes and selling strategies. Buy on online, pick up at the store, or buy on line and return items to the store. It worked. Today, they have an incredible online presence and are building new stores again.

So, what is Google’s intent? Do they want to sell off the various components of the business and keep the patents? Surely, it is tempting Google to see if they can make better phones or tablets than Apple. And with RIM on the ropes and nothing exciting from Nokia on the horizon, there is room for a new entrant. It could be quite timely for Google to add “brick and mortar” to its business strategy considering the management team should be able to execute it better than the AOL acquisition of Time Warner.

If this purchase is simply to acquire patents, then it is an expensive acquisition with a complicated ROI. Consider the value for a similar quantity of the Nortel patents at $4.6 billion now owned by Apple, Microsoft, RIM, EMC, Ericsson, and Sony (the Rockstars), most of whom are competitors to Motorola Mobility. The patents are valuable because they generate income on a transactional or annual cash basis raising the specter of the creation of a technology toll business. A tit for tat retaliatory pricing or licensing confrontation would be bad for consumers, businesses and service providers. Broadvox and other service providers make use of many of these patents everyday in our network infrastructure and service offerings. Uncertainty in business is never encouraging.

Interest in “What Would Google Do?” continues to develop.  

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