August 15, 2011

The Perils of Licensing to Your Competitors

Horace Dediu, writing for asymco:

"The lesson (and warning) was that a licensor that is also a licensee makes other licensees uncomfortable. The supplier is also a competitor. This is classic channel conflict and never ends well."

Horace makes the point that despite Google's promise to keep the Android platform "open" after its purchase of Motorola Mobility, that purchase will unsettle other Android licensees. Google will at the same time be their supplier (of Android software) and their competitor (with its own wireless phones and tablets).

The question is whether Google can walk the fine line between owning the software and hardware, giving them an edge over competing Android device manufacturers against Apple, and crowding their licensees out of the Android marketplace. An answer will come if we hear the first company or two exit the Android handset market.