Google and Motorola: A Decisive Acquisition.

Nothing can create a stir in the technical press more than when one tech giant decides to buy out another one. The last such buy out I can remember is when Microsoft said they were going to buy Skype which spurred a good week of articles from all my usual sources. There was also a whole bunch of people blaming Microsoft for ruining Skype as the service hit some troubles soon after the deal was announced, forgetting that the deal still hadn’t been finalized and Microsoft still had no say in how it was operated. Today’s buyout news has triggered a veritable tsunami of news, blog posts and speculation and this time around it’s not just all fluff.

As it turns out Google is going to be buying Motorola’s wireless division (and what then shall we call them: Googorola, GoogMo or maybe Gotogola?).

The news flooded my feed reader with dozens of articles ranging from simple regurgitated press releases to full blown analysis and speculation of what this will mean for both companies’ futures. I then spent the next hour or so devouring and digesting these articles to see if I could make sense of the massive reaction that this proposed buy out has triggered. From what I can tell it boils down to three key issues: Motorola Mobility’s patent war chest, Google’s desire to be a handset manufacturer and the effect that this is going to have on the Android platform. These are all rather meaty issues and whilst I might not have the cred of the larger blogging institutions I felt like I should throw my hat into the ring anyway.

The issue that everyone seems to mention at least once is Motorola Mobility’s rather impressive collection of patents, with 17,000 granted and 7,500 currently pending. The trove includes such pearlers as the mobile phone itself and patents that already have licenses with some of their biggest rivals (namely Nokia and Apple). On the surface acquiring the vast patent archive of Motorola Mobility seemed to be a reaction to Google losing the recent bidding war for the Nortel patents that were up for sale. Indeed Google did complain rather vocally that the partnership of mega-corps that did get those patents (some direct rivals, some users of Android) were only doing so in order to take down Android. However Google never appeared to be totally serious about acquiring those patents anyway, bidding strange amounts like pi and other mathematical constants. They were also apparently approached by the winning consortium to bid along with them (by Microsoft no less) which they turned down and sparked a rather public flamewar between them.

It then follows that Google, whilst not happy that it could have several companies breathing down its neck, didn’t just up and buy Motorola because of it. In fact it looks like Motorola has been under some pressure to monetize it’s vast patent cache for some time, even courting other big names like Microsoft. In the end they settled on Google as Motorola Mobility will retain some level of autonomy whereas Microsoft, still fresh from minting their deal with Nokia, was really only interested in their patents. Had Motorola gone with Microsoft in that instance it would’ve been a massive blow to the Android platform as a whole, as Motorola commands a respective 29% of that market. Motorola’s patents then are more a defensive barrier than anything else but that’s not the sole reason Google bought Motorola Mobility.

Google’s attempt to revolutionize the handset market, whilst commendable in their own right, has faced some problems when trying to break current industry norms. The Nexus One was meant to be sold unlocked for a mere pittance, as low as $99 outright,  but the carriers would have none of that leaving Google handcuffed and the Nexus One made available at industry level prices. Their follow up phone Nexus S, whilst an impressive handset in its own right, suffered the same fate and it seemed that Google’s hope of changing the mobile game was just pure fantasy.

However with their acquisition of the Motorola Mobility section they now get the ability to manufacturer handsets themselves as well as getting all the carrier relationships which, up until now, they have sorely lacked. This means that Google now has a lot more leverage when it comes to negotiating with carriers and they could possibly use this in order to see their original dream of cheap, unlocked handsets realised. I doubt that we’ll see anything like that for a while to come yet (the deal has to pass a lot of scrutiny before it’s official) but the potential for such a thing to happen is far greater with Motorola under Google’s belt than it was without it. 

The final issue that everyone has picked up on is what this acquisition means for the greater Android platform. Now you’d be forgiven for thinking Motorola isn’t that big of a deal, I certainly haven’t considered any of their phones and that holds true for my social group anecdotally. However they are indeed a powerhouse when it comes to Android, commanding some 29% of the market placing them second only to HTC at 35%. Google’s acquisition of them then means that they now have a direct influence over a sizable chunk of the Android market and this has had some speculating that this would mean trouble for other handset manufacturers.

For the most part though the other Android handset manufacturers have been positive about the acquisition and Google has stated that it wants Motorola to operate mostly independently. This is probably the best idea for Google as Android’s popularity can be easily attributed to those handset manufacturers and upsetting them in favour of Motorola would do far more harm than good. Many analysts have also speculated that the Googorola partnership will mean that Motorola will get preferential treatment over other manufacturers but I can’t see Google being that short sighted. The Motorola acquisition seems to be more of a defensive move to save the wider Android platform, not Google’s first steps into dominating the platform that others have helped make popular.

The Motorola Mobility acquisition looks like a positive move for Google, Motorola and the Android platform. With Motorola’s extensive patent chest Google will be able to defend the Android platform against any other mobile player that would seek to dethrone it. They also now have enough power to be able to realise their dream of cheap, unlocked handsets for the masses, leveraging off Motorola’s deep carrier relationships. Of course we’ve still got a while to wait before this deal is finalized and we start to see the fruits that this relationship will bear but I’m positive this will lead to good things for everyone involved.

 

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