This week kicked off to some pretty crazy news: Google announced that they were buying Motorola Mobility for $12.5 billion. Google says the acquisition was mostly in the name of protecting Android from patent lawsuits flying in from Microsoft and Apple, but there’s a lot more to it than that. We’re still trying to wrap our heads around the implications of such a big deal, but the editors here certainly have a few ideas of where to start.
As a patent play, it makes sense that Google buys Motorola; Google has been getting nailed by Apple and Microsoft over Android technologies, so they needed some kind of defense. Still, as a company that specializes in software rather than hardware, this acquisition seems as ill-fitting as Microsoft’s purchase of Danger back in 2008. Google maintains that Motorola will still operate independently, but despite some stiff-sounding words of support from LG, HTC, Sony Ericsson and Samsung, I worry that this might alienate other manufacturing partners and push them towards Windows Phone. Let’s put it this way: it’s hard to imagine anyone but Motorola making the next Nexus phone at this point. Of course, anyone buying Motorola handsets can expect speedier OS updates, and maybe more vanilla Android phones without clutter like Motoblur.
It looks like Google is taking that patent attack against Android seriously, as the $12.5 billion acquisition of Motorola Mobility will give it more than 17,000 patents in the United States to protect its mobile operating system against lawsuits. Motorola essentially invented the cell phone, so you can be sure that Google could find a patent a competitor infringes on if more lawsuits against Android are brought to court.
It’s more than just a $12.5 billion get-out-of-court card – although that price tag may sadly be worth it considering all the legal hours Google has been racking up – because this move will enable Google to offer an Apple-like experience of providing an end-to-end solution with hardware and software. It was the original Droid which got the ball rolling for Android, so it’s only fitting that Moto could be the one which sees the next phase in Android evolution.
There are still a ton of problems with this deal, as there’s no guarantee that this will go through now that the FTC is looking at Google’s control over Android. Part of Android’s success has been that Google didn’t mettle in the hardware game too much but swallowing Motorola really could create problems for the HTCs, Samsungs and LGs of the world. Look for many of these companies to take a harder look at Windows Phone.
This is a pure patent play, nothing else. I’d be shocked to see Google phones, as in made by Google, hitting the market. After failing to acquire Nortel’s portfolio of 6,000 patents, which went for $4.5 billion, they instead got 17,000 patents, plus 7,000 patents that are pending, for $12.5 billion. That’s $750,000 per patent versus $520,833 per patent. In other words, Google actually got a better deal than that whole consortium. HTC, Samsung, LG, Sony Ericsson, they’re all jumping for joy by this news because they’ll soon no longer have to fear Apple and Google breathing down their necks. What sort of innovation will take place now that lawyers don’t have to be paid to fight useless battles is what intrigues me the most about the future of Android.
It’s far too early to tell what the implications of Google’s acquisition of Motorola will be, but there certainly has been a lot of speculation around hardware production. Why would Google acquire a hardware maker and operate it as a separate business? The other thing that has been addressed by Google is that this move is intended to level the patent-war playing field. Google is hoping to diversify its patent portfolio and arm up against Microsoft and Apple, and acquiring Motorola could help its cause. How do I feel about this? At the moment, I’m really indifferent. I’m going to wait and see what happens after the acquisition before I start getting emotional.
I can’t say that I’m terribly surprised with Google’s purchase of Motorola. Motorola is likely the best positioned Android manufacturer, and after a less than exceptional split, Motorola Mobility could only really benefit from something like this (and it shows. MMI stock up almost 60% since the acquisition announcement). Now Google can defend itself like never before with a nice helping of patents by Motorola but hopefully this is just the beginning of Google protecting the Android OS.
While 12.5 billion sounds like a lot of money, that price may be shaved off over time, as Motorola has already licensed some of its patents and royalties should now be coming to Google. This purchase is more like insurance than anything. You hope you’ll never have to use it but if you need it, you’re prepared. This bodes well for the onslaught of patent attacks on the Android OS.
Not only is this about patents, but Google now owns Motorola’s set-top box business, which will allow the search giant to inject Google TV into many more devices. It hasn’t necessarily been sunshine and puppy dogs for Google TV since its debut, and hopefully its further reach will benefit the service positively going forward.
While I have my doubts that we’ll see only Motorola-made Nexus devices going forward, I’ll just say that I hope that this acquisition makes Motorola really kill off Motoblur.
But enough from us – what do you guys think of the deal? Aside from the fact that these are two wireless giants making sweet, sweet love together, what are the practical ramifications of Google and Motorola pairing up?