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Has Google misfired by buying Motorola Mobility?

Google stunned the market by announcing it was buying Motorola Mobility for $12.5 billion. But what is it up to, and should it be up to it? Simon Brew takes a look…

By Simon Brew, 16 Aug 2011 at 15:28

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Never let it be said that the IT industry has lost its ability to pull a surprise that the majority simply never saw coming. While one or two analysts had suspected that Google might be going shopping in due course, few had predicted that it would snap up Motorola Mobility, in a deal worth $12.5 billion. But that’s precisely what was announced on Monday 15 August, 2011.

The guts of the deal are this. Google is paying the purchase price in cash, offering a premium of 63 per cent over Motorola Mobility’s closing share price at the end of last week. It’s already said that it intends to leave it running as a separate business, with Larry Page, Google’s chief executive, saying that the acquisition will help “supercharge the Android ecosystem”.

Where Android was excelling was in being non-partisan.

Eyebrows raised

On paper, then, it’s quite straightforward. Google digs into its bottom drawer, pulls out more money than the vast majority of tech companies could raise, and buys a mobile handset company. It does so to give Android a guaranteed foothold in the market, come what may. And you could argue it also allows it some direct quality control.

But already, eyebrows have been raised. The big advantage of Android, to many, was it was the only major mobile operating system that wasn’t tied in to a major manufacturer. RIM, after all, keeps its software firmly tied to Blackberry products. Apple and its iOS system are permanent bedfellows, while Windows Phone 7 and Nokia inked a deal earlier this year, which means the former is the main OS used by the latter.

Where Android was excelling was in being non-partisan. As such, it collected a long list of companies keen to use it. HTC, LG, Samsung, Sony Ericsson and Motorola Mobility were amongst the firms that had heavily embraced it. Indeed, it was this broad level of support that had seen Android reach a 48 per cent share of the smartphone market, according to Canalys. It’s continuing to grow in popularity, too.

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2 comments

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Main reason buried

Why did you bury the main reason for the purchase in a couple of sentences on the last page?

This purchase is all about patents and protecting the Android ecosystem.

The Android partners are under attack left right and centre, but the other parties, espeically Apple, seem to be giving the "owner" of Android a wide berth - probably because they are the only ones with enough money in the bank to stand up to Apple.

htc, Samsung et al are being picked off, one by one, as they are easy pickings, to force into licensing agreements. Add to this, that Google itself has no real patent portfolio at present.

That means, that the company is looking to bolster its arsenal and situate itself in such a position, that the likes of Apple will have to go directly after Google and settle this dispute once and for all - in fact, Apple is going to the Android ecosystem exactly what Lodsys are doing to Apple's iOS ecosystem; pussyfooting around the edge and taking the easy pickings.

This won't help so much in the Oracle case, but it could certainly help in the others - assuming that the patent portfolio has a number of patents which are in the right areas to allow them to counter sue Apple, or at least get them to site at the table and discuss a solution.

It is an uncertain time for the other Android partners, but as long as Google uses the patents to protect all partners and they can guarantee that Motorola won't get preferential treatment, I don't think it *could* bring more benefits to the ecosystem than the uncertainty it raises.

By big_D on Wednesday Aug 17

One word...

"Patents"

Has anyone examined what patents, licences and other legal assets they obtain by this acquisition and how that may impact on the patent wars going on in courts around the world?

Who knows - may even benefit Samsung in their spat with Apple!

By CoxJul on Wednesday Aug 17