In case you haven’t followed any tech industry news in the last several days – Google (GOOG) and Motorola Mobility (MMI) have agreed on an acquisition to the tune of $12.5 billion. Some are calling them Motoroogle, but I prefer Googorola, especially since Google is the one doing the buying – their name should come first.
This is a pretty big step for a company like Google that is essentially a software play. Naturally people are asking what’s it all about. In order to figure out what may come out of this we need to try to understand why Google would buy a mobile hardware company. Unfortunately, the truth is there is no way to really know what Google was thinking. There are a couple of prevailing theories.
One is that Google sees this as a way to protect Android intellectual property against patent suits, especially from Apple (AAPL) and Microsoft (MSFT). Larry Page mentioned this in the Official Google Blog on Monday. Many pundits and analysts have lined up behind this theory. In fact it was mentioned by almost every single android manufacturer.
The other popular theory is that Google wants to be able to reproduce the capability of full ecosystem offerings like phones from Apple, Rim, and HP. This gives Google the chance to control the hardware, software, user-interface, and in short the complete user experience. This is a straight-on attempt to duplicate the popularity of the iPhone.
While I have to agree that the patent protection side is at least part of the reasoning, I am doubtful that it’s the only reason. Recall that during the recent hissy fit between Google and Microsoft re the Nortel patents, it came out that Google had the chance to be part of the winning consortium, but choose against it. Google claimed that it was smoke and mirrors on the part of Microsoft, since if it was part of the group it couldn’t use the patents to protect against a lawsuit by the co-owners of the patents. However, it’s undeniable that they also couldn’t be sued by the co-owners of the patents over the same said patents. Clearly they were after something other than just protecting Android.
In addition, Apple has been moving forward in their suit against Motorola. Florian Mueller has discussed this in depth over at Foss Patents. Obviously if Motorola can’t protect themselves from suits by Apple, they can’t protect Google and Android either.
This leads us to the other alternative – Google wants to build phones. This will be clear to all soon enough. Either Google will divest themselves of the phone-building part of Motorola, while keeping control of the patents, or… they will start building phones. If they divest, then what they claimed was all they’re after, and you can quit reading now. But the interesting part is what happens if they do start building phones.
One can’t deny that Google hasn’t gotten a lot of traction with their Nexus phones. On the other hand, the iPhone is the single most-popular smartphone out there. Anyone who wishes to seriously compete with them needs to take a serious look and try to understand how they’re succeeding. Leaving conspiracy theories about fan-boys etc aside, the conventional wisdom is that Apple’s ability to control the software and hardware gives them a serious edge in end-user experience. Let’s presume for a moment that this is at least part of why Google would spend such a premium on Motorola.
The question then is how does it all work? Google can isolate Motorola, run them as an independent company, and treat them on a level playing field with all other phone vendors. This is what Google is claiming so far. I don’t see it happening – if that’s the plan, why spend so much? This would essentially make it a pure patent play, and in that case the price was simply too high. More likely Google will feed Motorola first, possibly even giving them exclusive access to extra functionality. Given Motorola’s past success with popular phones from the RAZR to the DROID, I expect this could be a pretty big hit. It sounds very interesting to me.
End result then is the next step. What does it mean for android and android customers? Well, if you’re a Samsung or HTC phone fan, you might want to start checking out what Windows has to offer, because I expect both of them will be adding Windows to their stable. I don’t expect they’ll drop Android, but I won’t be surprised to see them pay less attention to it.
If you’re a Droid fan or Nexus fan, lookout. This could be a truly amazing set of phones coming from Google and Motorola working together in an unfragmented way. I’d be pretty happy right now if I was a Droid user.
As for Android itself, well it depends on how it all plays out. If Google starts competing with their hardware partners, then they will look for alternatives. Microsoft has a chance here to really make a great competitive offering at a great price. It might even end up being cheaper to license Windows than to pay royalties on Android. This could be the thing that they need to really finally get Windows Mobile off the ground. Android will survive as long as Google needs it and uses it, but it’s day’s of dominance in the mobile space may be numbered. Ironically, in an attempt to compete, Google may be strengthening a major competitor in Microsoft. Only time will tell.
One other possibility is that Googorola is interested in set-top boxes. It makes sense.
The Justice department is is asking for more info about the Motorola deal. This may or may not mean anything, depending on who you ask. Me, I’m not sure, but I don’t think it’s overly serious.
So Intellectual Ventures has filed a patent infringement suit against Motorola Mobility. Apparently Motorola’s patents can’t even defend themselves. So much for the “Google only wanted their patents” theories.