You have probably heard by now that Google is acquiring Motorola Mobility for $12.5 billion. On the face of it, the acquisition seems like an incredibly aggressive move by Google. However, in reality, this acquisition is all about defense.
Forgive me for being clichÃ©d, but as they say, offense is the best form of defense, and that’s exactly what this deal is all about. As we have already discussed, one of the key assets of Motorola Mobility is its patent trove. Android and its partners have come under fire in the recent months due to alleged patent infringements. In fact, Microsoft has found a smart way to earn possibly even more than Google is doing from Android by licensing its patents to manufacturers like HTC. Unfortunately, there’s not much Google can do at the moment because of its weak patent portfolio. It can’t hit back at the likes of Microsoft or Oracle. That’s the reason why Google was desperate to grab the Nortel and Novel patents. That’s the reason behind Google’s public outburst at the current patent scenario. However, Motorola with its twenty five thousand patents (17,000 granted, 7,000 pending) will change all of this. If you consider that Nortel’s patents were sold for as much as four billion dollars, the $12.5 billion price for Motorola doesn’t seem very steep. Motorola will undoubtedly offer Google other benefits, including the ability to build the Android device that it really wants to, and shape the ecosystem with firmer hands. However, the real reason for buying Motorola is undoubtedly to protect Android and its ecosystem from being devoured by patent infringement lawsuits from competitors. Larry Page doesn’t try to hide this in his announcement. Although he does throw in the usual generic remarks that the acquisition will help accelerate innovationand supercharge the entire Android ecosystem, he goes on to dedicate an entire paragraph on the significance of Motorola’s patent portfolio.
We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to protect competition and innovation in the open source software communityand it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.
If you still have doubts regarding the real reason behind the acquisition, have a look at the official reactions from other Android handset manufacturers.
We welcome the news of todays acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.
Peter Chou, CEO, HTC Corp.
I welcome Googles commitment to defending Android and its partners.
Bert Nordberg, President & CEO, Sony Ericsson
We welcome Googles commitment to defending Android and its partners.
Jong-Seok Park, Ph.D, President & CEO, LG Electronics Mobile Communications Company
The common phrase in the statements released by HTC, Sony Ericsson, and LG is defending Android and its partners.
The tech press has already dubbed the acquisition as a bombshell and a game changer, and it probably is. Google’s announcement blind sighted everyone, including yours truly. However, upon a closer inspection, it really seems to be an incredibly obvious move. So obvious that Stasys Bielinis from Unwired View had called it a couple of weeks back.
Motorola might have invented the mobile phone; however, as a mobile phone manufacturer they haven’t been doing so well. Samsung jumped onto the Android bandwagon well after Motorola, and yet has already managed to establish itself as the most popular Android handset manufacturer. Before Google jumped in, Motorola Mobility’s future was dubious at the very best. In fact, many believed that Motorola Mobility was spun off earlier in the year to simply attract buyers. Even more curiously, Motorola’s CEO Sanjay Jha bragged about his company’s patent portfolio just a couple of weeks back, in what might have been a bargaining move.
We own one of the strongest and most respected patent portfolios in the industry. We have over 17000 patents granted and 7000 patent applications pending, with particular strength in 2G and 3G essentials, non-essential patents important to the delivery of the competitive products in the marketplace, video, particularly compression/de-compression and security technologies, and, finally, a leading position in 4G LTE essentials. With new entrants in the mobile space, resulting from the convergence of mobility, media, computing and the internet, our patent portfolio is increasingly important. We regularly review the company’s strategies, opportunities and assets, including the IP, with the goal of creating and enhancing value.
In short, Motorola needed a buyer. More specifically it needed Google, since it had already committed to a 100% Android based offering, and Google also needed Motorola’s patents to save its skin as well as defend partners.
Until now, Google has been a software vendor that occasionally paired up with partners to dabble with hardware. However, if this deal goes through, Google will be in possession of one of the earliest and most dedicated adopters of Android. This deal will undoubtedly make HTC, Sony Ericsson, Samsung and others nervous about Google’s intentions. However, if Google manages to stay committed to its goal of remaining fair and unbiased, this acquisition will also help allay the Android parters fears regarding the long term viability of the Android platform. This deal also means that the stakes are even higher than before for Google. It now stands to not only generate revenue through extra advertisement eyeballs, but also through hardware sales. I am not saying that Google isn’t motivated right now, but a bit of extra incentive will probably not hurt Android.
The current situation, where Google is both a partner and a competitor of Android handset manufacturers, is not a lot different from the situation that arose a few years back when Nokia acquired Symbian. Google’s acquisition of Motorola doesn’t necessarily have to be a disaster, as many advocates of doom and gloom will like you to believe. Yes, ultimately Symbian did fail, but it was not because of Nokia’s conflicting role. It was because Symbian as a platform failed to keep up. It will be the same with Android. Unless Google shoots itself in the foot by getting overly bullish, which is unlikely given that Google intends on running Motorola as an independent division, Motoogle wouldn’t result in a rush of vendors jumping to alternative platforms like Windows Phone 7. That will only happen if Android fails to keep up with the demands of the market and someone else manages to come up with a much more compelling alternative. The Motorola Google combination seems like a natural fit, and Google will have to do something stupid to mess things up.