In January this year, Motorola, Inc. split into two businesses – Motorola Mobility and Motorola Solutions. Motorola Mobility (MMI) is comprised of two technology businesses – the mobile devices business and the home business as providers of digital set-top boxes and end-to-end video solutions.
If the stock market is a reflection of business opinion, Microsoft – Nokia has Wall Street support. In early morning trading, Microsoft’s stock rose by 1% and Nokia’s rose by 11%.
Most experts believe that a key reason for Google’s acquisition of Motorola is strengthening patent portfolio which will enable Google to better protect Android from patent wars from Microsoft, Apple, and other companies. Motorola Mobility has a very strong patent portfolio thanks to its role as one of the companies behind the original invention of the mobile phone and lot of work in this space.
However, with the acquisition, Google has walked into Motorola’s patent wrangle with Microsoft. Microsoft had sued Motorola in October, 2010 over patent infringement on Motorola’s Android smartphones. In November, Microsoft sued Motorola over wireless and video-coding patents claiming that Motorola is charging excessive royalties for its patents. Motorola counter-sued Microsoft claiming patent infringement in breadth of products for PC and server, Windows Mobile, and Xbox.
Incidentally, couple of weeks back, Google execs blogged claiming Apple, Microsoft, and other companies in the business are behaving in an anti-competitive manner with several patent lawsuits against Google and other smartphone makers using the Android platform. Ironic that this acquisition is a strategic move in the same direction.
Google’s acquisition of Motorola puts Android handset makers on a sticky wicket. Competing head-to-head with the supplier of operating software would be tricky. Some time before, Google made Motorola exclusively launch the first Honeycomb tablet – Xoom – and earlier they’ve tried indulging in an end-to-end experience with Google Nexus.
However, this would also translate to Google easing patent pressures on hardware partners like Samsung, HTC, and others.
Last week, Motorola CEO Sanjay Jha told investors that the company is completely open to using Windows on its handsets despite its current Android focus. Even though Google has announced that it would run Motorola Mobility as a separate business, this looks very unlikely now.
However, Google would hit the royalty stream that Microsoft has worked out in recent times. Microsoft has been seeking royalties from Android handset makers like HTC.
Handset makers would give Windows Phone a more serious consideration now. If patent royalties don’t make Android effectively free, Windows Phone licensing costs wouldn’t hurt. Also, Microsoft could offer HTC and Samsung similar deals as with Nokia while supporting their development and marketing budgets.