Google’s $12.5 billion takeover of Motorola Mobility is intriguing from almost every perspective. It is the biggest acquisition in Google’s history. In one fell, typically aggressive swoop, Google has almost doubled its headcount and folded in a company that, unlike Google, makes hardware. Even though Google says that Motorola Mobility will continue to function independently at arm’s length, the company has taken on a massive organizational challenge.
But why did Google do this?
The interpretations range from the strategic to the positively Byzantine.
There is a simmering battle over patents going on between various mobile phone manufacturers. Right now almost every major brand, platform, hardware manufacturer and even app developer is embroiled in patent disputes with almost everybody else. Among the larger brands this has led to a brutally competitive race to acquire as many patents as possible from holding companies.
In July a consortium of companies, including Apple, Microsoft and Research In Motion (RIM), bid $4.5 billion for a portfolio of over 6,000 mobile-relevant patents from Canadian telecom company Nortel. To give some idea of how fierce the bidding had become, consider this: Google kicked off the war by bidding just $900 million.
Wounded at the loss, Google seems to have retaliated with a massive counter-punch in the form of the Motorola acquisition. The deal brings to Google around 17,000 patents and another 7,000 or so pending ones. It is a coup for a company widely seen as overseeing the mobile platform with the weakest defensibility when it comes to patents. At one point it even seemed that Motorola itself might wave patents at other Android phone makers.
Therefore, the Android ecosystem will find solace in this “Motorola Defence”.
Or will they?
Now that Google has a hardware manufacturing division, albeit at an “arm’s length”, it has the ability to sabre rattle at brands such as Samsung and HTC. Whether Google accepts it or not, this does change the nature of the developer-manufacturer equation. Apple has long been seen to reap the benefits of controlling a device from end to end, and from in to out.
Will Google be tempted to follow suit? Nothing now prevents Google from creating a new smartphone entirely in-house, which will then compete with friends and foes.
What does this mean for consumers? This deal could now allow Android makers to get down to the business of making phones without the albatross of patent litigation on their backs. And good phones will push everyone to innovate.
As far as users are concerned the battle for the market is best played out with phones in shops, rather than in courts with patents.
Google’s purchase of Motorola: What does it signal? Tell us at email@example.com