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August 15, 2011

Google Buys Motorola

Google found a way to solve the problem of Android patents and it's only three times more expensive than acquiring the Nortel patents: buying Motorola for $12.5 billion.

"Motorola has a history of over 80 years of innovation in communications technology and products, and in the development of intellectual property, which have helped drive the remarkable revolution in mobile computing we are all enjoying today. (...) In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices. It was a smart bet and we're thrilled at the success they've achieved so far," says Google's CEO, Larry Page.

A few days ago, Motorola's CEO said that the company owns "one of the strongest and most respected patent portfolios in the industry. We have over 17,000 patents granted and over 7,000 patents pending with particular strength in 2G and 3G essential, non-essential patents important to the delivery of competitive products in the marketplace, video particularly compression, decompression and security technologies and finally, a leading position in 4G LTE essential." Sanjay Jha also said that IP was important to differentiate from other Android vendors. It's clear that Motorola didn't want to license its technology to other Android OEMs, so Google's solution was to buy Motorola.

Samsung, HTC, Sony Ericsson and LG had a unanimous reaction. "We welcome Google's commitment to defending Android and its partners." After all, it's Google who created the software, so Google has to spend $12.5 billion to solve the mess.

Google promises that Android will continue to be an open platform, but the other Android OEMs will have their reasons to doubt. Google's biggest acquisition to date could be an answer to Android's problems, but also the beginning of the end for Android as an open-source mobile operating system. Motorola released two of the most important Android devices (the original Droid and the XOOM tablet) and Android smartphones saved it from bankruptcy, but Motorola is a US company that can't compete outside of US and it doesn't have a good track record when it comes to releasing the latest software updates. Buying this company to save the Android ecosystem will only work if Motorola disappears.

Update. An interesting quote from Motorola's CEO (June 2011): "I expect consolidation to occur. Our customers are consolidating, and our supply base is also consolidating. But my view is that consolidation occurs in some interesting ways. I'm not convinced that handset manufacturers acquiring other manufacturers is the best way for value to be created for shareholders. Consolidation across content manufacturers and hardware and software manufacturers -- I see a bunch of different ways for this consolidation to occur, to create shareholder value and create different structures to the industry. You've already seen the acquisition of Palm by HP, a very interesting acquisition that brought software and hardware assets together. The relationship between Microsoft and Nokia also speaks to that. Do we expect Motorola to be an independent company? I don't know yet. I hope very much that we are."

18 comments:

  1. This is amazing, I can't wait to buy my first Motorola/Google handset, blur free! Google probably just spent the 12.5$ Billion to kill Motoblur, ha ha.

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  2. What do you mean when you say Motorola would need to disappear? Disappear/transform?

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  3. This blog is usually quite informative, but this article is ridiculous

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  4. Wasn't expecting that! Best of luck to all the people from Motorola working for Google now, wonder really how separate the businesses will be.

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  5. Does anyone know another place to get google news, where the writers is objective, I'm getting tired of this kind of news where the writer don't even try to stay objective.

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  6. There's something that I'm curious about and in fact I'm surprised no one in the blogosphere has mentioned it.

    What makes Motorola unique? Their Droids? No way. Their phones are OK, but they're just not terribly special or appealing within the broader Android world.

    Their patents? Maybe. But in that case, if Google refused to pay 4 billion for patents before, it's hard to see why they would pay 12 billion (and acquire an OEM, btw) just for their patents.

    Now there IS one Motorola project that is unique: the webtop. Their first lapdock was a failure but they're gonna try again with the Droid Bionic (the Photon 4G has the normal dock but no laptop dock), and the concept itself is incredible. Phones are powerful enough to power a computer, or at least a browser.

    But how could that create any synergy with Google's projects? Ok, if you remember, Google also is working on a "browser as computer". And when the Atrix came out, everybody was surprised that it run Firefox instead of Chrome. The Chromebooks themselves are nice but overpriced, and it just makes so much more sense to have them powered by an Android phone!

    Maybe the "phone-as-a-computer-as-a-browser" concept is more complicated than seemed at first, and Google needed to work really closely with Motorola to carry it out.

    Google has the Chrome expertise, they have been pushing Chrome as an operating system for a while, and now they have acquired the manufacturer of some kind of laptop that actually can only run a browser: to me the message is clear.

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  7. I think the reason isn't that Motorola was unwilling to license its patents to other Android handset manufacturers. The reason seems to be that Motorola has a number of patents that Google can use to sue and fight back if Apple or Microsoft try to sue Android handset manufacturers.

    Also, to the writer, I kind of agree with what others have said - please try to stay objective.

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  8. Can't wait for the next google phone!

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  9. so HTC out of picture? guess we know who's making the nxt Google phones



    =======================
    business telephone for business

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  10. The writer is objective enough. If you don't like, get out!

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  11. these patent wars from apple and generally occuring in the IT industry at the moment are doing more harm than good and slowing down progress.

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  12. I cant wait for a mix of Google and Motorola...

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  13. There is a point to understand here:
    1. Google has already branded itself in handset market. In absence of having an alternative, all other hardware manufacturers are highly dependent on Android OS for their Smartphone.
    2. Also many h/w manufacturer and OEM vendors refuses to go for OS upgrade due to cost incurred for doing so. In absence of upgrade feature in some android devices is spoiling Google Branding. User might loose interest in buying android smartphone. Where as MS and iPhone provide seamless regular OS upgrades.
    3. Google see a problem with its branding if upgrade doesn't work for all its devices.
    4. Google also struggle to fragemnt it's OS due to lack in hardware expertise. On top of this Google is unable to predict the hardware specifications in advance for its new releases to the accurate. We have seen few cases and news on hardware compatibility issues before.
    5. To address all these and to save Android branding, it was indeed a smart move. Google knew that it can be solved only by having his own hardware foray.
    6. There might a plan to monopolize android smartphone market in future by Google. Since other hardware vendors are not prepared and not invested in their own Smart OS, with one more smart step by Google after this merger will hit them very badly. They will still be dependent on Google until a new rock sold SmartPhone OS released to the market. (Note: MS or MAC never gonna go Open Source).

    These are personal speculations. People are open to share their views.

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  14. Google’s main source of Android revenues is probably from licensing and Android Market fees, and thus it would not make much sense to jeopardize its relationship with its manufacturer partners. I suspect the main reason for buying Motorola was to help to drive the Android ecosystem just as they had driven the web browser market with Google Chrome browser.

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  15. i just hope that this move was a well balanced move... in one aspect Google buy Motorola for patent issues, and the other aspect is the open source issues... i just hope the open source status quo will not be jeopardize.. time will tell...

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