Google rocked the mobile world early on Monday, August 15 with the news that it will buy Motorola Mobility for $12.5 billion, marking a 63-percent premium for the handset manufacturer. Pundits and analysts were quick to point to Motorola’s portfolio of more than 17,000 mobile patents, which should provide some desperately needed defense for Google in its escalating battle to protect Android from patent-infringement claims.
But the deal also ushers Google into the exclusive club of companies that control (to one degree or another) both the hardware and software elements of their smartphone offerings. That rarefied air includes Apple, Research In Motion and (on a smaller scale) Hewlett-Packard and Samsung. Each of these companies enjoys unfettered freedom to integrate its devices with its operating system. Each also has tremendous control over the developer communities that churn out the applications fueling our appetites for mobile data and, in turn, the growth of smartphone platforms.
The move with Motorola will enable Google to design handsets that are more closely integrated with Android, of course, but it also encompasses more than just smartphones. Android is finally becoming a viable operating system for tablets, and the platform is slowly beginning to gnaw into the iPad’s dominance: It was recently reported that Google has taken 20 percent of the tablet market from Apple. And as we discuss later in this research note, Motorola Mobility provides the scale and credibility that should give a huge lift to the still-struggling Google TV.
The Motorola acquisition is not without substantial risk, however. The deal is surely being frowned upon by Android handset makers such as HTC, LG and Samsung, who may find it difficult to trust a platform developer who suddenly has a stake in the manufacturing game. (Predictably, most of those companies issued lukewarm statements praising Google’s commitment to Android following news of the acquisition.) Those same Android manufacturers may find some cover in the patent-lawsuit feeding frenzy, though, with Google’s purchase of Motorola’s patents. Also, it’s not as if those manufacturers have a wide variety of operating systems to choose from. The next version of Windows Phone 7 looks promising, but Microsoft’s operating system will receive aggressive support from Nokia, which could crowd the market with handsets running Windows Phone and make it difficult for other manufacturers to stand out from the pack. And Apple’s iOS and RIM’s BlackBerry (and upcoming QNX) are simply unavailable to third-party manufacturers.
The blockbuster purchase gives Google a huge opportunity to take advantage of Android’s breathtaking growth and become a true competitor with Apple in every segment of the mobile market. But it’s still unclear how Google plans to leverage its new acquisition, and major potential pitfalls must be avoided. This research note examines the implications of the Google-Motorola deal, from the crucial patent issues to Google TV’s prospects to what the web is currently saying.
- Guess who else wanted to buy Motorola?
- With Motorola, Google TV just got a huge shot in the arm
- With the Motorola purchase, Google buys a seat at the patent table
- Will hardware makers trust Google after Motorola buy?
- Googlerola: What the Web is saying
- Now common in 5 of 6 mobile platforms: total control
- About GigaOM Pro