Google-Motorola Mobility deal set: Welcome to the hardware business

Google-Motorola Mobility deal set: Welcome to the hardware business

Summary: For Google, there's a larger issue ahead. Google has become hardware happy overnight and Motorola Mobility could be a distraction.

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The Department of Justice cleared Google's purchase of Motorola Mobility just hours after European regulators gave the deal the nod. Now Google is officially in the hardware business---for better or worse.

In a statement, the Department of Justice said it was closing its investigation into the Google-Motorola deal and also closing a probe into the sale of Nortel's patents by a consortium led by Apple. In other words, everyone is happy with their patents.

For Google, there's a larger issue ahead. Google has become hardware happy overnight and Motorola Mobility could be a distraction. Google absorbs about 19,000 employees once the deal closes. Motorola Mobility will contribute revenue growth to Google, but the device maker doesn't bring a lot of earnings to the party.

Related: Google and the hardware dream: Can it capture the wow factor? | DOJ approves Google, Motorola Mobility merger | European Commission clears Google, Motorola merger | Google's home entertainment foray: Why the Motorola deal may work | Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

Barclays Capital analyst Anthony DiClemente handicapped the profit margin issues. He said:

We forecast Motorola Mobility will generate $13.2 billion in revenue and $153 million in pro forma operating income in 2012, with the Mobile Device business generating $9.8 billion in revenue and a (1.5)% pro forma operating margin, and the home business generating $3.4 billion in revenue and a 9.0% pro forma operating margin. We think the biggest optical change for investors will be EBITDA margins, which would become significantly lower. Google's EBITDA margins could be 40.9% in 2012 (from 55.2% pre-acquisition).

The good news for Google is that the Motorola Mobility purchase allows it to defend Android better. Google will also get a set-top business to better target the living room.

Nevertheless, questions abound about Google's Motorola Mobility deal. Among the key ones:

  • Can Google truly integrate hardware and software well?
  • Will Google continue to manufacture Motorola branded devices?
  • How will Google juggle Motorola Mobility with its other Android partners?
  • And can Motorola Mobility decidedly alter the company's standing in digital entertainment?

Answers to those questions are elusive today. Give it a few quarters though.

Topics: Hardware, Google, Mobility, Security, Wi-Fi

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41 comments
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  • LOL!

    When the sale of Nortel's patents was being investigated to look for possible wrongdoing, it was "the sale of Nortel???s patents by a consortium led by Microsoft".

    Now that all looks to be fine and above board, it's 'The sale of Nortel???s patents by a consortium led by Apple".

    On the merger news, lets hope it all works out.
    William Farrel
  • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

    I welcome the deal and hope that my new smartphone will be Gootorolla ...
    AdnanPirota
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @AdnanPirota ROFL; Gootorola, LOVE IT!
      atlmann10
      • I was thinking more along the lines of

        @atlmann10

        Mooglela, but Gootorolla is good, too! :)
        William Farrel
      • I was thinking more along the lines of

        double post
        William Farrel
      • I was thinking more along the lines of

        triple post.
        William Farrel
  • ...you know what I've heard nothing mentioned about...?

    ...Timbuktu. I wonder if Google has some plans for making it possible to remotely control and access your PC from your phone? Not to mention the "Coolness Factor" in owning a "Google Wireless Router"..heheh
    ReadWryt (error)
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @ReadWryt (error)

      That doesn't require a new hardware or invention, just a Wireless or Bluetooth capacity on the computer, and a bit of software on each end.

      It's really just addition of the old SSH tunnel that Unix/Linux people have been using for decades. You really only need the Android SSH client for the connection.

      You might need to fine tune the PC end to allow for the smaller screen with controls. But, if you are a Command Line sort of guy, it's a snap.

      Note, this will be easy on Linux, the Software required comes for free. On Windows you might need to buy some new Software to make it work.

      Mac computers already use Unix as the base, the SSH software is available from the BSD folks, though considerable tweaking is required.

      MS's VMS underbelly (The parts for the NT family that Microsoft took from late 1960's and mid 1970's minicomputers and what makes NT able to multitask) doesn't do native SSH terribly well. (That isn't to put NT systems like Windows 7 or Windows 8 down, VMS was in it's turn based on several Mainframe systems from the 1960's. It's potentially very good tech. Potentially.)

      I'm sure the usual MS trolls will savage me severely for this. It should be interesting to watch.
      YetAnotherBob
      • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

        @YetAnotherBob

        same thing for Windows using this: http://stunnel.org/
        mswift1
  • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

    Apple, look out! Google is right behind you playing your legal games. Looking forward to see the mobile landscape of the futrue.
    parcosft
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @parcosft
      Apple was suing Motorola not Google so I am not sure how Motorola purchase helps Google. Actually it means that Google will now have to face the same IP allegations that Motorola is struggling to defend against - just an observation.
      global.philosopher
      • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

        @global.philosopher
        Agreed Apple is suing smartphone manufactures... and soon so will Google. Google needs to defend it's Android product and will have a better chance with their newly acquired patents from Motorola Mobility.
        parcosft
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @parcosft I dont think Google are doing this from any aggressive legal standpoint. Its probably got more to do with Android phones being made by all and sundry, with a badly fragmented experience at the end of it.

      Google wants to consolidate and provide a single cohesive weapon in the war against Apple etc and probably couldnt care less what happens to the likes of Samsung - they can go find their own OS, one would suspect - and bringing their own hardware to the table is a good way of doing it.

      Android is a terrible mess right now, and the various legal wrangles over its limbs would be better covered with one pair of trousers...
      SiO2
      • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

        @SiO2
        You're certainly comical... thanks for the laugh!
        parcosft
  • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

    Next thing, Google will buy Logitech Revue, since they are not building it anymore. Then we'll see Google in our TV room. Motorola was a multiple target subject, as it will help the Android patent shield, but will definitively put Google in our TVs. Resistance is futile...
    FuzzyIce
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @FuzzyIce
      No point in them doing this - they can just add google tv to motorola cable boxes if the cable companies approve it.
      DS-Solutions
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @FuzzyIce

      Longer term, I expect to see component TV. For a home theater system it makes a lot of sense. Let the TV just be a very large monitor. The basic box will be the TV Tuner, and will include a wireless feed for the TV. (low power WiFi makes this really make sense.) another box would allow the system to also use the internet directly. Your Smart Phone would then be the Remote. Add in a sound amplifier for surround sound, and a Blue Ray/DVD player plus a Game Console, and you have everything you would want. A Web Cam on top of the TV Screen would help you with a Kinect type of interface if desired, and also help with Internet video calls. If you want Satellite or Internet, just add a reciever and Wifi Modem to the mix. Let the WiFi connect all the parts. Then, the locations are not important, though I think that stackable devices in one location will be more convenient.

      Yep, that sounds like a system that would work, and you would only have to replace one component at a time.
      YetAnotherBob
      • just what my living room needs - more stuff

        @YetAnotherBob
        More boxes, more CABLES, more complexity, more power outlets required. As it is I have a rats' nest behind the existing - by modern standards, quite basic - stereo. And please don't tell me "It's wireless", there ain't no such thing, Bub.

        I'm a techie, and I hate the complexity and cabling mess in home theatre. How does the average joe or jane cope?
        chrisbedford
  • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

    Google Hardware is pretty solid. Let's keep in mind that they build their own servers (among the top server manufacturers in the world) to meet the demands of their on-line uptime, which is their business.

    Having said that, the Samsung phones are gaining in popularity - wondering how this might affect that momentum, or how they'll balance supporting Samsung while entering into competition with them.
    Non-techie Talk
    • RE: Google-Motorola Mobility deal set: Welcome to the hardware business

      @Non-techie Talk
      I reckon this might be tricky to pull out. Are Samsung, HTC and the other android hardware manufacturers going to feel threatened by this merger? They might. But I think it's the better of two evils, with respect to what dangers might await them if they have no patent and legal shields from Apple's merciless court-room attacks.
      Cheers.
      afedwin