Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

Summary: Google's purchase of Motorola Mobility solves the search giant's patent problems, gives it a bigger say in hardware integration and fixes a few other issues. Here's a look at the moving parts.

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Google's aims to fix multiple lingering wireless issues with its $12.5 billion purchase of Motorola Mobility and overall the deal is just crazy enough to work.

On a conference call with analysts, Google CEO Larry Page outlined the rationale for the deal. In a nutshell, Page is betting on mobility as the future of computing (Google statement, blog). But even with the grand themes of software-hardware integration and better user experiences, Google's purchase of Motorola Mobility cures a lot of ills for the search giant.

Page said minutes ago regarding Motorola:

I think they have an exciting product roadmap, a strong vision for the future and are poised for growth. I think there's an opportunity to accelerate innovation in the home business by working together with the cable and telco industry as we go through a transition to Internet protocol. Motorola also has a strong patent portfolio which will help protect Android from anti-competitive threats from Microsoft, Apple and other companies. Many hardware partners have contributed to Android's success and we look forward to continuing our work with all of them on an equal basis to deliver outstanding user experiences. We built Android as an open-source platform and it will stay that way.

Can this marriage work? Here's a look at the ledger and six reasons why the Google-Motorola deal makes sense:

Integration may be all that matters in the wireless industry. Apple's hardware-software-ecosystem business model brings better profit margins, can grab market share and seems to delight consumers. Google's Android effort could be a bit like herding cats. The larger question is whether the vertically integrated model is the only one that works in the wireless industry.

Google lands its patent treasure trove. If you consider that Google was going to pay nearly $4 billion for Nortel's 6,000 wireless patents, $12.5 billion for Motorola Mobility doesn't look like a big chunk of change. With Motorola Mobility's patents, Google can fend off lawsuits. In other words, Google builds out its patent portfolio. On a conference call, Page called out patents as a big reason for the Motorola Mobility acquisition.

Google gets a TV play. While Google's Motorola acquisition primarily revolves around wireless devices, there's a significant living room play here. Why? Motorola Mobility has a significant set-top box business. In the cable box world, there are two players: Cisco and Motorola Mobility, which is the leader. Google will get significant relationships with cable providers and give Android more of a foothold.

There's a good chance that Google can keep hardware partners in the fold---for now. Page reiterated that Google will keep Android open source and work with partners such as HTC and Samsung. Also keep in mind that this Google-Motorola deal could win it some goodwill with hardware partners. Motorola was thinking about suing other Android hardware makers over patents. Google's acquisition would put an end to that.

The deal forces Microsoft's hand. When it comes to the art of war, Google and Motorola force Microsoft's hand a bit. With the Google-Motorola deal, Page is basically acknowledging that there's no money in third-party operating systems in the mobile space. The upshot: Mobile software players need a hardware component. As a result, Microsoft may be forced to acquire a hardware player. Research in Motion and Nokia are prime takeover candidates. In any case, Microsoft will be distracted by a big acquisition.

And Android boxes in Nokia and RIM. With Motorola, which has some enterprise credibility and Android innovations, Google can enter the enterprise easier. As a result, RIM increasingly looks like the odd man out. Nokia is already under fire as it waits for Windows Phone 7 to gain traction. RIM is betting on QNX as an operating system. Google is indicating that the wireless market is a two-platform race. And those two horses are going to be Android and iOS.

Around the network coverage:

ZDNet:

CNET:

Topics: Security, Android, Google, Hardware, Mobile OS, Mobility, Networking, Smartphones, Wi-Fi

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  • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

    Is proofreading just not done any more?
    staylor33322
    • Google devalued the news industry.

      @staylor33322

      And forced the layoff of editors and fact checkers.
      Bruizer
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @Bruizer Right, because with the advent of technology, no one else would eventually have created an algorithm that does searching so well. Awwww, bruizer 'you mad?
        indio7777
    • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

      @staylor33322 <br>For example: "On a conference call with analysts, Google CEO Larry Page outlined the rational for the deal." rationale not rational.
      Knowels2
      "I expect this to be broadly wave through. With Google more that willing to sacriface the hardware bit if necessary. But I do not think anyone are going to be putting a gun to there head any time soon to force the sale of the hardware division of Motorola. " sacrifice, their, are--is
      dhays
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @dhays Yes, but when enough people make the same mistake consistently then language rules will change. I suggest getting rid of those pesky there, their, they're distinctions and just use "thare." Then context will sort out the meaning. Yes, I majored in English with a minor in sarcasm.
        josmyth
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @dhays My big gripe is "then" being used when it should be "than".
        I am Gorby
    • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

      I totally agree. It would appear not ! I've seen more typo mistakes that make a piece of writing imply the exact opposite of what was intended purely through carelessness on this site that in all the Newspapers I've ever read. There's no reason for it, and no possible justification.
      rod4
    • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

      @staylor33322 I dont know why people like motorolla so much, its a fail brand.<br><a href="http://www.paperprofs.co.uk/writing-types/thesis/">Custom Thesis</a><br><a href="http://www.paperprofs.co.uk/writing-types/book-report/">Custom Book report</a><br><a href="http://www.paperprofs.co.uk/writing-types/dissertation/">Dissertation Help</a><br><a href="http://www.paperprofs.co.uk/writing-types/coursework/">Custom Coursework</a>
      lorisinclair
  • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

    So who gets latest Android software ahead of everyone else? Who gets the push on Google's search page [this is a biggie]? What Google did with this acquisition is to push other hardware vendors towards Windows Phone... Everyone tried to take down Android, but Google's effort seems to be the best
    browser.
    • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

      @browser

      Exactly my thoughts.

      If anything, this deal will have Android phone makers more seriously look at WP7. With this deal, Google will always have that "conflict of interest" monkey on its back. Third-party Android phone makers will want to diversify to protect themselves.

      Oh and by the way, all the points presented in this article are laughable, except the patents one, which was too obvious.
      Intosh
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @Intosh "...more seriously look at WP7?" Run from one loser to another? At least Google is inept enough to run circles around in the field. Microsoft still has a monopoly siege mentality.
        I agree on your comment about the article being a bit off. Every point made is so easily countered as to be a waste of electrons (ink?).
        dheady
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @Intosh "If anything, other Android phone makers will more seriously look at WP7."

        What a silly idea. It'll make them look closer at MeeGo. Surely!
        Olderdan
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @Olderdan<br><br>MeeGo? What a big irony that you said my idea was silly.<br><br>Who's gonna develop MeeGo, inject lots of software expertise and lots and lots of $$$ to build OS, UI and the ecosystem? Intel? Nokia? What a joke.
        Intosh
      • Why is WP7 such a loser

        @dheady@...

        Because it's more stable and faster then Android?
        William Farrell
      • Re: MeeGo

        The biggest brains in Qt seem to be moving from Nokia to Intel. Intel wants to put Atom-type SoCs everywhere: a few dozen in your car; a few more in the Fridge (to manage shopping lists, and verify the presence of recipe ingredients, and so on); a couple more in the kitchen stove (to look up and execute those recipies); your A/V/ entermtainment; your security system; your HVAC and your bathroom "spa". Theses strategies cannot co-exist with Microsoft software on a "$$ per SoC" pricing arrangement; and even more important, they can't coexist with Microsoft's Eye-Pee games.

        Microsoft may think that KDE is the only "Linux Desktop", and that turning Nokia from Qt/Meego towards WP7 "Kills the Linux desktop".

        It might hurt Qt a lot. But Nokia setting Qt free, after a lot of sneers about "burning the platform", might also allow Qt to govern itself -- far better than it has been governed over the last few years.
        Rick S._z
    • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

      @browser. Apparently you've not read all the statements from HTC, Sony-Ericsson, etc congratulating with positive comments.
      indio7777
      • You mean like the congrats that Sun's CEO gave to Google?

        @indio7777 .. that was a bit short-lived, wasn't it?
        daftkey
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @daftkey <br><br>It was Oracle that deleted those comments from their website and tried to pretend that they didn't exist. It was nothing to do with Sun's CEO. <br><br>This is a recent comment from Suns CEO on his blog:<br>I feel for Google Steve Jobs threatened to sue me, too.
        Nickkuk
      • Apparently YOU didn't read all the statements.

        @indio7777 Notice how they're ALL worded almost identically? If you don't think Google fed them exactly what to say you're pretty naive.

        http://www.loopinsight.com/2011/08/15/google-partners-welcome-motorola-acquisition-with-a-gun-to-their-head/
        matthew_maurice
      • RE: Google's $12.5 billion Motorola Mobility bet: 6 reasons why it makes sense

        @Nickkuk<br><br><i>It was Oracle that deleted those comments from their website and tried to pretend that they didn't exist. It was nothing to do with Sun's CEO. </i><br><br>This is true, but like the glowing congrats given by Sun's CEO, the congratulations given by Google's Android partners is also worth less than the paper they are written on. As is Google's statement that "we look forward to continuing our work with all of them on an equal basis to deliver outstanding user experiences. We built Android as an open-source platform and it will stay that way."<br><br>Google and its partners can publicly say what they want. Doesn't mean that they can't later say "that was a different time in a different market - we can't afford not to do evil anymore." Oh wait - they already said that, too, maybe not in that many words, but certainly in actions.
        daftkey