Google's Motorola acquisition: Nail in the Android patent coffin?

Google's Motorola acquisition: Nail in the Android patent coffin?

Summary: Google is to become a mobile manufacturer -- competing with Apple and Research in Motion directly.

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Google on Monday announced plans to acquire handset maker Motorola Mobility for $12.5 billion in cash.

Google, in effect, now signals its move to steer away from just providing the mobile operating system, Android, that powers a huge percentage of the global marketshare already.

Google is to become a mobile manufacturer -- competing with Apple and Research in Motion directly.

The price of $12.5 billion represents a 63 percent premium on shares last Friday, with Google having in its reserve $39 billion at last count.

Putting these together, Google is paying a huge price for the handset manufacturer -- to build dedicated Google handsets for the Android operating system.

While Motorola Mobility will remain a licensee of Android, and Android will remain as an open operating system, Motorola Mobility will act as a separate business under the arm of Google.

Keen to highlight the 'openness' of the Android platform, the mobile operating system will still be available for "other hardware partners", Google CEO Larry Page said, adding: "Many hardware partners have contributed to Android's success" and is keen to "work with all of them to deliver outstanding user experiences".

As ZDNet colleague Ed Bott points out, Google has just "bought its way" into a lawsuit with Microsoft, as Motorola is being sued by Microsoft for infringement on Android's patents.

The shake-up to the market could not come at a worst time for the industry. However, the deal is subject to shareholder and regulatory approval in the United States and under the European Commission.

Google has bought itself a fight with Microsoft, and Apple and Google seemingly getting on far better than Apple and Microsoft ever have. Meanwhile, Google and Microsoft are still furious at each other after last month's very public patent spat.

This could be the nail in the BlackBerry coffin. If Android becomes the dominant operating system, squashing the BlackBerry marketshare and effectively ruining manufacturer Research in Motion, a third-party could be brought in to revitalise sales.

Could that third-party be Microsoft? If Google and Microsoft are still on mobile turf war with each other, I wouldn't be too surprised if -- push came to shove -- Microsoft acquired Research in Motion -- even if it was a retaliatory strike against Google's mobile venture.

ZDNet's Mary Jo Foley thinks otherwise. Microsoft is more likely to form strategic partnerships with other companies, without buying companies outright. Skype, of course, was an obvious exception, however.

Google and Motorola Mobility will hold a conference call with financial analysts to discuss this announcement today at 8:30am ET.

[More to come]

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

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74 comments
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  • Would be interesting if...

    This pushes HTC closer to MS. I see HTC as a huge looser in this.
    Bruizer
    • RE: Google buys Motorola Mobility for $12.5 billion

      @Bruizer Google now has many more patents. They may now have enough to force Microsoft to stop taking fees from HTC, Samsung et al. Motorola was going to fight Microsoft alone, so they obviously believed they could win. Google also has a powerful legal team to augment their fight. If Google succeeds, then the doors are open to competition again. I also don't believe Google is interested in building handsets. I suspect they may spin that piece off again in a few years.
      normcf
      • The doors on competition never closed.

        @normcf

        Google did not pick up Motorola's patents only MMI's. Motorola kept many of the radio based patents for themselves.

        Now, fanboys will look at this and parrot what their Google God tells them, but in no way is this a good thing for HTC, ZTE, Sammy or other handset makers of the OHA.
        Bruizer
      • Bingo.

        @normcf Google will almost certainly spin MMI back off (sell it back to Motorola?) as soon as the patent legal war is over. Google just paid there way into a seat at the table so they can control the case.

        While if I'm Samsung, Nokia, or HTC I'm wary about the move, I'd also be cautiously optimistic that it's Google's way of saying "I've got your back".

        Proof is in the pudding of course; if MMI doesn't get any special treatment in terms of access, just special treatment in the legal department, it wouldn't seem to effect me at all negatively long term if I'm one of the other Android vendors.

        Now, three years from now, when the legal battle is over, if MMI doesn't get respun off....... then there's a BIG problem.
        Bill Ward
      • Don't see that happening

        @Bill Ward Moto is dumping MMI because it has being working in the red for years and it barely made it to the black this year. They are not going to buy it back.
        wackoae
    • RE: Google buys Motorola Mobility for $12.5 billion

      @Bruizer Nah... HTC, Samsung and the other partners know that Google did this to protect both Android and them but nice try.

      Apple and MS are the only ones that should be concerned here as they have to worry about a rejuvenated Android in the Market!
      slickjim
      • Nice attempt at spin but no go.

        @Peter Perry

        This puts Google on direct competition with their partners. Only a massive fanboy of epic proportions would see this as great news for other handset members of the OHA.
        Bruizer
      • RE: Google buys Motorola Mobility for $12.5 billion

        @Bruizer. Peter Perry is correct.

        http://www.google.com/press/motorola/quotes/

        ?We welcome today?s news, which demonstrates Google?s deep commitment to defending Android, its partners, and the ecosystem.?

        ? J.K. Shin
        President, Samsung, Mobile Communications Division

        ?I welcome Google?s commitment to defending Android and its partners.?

        ? Bert Nordberg
        President & CEO, Sony Ericsson

        ?We welcome the news of today?s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.?

        ? Peter Chou
        CEO, HTC Corp.

        ?We welcome Google?s commitment to defending Android and its partners.?

        ? Jong-Seok Park, Ph.D
        President & CEO, LG Electronics Mobile Communications Company

        The only ones worried should be patent bullies/trolls Apple and Microsoft.
        Nickkuk
      • RE: Google buys Motorola Mobility for $12.5 billion

        @Bruizer I guess I could say only a massive Apple fanboy of Epic proportions would see this as a bad thing for Google's partners!

        Google is not Apple, they don't take stuff submitted to them by potential partners and then steal it for their own products (go research the number of Apps they rejected and then stole the ideas, there's quite a few of them out there).
        slickjim
      • So now Microsoft have no choice to buy Nokia? Isn't it?

        @Peter Perry : So now Microsoft have no choice to buy Nokia?

        What do you think?
        EricDeBerg
      • RE: Google buys Motorola Mobility for $12.5 billion

        @EricDeBerg Actually, RIM is a much larger target than Nokia for their Smartphone and Mobile OS Patents Alone. Also, MS already has Nokia on contract to provide Windows Phone 7 for their phones and adding Blackberry to that mix will solidify another phone manufacturer using WP7.

        However, I cannot see MS Buying Nokia as their thing isn't hardware it is purely software and they don't generally want to deal with that side.
        slickjim
      • RE: Google buys Motorola Mobility for $12.5 billion

        @Peter Perry : why do you tell Nokia is not a hardware maker? Nokia is Like Apple no? They probably make do the hardware in China like all other companies but they have a brand : Nokia which is a Handset brand associated to High quality Mobile Phone... Similar to Apple with their iPhone... No?<br><br>You are right about RIM If we add the market share of Nokia and the Market share of RIM and give this to Microsoft it means, like android phone, Windows Phone will flood the world... Ouf this is dangerous to Apple here no?
        EricDeBerg
      • RE: Google buys Motorola Mobility for $12.5 billion

        @EricDeBerg

        MS is already partnered with Nokia which pretty much amounts to the same thing.
        Buying RIM looks to be more counterproductive than not.

        May hap consolidate and acquisition Nokia?
        Better option...
        rhonin
  • RE: Google buys Motorola Mobility for $12.5 billion

    a new day has come
    AdnanPirota
  • RE: Google buys Motorola Mobility for $12.5 billion

    @NoAxToGrind Because they were bought for the Patents to get a cross licensing deal in order to take some pressure off of their partners.
    slickjim
    • So why would ANY OEM use Android now?

      @Peter Perry

      You never answered the question.
      Bruizer
    • RE: Google buys Motorola Mobility for $12.5 billion

      @Peter Perry Motorola's patents don't protect HTC or Samsung or any other licensee of Android! They protect Motorola and Motorola alone. How can a licensee compete against a company that will get the newest Android builds months before the rest. First to market... first to update. Time to go shopping for a new platform, I'd say.
      General C#
    • RE: Google buys Motorola Mobility for $12.5 billion

      @General C# That is not in their plan and Google has the right to use those patents as they see fit.

      This will result in a cross licensing deal with MS that removes the $15 from Android Smartphone Vendors. Motorola has MS Dead to Rights with their software patents and it impacts not just Microsofts Mobile Division but their main Windows Cash Cow!
      slickjim
    • RE: Google buys Motorola Mobility for $12.5 billion

      @Bruizer Because Google and Android need HTC and Samsung, they will not be playing favorites with an in house hardware line.

      I'm not totally sure how they're going to work it but I bet they could sell off that lucrative Verizon Contract and the Droid Line for at least a 3rd of what they paid for the company.
      slickjim
    • RE: Google buys Motorola Mobility for $12.5 billion

      @Bruizer - An OEM would continue to use Android because it now has more patent protection from shakedown artists like MS and Apple. They also believe that Google is more interested in expanding the overall breadth of Android than doing a closed system like Apple. They probably also have evaluated MS as a partner based upon past WinMo distributions and don't really trust them either.
      tbuccelli