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

By | August 15, 2011, 5:10am PDT

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

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

Google Inc., Mobility, Handset, Motorola Inc., Mobile Security, Cellular Phones, Wireless And Mobility, Consumer Electronics, Personal Technology, Google Motorola Mobility, David Grober

Zack Whittaker, a criminologist who studied at the University of Kent, Canterbury, is a journalist, writer and broadcaster.

Disclosure

Zack Whittaker

I worked briefly with Microsoft UK in 2006 but no longer have any connection with the company. Regardless, I remain impartial and unbiased in my views.

I don't hold any stock or shares, investments or industrial secrets in any company, but have signed confidentiality agreements with a number of UK and U.S. organisations, whose names I am not at liberty to disclose.

I was involved with Kent Union, the University of Kent's student union, undertaking voluntary, non-salaried, elected positions between early 2009 and mid-2010.

No other company, body, government department, non-governmental organisation or third sector organisation employs me or pays me a salary in any capacity whatsoever.

As a freelance journalist, whenever expenses are given and taken by a company that is not CBS Interactive, these will be disclosed in each relevant post to ensure transparency.

I currently work with a UK law enforcement unit, but this is an entirely separate position which bears no connection to other work.

(Updated: 23rd October 2011)

Biography

Zack Whittaker

Zack Whittaker, criminologist who studied at the University of Kent, UK, is a journalist, writer and broadcaster.

After studying criminology at university, though still in his early-20's, he has already had a series unconventional work and voluntary positions. He has worked with researchers studying neurological illnesses like Tourette's syndrome (which he suffers from), has given lectures on the nature of disabilities in the public community, and occasionally ends up speaking on television and radio discussing the events of the day.

He first had academic work published at the age of 22, then still an undergraduate, and has been cited by a wide range of publications: from CNN, the Huffington Post, AllThingsDigital, The Atlantic Wire and CBS News.

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RE: Google buys Motorola Mobility for $12.5 billion
non-biased 18th Aug
@Peter Perry Let see, after they refused to join the consortium and then didn't bid enough to win, maybe they are.
View in thread
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Would be interesting if...
Bruizer 15th Aug
This pushes HTC closer to MS. I see HTC as a huge looser in this.
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RE: Google buys Motorola Mobility for $12.5 billion
normcf 15th Aug
@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.
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The doors on competition never closed.
Bruizer 15th Aug
@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.
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Bingo.
Bill Ward 15th Aug
@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.
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Don't see that happening
wackoae Updated - 15th Aug
@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.
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@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!
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Nice attempt at spin but no go.
Bruizer 15th Aug
@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.
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RE: Google buys Motorola Mobility for $12.5 billion
Nickkuk 15th Aug
@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.
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@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).
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So now Microsoft have no choice to buy Nokia? Isn't it?
EricDeBerg 15th Aug
@Peter Perry : So now Microsoft have no choice to buy Nokia?

What do you think?
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@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.
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RE: Google buys Motorola Mobility for $12.5 billion
EricDeBerg Updated - 15th Aug
@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?

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?
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RE: Google buys Motorola Mobility for $12.5 billion
rhonin 15th Aug
@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...
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RE: Google buys Motorola Mobility for $12.5 billion
AdnanPirota 15th Aug
a new day has come
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So why would ANY OEM use Android now
NoAxToGrind 15th Aug
Kind of makes competition seem silly.
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@NoAxToGrind Because they were bought for the Patents to get a cross licensing deal in order to take some pressure off of their partners.
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So why would ANY OEM use Android now?
Bruizer 15th Aug
@Peter Perry

You never answered the question.
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RE: Google buys Motorola Mobility for $12.5 billion
General C# 15th Aug
@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.
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@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!
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@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.
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RE: Google buys Motorola Mobility for $12.5 billion
tbuccelli 15th Aug
@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.
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Why any OEM should use WP7, after the MS/Nokia deal?
theo_durcan 15th Aug
@NoAxToGrind
that's the question every MS fanboy conveniently omit to ask..
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RE: Google buys Motorola Mobility for $12.5 billion
Nickkuk 15th Aug
@theo_durcan

Exactly. Handset manufacturers have less freedom to customise WP7 so I cant see them moving from the leading OS to one with a stalled 1% market share.
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RE: Google buys Motorola Mobility for $12.5 billion
Graham Ellison 15th Aug
@NoAxToGrind Quite right. But then it always was a retarded idea. As soon as Google tried to launch and direct market their own phone, it was obvious all its partners were in a Christmas turkey game.

All Google has done with Android is create a dependency by providing food for OS starved OEMs, destined to die the moment the food stops coming. And that day could be anytime, but it surely just drew closer.

No sane company determined to establish a meaningful foothold in any market would play both wholesaler and retailer of the same products. Yet that's precisely what Google have been doing. The effect, as I say, is to create a dependency and a market share for the OS, yet a horribly fragmented device market in which no single player can gain a significant share or make enough money to effectively cover device development costs.

It's only when you look at the situation in this way that you see it for what it really is.
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RE: Google buys Motorola Mobility for $12.5 billion
radleym 15th Aug
@Graham Ellison What you and many others are forgetting is that Android is open source, and was built on open source (linux). If google wanted to close Android, they would first have to recode most of it. This also means that the source would still be available to anybody who wants to use it, even if google withdraws completely from the market.
The only caveate here is that google needs to assure its.partners that MM will not get new code bwfore it is open to everybody else. They seem to have successfuly done so, given the responses so far from rthe.other android players.
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RE: Google buys Motorola Mobility for $12.5 billion
non-biased 18th Aug
@radleym Does the response from the other Android players really carry any weight at this point? What do you expect them to say, "Oh great, Google just screwed all of us"? Of course they are going to talk up how Google is protecting them and they see it as a good move for all but do they really have any clue what Google is going to do? I can guarantee regardless of what people post here they don't know what Google is or isn't going to do.
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RE: Google buys Motorola Mobility for $12.5 billion
rberg009 15th Aug
bye bye RIM.... the big boys are officially in town... LOL
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RE: Google buys Motorola Mobility for $12.5 billion
dsims7_2000 15th Aug
@rberg009 RIM, more or less, died @ 5 years ago. I used to be in charge of BES server for about 7 years. When they had paten to PTT and push e-mail, business ate and craped BB. After they lost that and more operating systems became available, RIM was gone IMO! Its been recduced to being a cheap kids toy and even kid are looking elsewhere.
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RE: Google buys Motorola Mobility for $12.5 billion
Graham Ellison 15th Aug
@dsims7_2000 Yeah, but if you's in a gang an wanna predic a riat... yenowotameeeeen? innit
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RE: Google buys Motorola Mobility for $12.5 billion
KenoshaSysAdmin 15th Aug
@rberg009
Because less choice is always a good thing, right? Lol! Everyone has to be like me or theyre stupd!
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RE: Google buys Motorola Mobility for $12.5 billion
Graham Ellison 15th Aug
@radleym If you believe those responses you're more naive than it's possible to imagine. Google just got smart, albeit with the wrong partner, and that spells disaster for the rest of the Android partnership. Any fool can see that. I haven't forgotten anything. I've been in business for 30 years and seen this sort of maneuver many times before.
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
This has to have both MS and Apple rethinking their strategy as this gives Google a whole new hand of cards by which to play the patent game!
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RE: Google buys Motorola Mobility for $12.5 billion
EricDeBerg 15th Aug
@Peter Perry : no because they don't buying Motorola patents.
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@EricDeBerg They didn't buy all of Motorola's Patents but they did get quite a few. Do you really thing Google is dumb enough to pony up 12.5 Billion and get nothing but a few manufacturing plants in the process?
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RE: Google buys Motorola Mobility for $12.5 billion
non-biased 18th Aug
@Peter Perry Let see, after they refused to join the consortium and then didn't bid enough to win, maybe they are.
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RE: Google buys Motorola Mobility for $12.5 billion
Graham Ellison Updated - 17th Aug
@Peter Perry What do you imagine Apple need to rethink about their strategy? Why would they need to rethink anything?

Google isn't going to be a larger threat to Apple just because of a few Google stickers. The only effect this deal will have is that an already unpopular brand will have a previously popular brand associated with it. No, that doesn't sound like a threat for Apple to me. Google have already demonstrated beyond any serious observer's doubt that they don't know how to retail mobile phones. Why? Because they don't understand phone users. Despite being the world's leading advertising medium, they actually arrogant enough to think if they set up a website, people would log on buy a mobile phone named after a prop in a forgotten sci-fi TV show. Whoever thought of that should have been fired.

It will however make a lot of other Android OEMs in the Open Handset Alliance very nervous, and should make discerning mobile phone buyers equally concerned. But I suspect Android mobile phone buyers aren't actually very discerning in the first place. Some things I want above all else are consistency and reliability. I'm never going to get that from an amateur hour operation like Android - despite [and now because of] Google's involvement. Anyone who made that leap of faith was living in cloud cuckoo land.

As for MS, well, they need to rethink their company leadership first. But maybe one day they'll understand that owning the OS and means of hardware production is vital to success. They have after all been watching Apple closely enough to copy just about everything else they've done for the past 10 plus years! But don't count on it happening whilst Mr "500 dollars? - Fully subsidized? - With a plan?" Ballmer is still in charge. He must have the worst business judgement since Michael "I'd shut it [Apple] down and give the money back to the shareholders" Dell.

You need to understand why Apple is successful before making such sweeping statements. Just copying Apple - after the fact... over 4 years too late, isn't a recipe for success. Apple's path to where they are has its origins in the NeXT era, and began for real with iPod. In Google's case, buying Motorola may help to mitigate some of their early errors, but in 12 months time when Googorola phones come on stream, all they'll be doing is pi$$ing off the rest of the Open Handset Alliance, who will all be busy trying to add their own differentiation layers to Android, causing inconsistent user experiences and app compatibility issues. So back to where we were before Apple even entered the game. That will pi$$ off developers and confuse users, which in turn will mean market resistance, which of course will cause a price war, meaning everyone in the OHA still won't be making any money.

That's not a threat for Apple. That's an opportunity to gain market share with a model that does work and in so doing, increase profits exponentially.
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RE: Google buys Motorola Mobility for $12.5 billion
LoverockDavidson 15th Aug
And people were giving Microsoft crap about buying Skype for $8 billion, look at this Google deal. It will soon be littered with antitrust suits. I don't see any Motorola handsets in my future.
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RE: Google buys Motorola Mobility for $12.5 billion
jasonp@... 15th Aug
@LoverockDavidson
We wouldn't expect you to admit to having anything but a Windows phone. I've currently got an LG running Android 2.2.1 and I'll probably use it for at least another year. When the time comes to upgrade, however, I'll certainly have to give Motorola a look since presumably the hardware platform owned by the OS vendor should have the tightest integration on the market. If this deal is allowed to go through, it may well force Microsoft to either Kin WP7 or buy their own phone manufacturer. RIM wouldn't make much sense, but there are other viable options out there.
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RE: Google buys Motorola Mobility for $12.5 billion
LoverockDavidson 15th Aug
@jasonp@...
Microsoft won't buy any handset maker, they can license out WP7 to multiple oems instead of locking in to just one. Google should have thought this through a little better.
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I hope your right...
EricDeBerg 15th Aug
@LoverockDavidson : you don't see any Motorola handsets in my future.

Nice! I really hope you're right about this!! F***ing Motorola crap handset...
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RE: Google buys Motorola Mobility for $12.5 billion
LoverockDavidson 15th Aug
@EricDeBerg
I hope I'm right too.
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RE: Google buys Motorola Mobility for $12.5 billion
radleym 15th Aug
@EricDeBerg Very little chance of Lovey being right about anything. He lives ia world where MS is the sole provider of anything digital. Like MS, he chooses to ignore the existence or viability of anything open source. He obviously believes google "owns" Android like MS owns Windows.
He's also.pretty boring - you only need to read his signature and you know exactly what his post will say. In fact, he might just be a simple computer program (kneenjerk.exe?) from the depth of hos analysis.
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RE: Google buys Motorola Mobility for $12.5 billion
KPOM1 15th Aug
Microsoft/Nokia is an interesting possibility, as well.
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Far more likely than MS/RIM...
jasonp@... 15th Aug
@KPOM1
I can't imagine Microsoft considering a RIM purchase. It would seem far more likely for them to eye a current WP7 vendor or a vendor working on a WP7 platform.
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RE: Google buys Motorola Mobility for $12.5 billion
Graham Ellison 15th Aug
@KPOM1 I agree. Nothing else will secure the remaining Nokia jobs! But it's okay, it wasn't the weight of the passengers that sank the Titanic...
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Android says: Now, I have got a house.
said.fox@... 15th Aug
Android seems like refugee without house, but he succeeded to find a new house!
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RE: Google buys Motorola Mobility for $12.5 billion
owlnet 15th Aug
This is begining of the end for android... 12 billion mistake. It will loose the patent war with MS and Oracle. The only manufacturer for android will be 'motorala'... and yet have to pay royalities to MS and Oracle...
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RE: Google buys Motorola Mobility for $12.5 billion
indio7777 15th Aug
@owlnet I guess you're just mad? Either that or a genius for being able to read the future?
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RE: Google buys Motorola Mobility for $12.5 billion
Peter Perry 15th Aug
@owlnet Umm, Motorola was the one going after the MS for OS and Software Patents they claim Microsoft Infringed Upon.
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RE: Google buys Motorola Mobility for $12.5 billion
bradavon 15th Aug
I hope this means Motorola drop MotoBLUR. It's rubbish and I bet Google agree.

I also hope this means we see a larger selection of Google branded phones. Really get people notice Google as a brand of phone. Not enough at all realise Google sell phones too.

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