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Topic: Hardware

Google's Motorola Mobility acquisition: Does it still add up?

Summary: Google bought Motorola Mobility for the patents. That's good since the rest of the company is starting to look a bit like a fixer upper.

Larry Dignan

By for Between the Lines |

Motorola Mobility plans to make fewer handsets, make a bet on Intel's unproven (so far) mobile platform and issued a fourth quarter profit warning.

How's that Motorola acquisition looking right now Google?

Given the moving parts with Motorola, it's worth asking whether Google $12.5 billion move to buy the smartphone maker adds up. Google will take on 19,000 employees and get a patent portfolio to protect Android. It'll also potentially alienate partners like Samsung and HTC. Meanwhile, Motorola is starting to look a bit like a fixer upper.

To wit:

  • At CES (CNET full coverage), Motorola CEO Sanjay Jha told reporters that the company plans to release fewer new models to focus its marketing better. On the surface, the move makes sense. However, Motorola Mobility will increasing need its devices to be hits. Simply put, the company will be up to bat fewer times.
  • In addition, Motorola has formed a multi-year, multi-device partnership focused on smartphones powered by Intel's Atom processor. Tablets will also be included. The move is good for Intel since it's trying to grow its mobile footprint. The bad news is that Intel's platform is largely unproven in a mobile world dominated by the ARM architecture.
  • And the fourth quarter was weak. Motorola should have been cleaning up in the fourth quarter, but stumbled. Fourth quarter unit shipments were 10.5 million, well below Jefferies estimates of 14.6 million. Total revenue for the fourth quarter was projected to be $3.5 billion, below the Wall Street estimate of $3.9 billion. What's going on? Jefferies analyst Peter Misek said that Google doesn't want to compete with its Android partners. As a result, Motorola is going to focus on high end devices only.

Regulators still have to approve Google's purchase and analyst expect the deal to close by the end of March. That timing is fortunate since it's unclear Motorola's quarters will be able to hold up going forward.

Related: All CES coverage from CNET and ZDNet

Topics: Hardware, Banking, Enterprise Software, Google, Mobility, Security, Smartphones

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6 comments
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  • Forgot to add that Microsoft is suing them for IP infringement..

    These guys have no idea how to make money in the current environment.. going to be a big black hole for money.. have just been breaking even or losing money since day were spun off.
    theFunkDoctorSpoc
    Reply Vote

    • Conversely...

      @theFunkDoctorSpoc Anybody can get sued for just about anything, it's another thing to lose a lawsuit. As ugly as these trivial IP lawsuits are, I would add that Motorola successfully got iPhones and iPads banned in Germany recently (not sure why ZDnet hasn't talked about this more). That shows that there is some IP to fight back.

      I imagine that Microsoft will get sued back for WP7 IP infringement at some point if they ever start making any money off of their phones.
      K B
      Reply Vote

  • Assumptions

    How do we know that Google will not just skim off the patents and sell everything else? This option has always been available.
    Rabid Howler Monkey
    Reply Vote

    • RE: Google's Motorola Mobility acquisition: Does it still add up?

      @Rabid Howler Monkey Because there is no one left that would purchase the junk that is left after the patents are skimmed off.
      gomigomijunk
      Reply Vote

      • RE: Google's Motorola Mobility acquisition: Does it still add up?

        @gomigomijunk Take the patents and then cut the festering sore off (the actual business part). That is probably best for Android.
        global.philosopher
        Reply Vote

  • It's a bad move.

    Microsoft and Apple are already suing Motorola and other Android device makers, or extracting patent fees, how is Google owning Motorola going to stop that? How? The only thing that Google gets from the purchase, is preventing MMI's patents from falling into the hands of its competitors and having a greater effect on Android. Is that that worth $12.5 Billion.
    Motorola was already aware that its was in trouble. I've read blogs on ZDnet, proclaiming that Motorola had been in talks with Microsoft about a patent sale or an outright purchase and that they(Motorola) was even considering making a windows phone, before Google made its offer. Google has only been successfull at one thing-Advertising as a result of its search engine. Android is a success, because of the OEMs that support it, not Google. They supported it because it was free. Though it is profitable for them, it's nolonger 'free".
    Motorola is only going to be an albatross around Google's neck. It's going to eat into its vast cash reserves. Meanwhile, Microsoft's Bing is sloowly taking marketshare away from Google. Microsoft has the time and the money to invest in Bing and eventually it will affect GOOGs one and only cash cow. Not to mention mounting Anti-trust concerns both at home and abroad. AND what if Oracle is sucessfull in its lawsuits. I'm just saying..
    oraman
    Reply Vote
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