How Google-Motorola will change tech: Four ways

How Google-Motorola will change tech: Four ways

Summary: Google's buyout of Motorola Mobility may not be one of the most expensive acquisitions of this era, but it will likely go down as one of this era's most influential events in the tech industry.

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Google's $12.5 billion purchase of Motorola Mobility will go down as one of the most important events in tech during this era. Other deals, such as AT&T's $39 billion buyout of T-Mobile USA, are worth more money, but none of them will have as big of an impact on the tech industry (and as much fallout) as the Google-Motorola deal. As I discussed on Twitter with Technologizer editor Harry McCracken on Monday, this is the most important acquisition in the technology space since the HP-Compaq $25 billion deal a decade ago.

Here are the top four ways that Googlerola will change the course of the tech industry.

1. The Android patent wars are over

Before Google bought Motorola, the Android ecosystem was in real danger of having innovation stymied by litigation. Microsoft, Oracle, and Apple were all bearing down on Google as well as Android partners Samsung and HTC over patent infringements. Motorola hadn't entered the fray yet, but with its long history in the wireless business there was the potential that it could use its treasure chest of patents to pile on to its chief Android rivals, Samsung and HTC.

On August 11, my ZDNet colleague James Kendrick posted, "If Motorola turns its patents on other Android phone makers the platform will implode." And, that was on top of the overall intellectual property issues with Android itself, which affects all of the Android device makers. The problem for Google was that it didn't have enough mobile patents to fight back. That's the way these things usually work. One big company typically says to another big company, "Yeah, we might be infringing you there, but you're infringing us over here" and then it turns into a draw. With Motorola's 17,000 patents on its side, Google has essentially put an end to the Android patent wars. There will still be some final skirmishes, but don't expect much carnage.

2. Vertical integration has won

While Google is pledging to keep Android an open ecosystem and claiming that it will run Motorola as a separate business, it's pretty clear that Google also wants to have the option of producing its own hardware devices so that it can build prototypes, concept hardware, and leading edge devices to demonstrate its vision and point its ecosystem partners in the right direction. Google wanted to do this with the Nexus One smartphone and we also saw Google's hardware itch in the CR-48 laptop running Chrome OS. Of course, Google didn't have the expertise or infrastructure in place to handle the hardware business.

With the Motorola Mobility acquisition, it will add over 19,000 new employees with supply chain, customer service, and hardware development skills. When Google wants to do its next leading edge Android device like the Nexus One, Nexus S, or Motorola Xoom, we have to assume that it's going to use its new hardware division to build it so that it can deliver exactly the device it wants and get it to market much more quickly.

With Apple's continued success in mobile, BlackBerry's large (albeit fading) market share, HP's new hardware/software unification with WebOS, and now the Google-Motorola deal, it's becoming clear that vertical integration is winning in mobile. Going forward, look for the latest, greatest, high-end devices to all be vertically integrated, while many of the low-cost, copy-cat devices will come to the market later and be made by mass market manufacturers like Samsung.

3. Mobile consolidation has begun

Over the past couple years, the arrival of new mobile platforms and the expansion of mobile vendors have given buyers lots of new choices in smartphones and now tablets. However, even in a fast-growing market like mobile, the good times can't last forever. In 2011, we've already seen BlackBerry and Nokia drastically losing momentum, Windows Phone 7 and WebOS struggling to gain market share, and Android and Apple increasingly hogging the spotlight.

Even within the Android ecosystem itself, there have been lots of new upstarts recently, including LG, Lenovo, Acer, and ASUS. All of them have been grasping for a piece of the expanding Android market, which has been dominated by the big three -- HTC, Samsung, and Motorola.

However, leading up to the Google deal, Motorola was the only one of the Android vendors that lost market share in the smartphone market in Q2. Obviously, that's likely to change if and when Motorola morphs into the Google-branded Android devices. Nevertheless, Motorola's Q2 struggles are a sign that the Android market itself is already beginning to whittle down to fewer big players.

4. Google has to grow up

As a company, Google is only a little over a decade old. Despite its recent kerfuffles with government regulators and its dust-up with China, the company has lived a bit of an idyllic, Peter Pan existence. Its offices are like college campuses with free food, free transportation, and free personal services (cleaners, barbers, etc). Its employees are loosely organized, don't have to deal with a bunch of overbearing middle managers and bean counters (in most cases), and even get the ability to use work time to dabble with some of their own pet projects.

Because Google's search engine has been such a major cash cow, it has given the company freedom to hire lots of engineers and computer scientists and loosely organize them in this unique environment. However, with search under greater pressure than ever from the social web, it could finally be time for Google to grow up and act like an adult company that has to closely manage expenses and account for the value that each of its employees brings to the organization.

The Motorola acquisition could hasten the process, since it will add over 19,000 employees to a Google that currently has 29,000, and Motorola is a much more established company with traditional organizational standards. Of course, Google will talk about wanting to maintain its startup-like culture, but it will be interesting to watch and see if Motorola influences Google to become more of an accountable, grown-up company.

Also read

This article was originally published on TechRepublic.

Topics: Hardware, Android, Google, Mobility

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  • RE: How Google-Motorola will change tech: Four ways

    Its going to change tech but not in the way you say. Google is going to alienate all of its android partners. Don't be surprised if there are only going to be 1 or 2 OEMs using android within 2 years time. And because of that situation the android marketshare will go down and the reverse effect causing iOS and WP7 share to go up. You will also see some lawsuits against Google because of this purchase as well.
    LoverockDavidson_-24231404894599612871915491754222
    • RE: How Google-Motorola will change tech: Four ways

      @LoverockDavidson_ I think you hit the nail on the head with that one. Google's days could be numbered....
      T-Wrench
      • RE: How Google-Motorola will change tech: Four ways

        Certainly if they just spent $12B for "patent protection" they might have otherwise bought for $4.5B had they outbid Apple for the Nortel patents, then they spent $7.5B more than they needed to.
        That's a lot of "0"s.
        AndroidGold.com - Best Android Tablets and Phones
      • RE: How Google-Motorola will change tech: Four ways

        @T-Wrench and LoverockDavidson:

        Your wishes are just that wishes...
        Then or you give us something logic or better pray.

        Some help:

        'GoodFather' MS in Redmon, hallowed be your name on the desktop and clouds, 'give' us our daily trolls' bread ,etc etc....but deliver us from cunning Google, Amen.
        Marco nn
    • Impresive

      @LoverockDavidson_ <br>And you pulled all of that out of this purchase and your crystal ball?<br>You can tell I seriously disagree with your interpretation.<br>Let's see how this turns out. I suspect you will see more consolidation but suspect that Google and Android are here to stay. The open area I still see is how much farther Apple tries to push this and if MS keeps pushing back at the OEMs...<br><br><br>[i] popcorn mode is now active.... [/i]
      rhonin
      • RE: How Google-Motorola will change tech: Four ways

        @rhonin LD also predicted WP7 would be the world leader phone OS by now. In other words, he's has a very poor record on predictions.
        anothercanuck
    • Since you are always wrong....

      @LoverockDavidson_
      It is a 100% sure that the opposite is true. So thanks for verifying the Android will exceed expectations and WP7 will fail miserably.
      linux for me
      • RE: How Google-Motorola will change tech: Four ways

        @linux for me

        It's a 100% sure that the opposite is true? I do agree with @LoverickDavidson that some of the other OEM vendors will start to feel alienated and turn to an OS other than Android.

        Having had 2 Android phones I can say that the lack of continuity in style and useability is what is going to hinder its success. We also use RIM at work and I am prone to use a Blackberry or iPhone as opposed to another Android (I did replace my second android).

        I just don't see Android exceeding expectations as it has already disappointed me twice now.
        Fan_of_Tech
      • RE: How Google-Motorola will change tech: Four ways

        @Fan_of_Tech That is the point exactly, the android system needs to be unified, in the purchase of Motorola, they will be able to unify the system at least on Motorola phones, and other OEM's can either follow suit, and go with it, or suffer loss of market share, the biggest problem with Android is OEM's and their inablility to deliver the latest updates to the OS. They would all make alot more money if they were on the same page. Plus, google would not have to manufacture all of the devices themselves, they could have what sets them apart, but deliver higher quality services if updates were all rolled out at the same time. I like my fascinate, its great, but i am only on 2.2 because of whatever reasons samsung has dropped the ball.
        kevint2011
      • RE: How Google-Motorola will change tech: Four ways

        @Fan_of_Tech
        1) Far from being alienated, many OEMs already signed off on the deal.
        2) What other OS?!?
        .DeusExMachina.
      • I heard they're coming out with

        @linux for me Windows 8 phones on the open market now, so that's a far cry from Google Chrome Book. http://www.gmanews.tv/story/229712/technology/microsoft-publicly-crowdsources-ideas-for-windows-8 via @gmanews
        cosmos-420man
    • RE: How Google-Motorola will change tech: Four ways

      @LoverockDavidson_ ... and all other anti-android, head in sand idiots posting here.

      The actual factual numbers are crystal clear. Android is doing nothing but go up up up up up. WP7 (as nice as it is) is doing nothing but plummet like a rock. iPhone is still going strong, but is showing nothing similar to Android's growth.

      Apple, Microsoft, and Oracle all know how great Android is, and how people just can't get enough Android devices. And they know they can't out-innovate Google. So they've been using anti-competitive patent litigation to try to stymie, or parasite off of, Android.

      Well, that is history now, with the 17,000 mobile patents Google now owns. Also, Oracle is up s$#% creek with it's Java patent lawsuit - they're loosing badly in court at this juncture, and Google now owns database and OOP patents acquired from IBM ... oops!

      And as far as the idiots here saying Google just copied others - get a grip - Apple did not invent smart phones, did not invent multi-touch - they copied it from others and refined it, and marketed it extremely well. Besides, Android was already under development well before iPhone was a twinkle in Jobs' eyes. And MS - have they ever innovated anything? Really? They're whole history has been copying everyone else's innovations, and making it "good enough" for the masses. Get a grip on reality people.

      That said, I don't think Google is all that and a bag of chips. I have real concerns about data and privacy with them. But has a general user of their products and services, I'm extremely satisfied - everything they make is very simple to use, extremely fast, and very useful. I can't say that about MS or Apple or Oracle. Also, Google has been competing by producing great products and services - not by litigation, or leveraging monopoly power.

      But, I do use products form all of them. I have an iPhone and iPod. I use Windows 7 as my desktop OS the majority of the time. I use Google for search and email and calendaring. I use Oracle DB extensively with my programming job.

      I have no dog in this fight. It's not a religious war to me.

      For me, it's pragmatism. It's all about open innovation and competition. I'm always on the side of the corp or organization that is trying to compete with great products, and against the corp or org that is trying to compete via litigation or wielding monopoly power. With the former, consumers win. With the latter, consumers lose.
      jasdude
      • RE: How Google-Motorola will change tech: Four ways

        @jasdude Google has been ruling.http://www.ommrudraksha.com/products/119-10-mukhi-rudraksha-bead.aspx
        rudraksha1
    • RE: How Google-Motorola will change tech: Four ways

      @LoverockDavidson_ Your opinion is ill informed, why would OEM's back away from an OS that will remain free, even if they closed the doors, if Google started manufacturing hardware devices, whose to say that it wouldnt be direct competition to Apple and that other OEM's would be stuck with lousy WP7, and slowly fade out of the market. If Apple can hold such a market share, why cant Google? The likely scenario is probably much different, motorola makes money off selling android phones right? Well they will continue to do so, right? Samsung makes money off android phones, right? They will probably continue to do so. Same goes for the other 30 some odd licenses. They do not have to alienate any OEM's, they will still make money, if Motorola gained share of the android market and outsold samsung and htc, well it wouldnt matter then would it, it would be Google vs. Apple, and it rightly should be anyways, considering all those companies do is whine over IP rights, and that includes apple. Another thing reports have been mentioning is that MOTO is operating on a budget that is just enough to pay bills, great! Thats much better than a company that is operating in the Red, isnt it. Yes, that means Google needs to cut what is not making money and sell it, they need to keep the phones, build em and create a stream line phone much like the Iphone, a flagship model, that just keeps getting better. Instead of starting from scratch with a redesign, keep what works and adapt the concept. And all this silly talk about Google's days are numbered are ignorant claims, there is no sign of such a thing, if Moto is breaking even, then it isnt a burden at this time, if they grow consistently at at least 5-6% per year, then meeting obligations will not be a problem. Google's business on the other hand will continue to grow, they are not going anywhere.
      kevint2011
      • RE: How Google-Motorola will change tech: Four ways

        @kevint2011 "Your opinion is ill informed, why would OEM's back away from an OS that will remain free, even if they closed the doors, if Google started manufacturing hardware devices, whose to say that it wouldnt be direct competition to Apple and that other OEM's would be stuck with lousy WP7, and slowly fade out of the market. If Apple can hold such a market share, why cant Google?"

        Because a patent-encumbered OS is anything but "free." Microsoft already collects about $1 billion/year from Android OEMs as part of patent infringement settlements. And you got other lawsuits that are still moving through the courts. If these also end up as licensing settlements, then it adds up to real money moving forward.

        If the monetary cost is no different than a Windows Phone license, then Android's "free" OS begins to look less and less attractive, especially since Windows Phone indemnifies the OEMs from lawsuits. It's not free, but the cost is more certain.

        None of this affects affect Apple because they control the entire value chain, and already pay for licenses on many of the technologies used in iOS.
        Woochifer
      • RE: How Google-Motorola will change tech: Four ways

        @kevint2011 Please define 'free'. In real life, nothing comes for free. It is a question where the price is paid. In fact, you missed to mention the mobile operators which play the role of 'devil'. Comparing iOS, WP7, and Android, mobile operators in US seem to like Android a lot. I trust that mobile operators feel that they can control Android: how subscribers download the apps, pay for the apps. In essence, mobile operators are the gate-keepers, hence the non uniformity to how the Android OS can be updated over-the-air.
        PWsY
    • Message has been deleted.

      tejainece
      • RE: How Google-Motorola will change tech: Four ways

        @tejainece

        Seriously, You don't have to be rude!!
        Fan_of_Tech
      • RE: How Google-Motorola will change tech: Four ways

        @tejainece

        You should seriously learn to spell before you call other people dumb.
        .DeusExMachina.
    • No

      @LoverockDavidson_ "Google is going to alienate all of its android partners."<br><br>This is the dumbest thing anyone could say. Google's cash cow is ads and thus, its search engine. Google makes money by having as many devices out there running its search engine and displaying the ads customers pay for. Google knows this, they aren't stupid.<br><br>Google is positioning itself to DEFEND its platform that makes it so much money so that there can be as many devices out there as possible making them even more money.<br><br>So with that said, why the hell would Google change this business model that is working well and only getting bigger/stronger?
      cbstryker