Top three reasons why Google is buying Motorola

Top three reasons why Google is buying Motorola

Summary: Google is spending $12.5 billion in cash to acquire Motorola Mobility (MMI). Why do they see Motorola as being so valuable? Here are the top three reasons.

TOPICS: Mobility, Google

This morning Google announced that it was spending $12.5 billion to acquire Motorola Mobility (MMI). In cash. Clearly Google must see a lot of value in Motorola that shareholders didn't see as late as Friday, when the company was valued at "only" $7.7 billion. Why does Google want Motorola so badly? I believe there are 3 main reasons:

1. Patents. The US patent system provides government-sanctioned monopolies, ostensibly to protect the little guy that comes up with a truly novel and unique invention in his workshop from having his idea stolen and replicated by robber barons without giving the original inventor a cent. At least that was the intent when the first patent was granted on US Soil to Samuel Winslow in 1641 for a new way of making salt.

Lately, though, patents have been less about protecting the little guy and more about generating revenue and protecting markets. IP holding firms buy up patents and then use them to extort money from companies that actually make products, and big companies encourage their employees to submit thousands of patents that are then used to sue their competitors. Compounding the problem is the lack of quality in patents granted. It's all-to-common for the patent office to grant multiple overlapping patents covering basically the same invention, or granting patents for ideas that are obvious to anyone skilled in the field.

As a relatively new company that started with the silly notion that it was more important to do innovative work rather than lock up the work in patents to prevent others from doing it, Google has found itself on the short end of the patent stick more often than not. The purchase of Motorola gives the company a much bigger stick with which to fend off attackers. As sole owners they can also pass on this protection, if they wish, to Android licensees down stream.

2. Enterprise features. One area where Google has been lagging is security and other features that are required by Enterprise customers. For example, plain vanilla Android does not support some of the most popular VPN protocols used by big business. Motorola, Samsung, and others have been working hard to differentiate themselves by providing packages of Enterprise ready features on top of the base features supported by Android. Now Google can take the Motorola offering and fold it into Android, making these features available for free to all Android licensees.

3. Home devices. So far, Google's efforts to break into the home market have been a flop. Google TV and Google @ Home could both benefit from Motorola's expertise in making consumer devices and exploiting Internet technologies in smaller and more personal ways. I'm doubtful this will ultimately be a success, but certainly the Motorola purchase will give it a shot in the arm.

So those are the reasons why Google is buying Motorola. How about the reasons that they shouldn't have made the purchase? The main one is possible damage to Google's partnerships with Android phone makers. Google claims that the Motorola purchase will not hurt its relationship with Motorola's competitors such as HTC and Samsung. But how can it not? Before today's announcement were rumors that Google would buy Motorola but divest itself the phone making parts, keeping only the software and patent parts. But today Google says Motorola will continue doing what it's doing as a "separate business". That's going to be a tough balancing act.

Topics: Mobility, Google

Ed Burnette

About Ed Burnette

Ed Burnette is a software industry veteran with more than 25 years of experience as a programmer, author, and speaker. He has written numerous technical articles and books, most recently "Hello, Android: Introducing Google's Mobile Development Platform" from the Pragmatic Programmers.

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  • RE: Top three reasons why Google is buying Motorola

    Here's three more: Money, control, money.
    • RE: Top three reasons why Google is buying Motorola

      <i>"Here's three more: Money, control, money."</i>

      Here's three more good ones: Money, patent-control, money.
      • You do realize that Moto's mobile patents are outdated

        @Return_of_the_jedi They don't include 3G or 4G mobile technology.
      • RE: Top three reasons why Google is buying Motorola

        @wackoae Prove it! If Moto has 4G patents then they are very valid and I have no reason to believe they don't have both 3G and 4G patents which would be under 14 years old and still very valid!
      • Feel free to Google it ....

        @Peter Perry Not a single 3G or 4G patent is owned buy MMI. They license the tech like everybody else.
  • Supply Chain and Logistics

    Patents are negiligible. Google needs the logistics and manufacturing capabilities to remain competitive. How soon before Google Search Appliances are manufactured in-house at Motorola?
    Your Non Advocate
    • Re: Supply Chain and Logistics

      @facebook@... Hopefully never. Moto isn't known for its ability to make Server hardware, but Google already is.
      Ed Burnette
  • RE: Top three reasons why Google is buying Motorola

    There is only one reason: patents. Motorola threatened the other Android OEMs with patent litigation (I know!) and Google decided to buy Motorola, well I guess they had little option.

    Fall out? Oh yeah, will the other OEMs think Motorola will get preferential treatment? This seems highly likely. But for Google this is the lesser to two evils.

    So Android isn't strategic for Google? Yeah, right.

    But isn't there a HUGE antitrust problem here? Yes there is.
  • RE: Top three reasons why Google is buying Motorola

    "As a relatively new company that started with the silly notion that it was more important to do innovative work rather than lock up the work in patents to prevent others from doing it"

    Aside from their improved search algorithm on search, Google has not done much innovation.

    They bought Android, and decided that they could play fast and loose with Linux and Java, ignoring other people's innovation. Nearly all of their apps and services were either bought or derived from previous work.

    And all this to spy on their users in order to better target their advertising.
  • Actually a 4th

    According to a Cnet report, Microsoft was also interested in MM. So Google payed a big premium to buy MM.
  • RE: Top three reasons why Google is buying Motorola

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