Google and Motorola tighten their smartphone ties

A new report says Google's wholly owned Motorola subsidiary is working on a top-secret "X phone," with a tablet not far behind. What will its Android handset partners think?
Written by Ed Bott, Senior Contributing Editor

I am shocked, shocked by this news from Google, dumped into the news cycle on a Friday afternoon before the biggest holiday weekend of the year.

Google is in the midst of designing a brand new smartphone that is said to "rival" anything coming from mobile giants Apple and Samsung, according to The Wall Street Journal.

The report says engineers at Motorola Mobility (which was purchased by Google in a deal that closed in May 2012) are developing devices they're referring to internally as the "X phone," with an "X" tablet not far behind. The devices will "stand apart" and "provide more potent competition" for devices like the iPhone and Galaxy S III.

Gee, where have I heard this before?

Oh yes. Here:

Licensing operating systems to hardware partners is a tricky business. Google’s announcement this week that it plans to buy Motorola Mobility is a tacit admission that the partnership thing just isn’t working out for them. Android might be selling lots of phones (and a few tablets too), but the ecosystem is a mess, the Android reputation isn’t exactly stellar, and Google isn’t making nearly enough revenue per phone. 


Buying a hardware company means Google gets to build Android and its phones in sync.  ... A Google phone or tablet manufactured by Motorola will have unfair advantages right out of the gate.

Such a phone will almost certainly be set by default to use Google services and will also steer traffic exclusively to Google’s sites. There’s no guarantee other handset makers will be as loyal to Google—at least not without some cash in exchange for setting the right default services. Google can even sell its phone at or below cost if it knows it can make a higher amount through the ongoing revenue stream.

But the biggest advantage of all is technical. The engineers who work on those new phones and tablets made by Google subsidiary Motorola will have access to “highly proprietary” parts of Android that Motorola engineers don’t see now.

This wasn't how things were supposed to happen, of course. Google promised that this was all about the patents and it would never treat its partners differently.

Why are you acquiring Motorola Mobility?

There are two reasons. For one, innovation. This acquisition will bring Motorola Mobility’s hardware expertise closer to our software expertise -- accelerating innovation. The second reason is to protect the Android ecosystem. Dubious lawsuits are threatening Android and its manufacturing partners. In some cases, litigation is keeping companies from selling competing products. Motorola Mobility’s patent portfolio will act as a deterrent, ensuring Android devices continue to compete with Apple, RIM and other platforms.


Will you now favor Motorola Mobility’s handsets, giving them the latest versions of Android before others, providing better functionality, etc.?

No. We will continue working with all our hardware partners and will continue our strategy of working with different lead device manufacturers. We want as many companies building Android devices as possible.

This was never about the Motorola patents. And it wasn't about Google TV, as this week's sale of the Motorola set-top box division made clear.

Meanwhile, I don't expect the hardware partners to react with a unified voice to this news.

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