Wednesday, 17 August 2011
Twenty-four hours after Google announced plans to acquire Motorola Mobility, speculation about the implications is swirling in the technology world. Google will pay $12.5 billion for Motorola, a 63 percent premium over its closing stock price on Aug. 12.
Google described the acquisition as a move to supercharge its Android ecosystem. But is it worth it? Google already boasts more than 150 million Android activations, and that number grows about half a million every day. Bruce Edward Walker, research fellow at The Heartland Institute, thinks the deal is worthwhile.
"This may very well be a red-letter day for competition in the smartphone and tablet markets as Motorola Mobility will be better positioned in its duels against Apple, Nokia, Samsung and other industry competitors," Walker said. "Google's Android platform also may realize a technological boost by creating hardware-development strategies from the ground up. It's a win-win for Motorola Mobility and Google, and a win-win for free markets and customers."
The Patent Argument
With the Motorola acquisition, Google will pick up a much-needed patent portfolio -- and a fairly deep one. Motorola has 17,000 patents and 7,000 patents pending.
"The Motorola acquisition deflates some of the legal maneuvering against Google. So I think Google is going after the IP," said Michael Disabato, vice president of network and telecom at Gartner. He noted that Google lost its stalking-horse bid for the Nortel Networks patent portfolio, but recently picked up some IBM patents. "It was a good buy because Google can license the IP and drive revenue," he added.
As Greg Sterling, principal analyst at Sterling Market Intelligence, sees it, Google's acquisition will shake things up in the smartphone market. Each handset maker will have to figure out what competing with Google on Android devices means. But it also ups the ante between Google and Apple on another level.
"This acquisition likely means that Google and Apple will ultimately be in direct litigation with each other, which has been avoided because Apple has been suing the handset makers largely based on the way in which these Android handsets allegedly copy the Apple design," Sterling said. "If the acquisition succeeds, Apple and Google could be directly in a lawsuit."
Sterling and Disabato agree that Google wants more control over its Android operating system, which has been modified by various vendors. Disabato suspects Google may be moving toward standardizing the Android user experience. "I think Google realizes now that it was a strategic mistake to make Android so open," Disabato said. "Microsoft has licensed Windows Phone 7. Part of the licensing terms dictate that you have to make the phone operate in a certain way. I have a feeling Google might be trying to pull that punt, and there will be a lot of push-back from the current open-source vendors."
