[sc:mobile-category ]This week we had the big announcement that Google is going to buy Motorola Mobility for $12.5 billion. That’s a big chunk of change even for Google, but what is really behind the move?
There have been several theories floating around the net, but the one that makes the most sense to me is the patent portfolio that Motorola Mobility holds. Google is a late comer to the tech industry and as such doesn’t have a large number of patents. This puts it at a disadvantage to people like Microsoft, Apple, IBM and Nokia in any field that they compete.
Several articles have suggested the deal was struck very quickly over the weekend and I can believe that as even as late as last week the CEO of MM was hedging his bets about mobile OSs saying he was open to Windows Phone 7. Truth or shrude salesmanship to get Google to move even quicker?
But none the less, what does it mean moving forward?
From a patent perspective MM is a granddaddy in the mobile space so the patents will be helpful in many aspects of Google’s future, but for the short term, it won’t help them much with the multiple lawsuits that are already in play. Longer term, it seems likely a good bargaining chip to have the next time someone comes knocking on their door with infringement claims.
From a product perspective, it certainly cuts out Windows Phone from being an option on Motorola hardware and brings in to question the future of Android on other third party vendors. Yes, I know everyone lined up on announcement day and sang the party line that this was good for Android and everyone was still committed to it being open and free. But let’s be pragmatic, when Google goes to make its next phone its not going to ask HTC or Samsung to build it when it can do it it’s self.
With Android 3, Google close the source code to everyone and still hasn’t released it, can you image when Google owns MM that they won’t have access to the code first and then everyone else. It is just in Google’s own best interest to do this, to make sure MM comes out with new products based on new version of Android before everyone else.
So what do Samsung, HTC and the other do? Sit back and accept they have just been demoted to the second tier of Android vendors? Or do they start hedging their bets?
Business is business and any Android vendor that isn’t looking to reduce their reliance on Android is not doing their job at this point. This is probably a really good opportunity for Microsoft all things considered. Samsung and HTC have long support WP7 and Acer was announced a while ago, but they put out many more Android models than WP7 (which is to be expected up until now) but I think we might see that change over the next 6-12 months. Should Sony Ericsson or other vendors start up conversations with Microsoft? Might not be a bad idea all things considered.
Microsoft has always know that you can’t be an OS vendor and a hardware vendor for that OS at the same time, you have to choose what you want to be and run with it. When Microsoft does make hardware (Xbox, Zune, etc) they build a custom OS and don’t license it out. It makes no sense as you’re just helping others take you business away from you. With the OSs they do license (Windows, Windows Phone, etc.) they just stay out of the hardware business. I can’t imagine the number of times a vendor (HP, Acer, etc. Ok, maybe not IBM) must have gone to MS and asked to make a Microsoft branded PC to put on store shelves and MS wisely said no thanks.
If multiple Android vendors do start to move away, what can Google do? The most obvious move would be to spin Android out of the company in to some kind of industry consortium. But that would really defeat Google’s real reason for making Android in the first place as the consortium would no longer be tied to Google’s services and could even select other search engines and advertising providers if they wanted to. It would just give up too much control to people who aren’t all that interested in Google’s advertising business. In this scenario, could MS actually pay the consortium to make Bing the default search engine?
Could we see a fork of Android? Certainly there’s a lot of competition in the marketplace already, with multiple app stores available and several forks of Android , but without the big handset makers behind them they are not really an option at this point. But if Samsung, HTC and other put their weight behind a new app store and a forked kernel? That would make it very interesting for Google and MM.
What the Google purchase of MM really shows us though is that the smartphone business is still experiencing growing pains, it hasn’t even reached puberty yet. It’s still anyone’s game to win and everyone is using everything they’ve got to win it.