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The main reasons behind Google’s acquisition of Motorola Mobility

18 Aug

On Monday, Google announced that it had acquired Motorola Mobility, the handset development arm of the telecommunications company for a price of $12.5 billion (£7.5 billion). Google was quick to assure the public that Motorola will be run as a separate division to Android. One of the main drivers of the success of Android is the open nature of its platform, which will not be affected by this acquisition and which will continue to serve as the sole operating system for all of Motorola’s smartphones. Larry Page, Google’s co-founder and CEO, commented on the acquisition that “together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere.”

I’ve spent a bit of time trying to get a better understanding of the main reasons for this deal and the key benefits expected by Google. This is a brief summary of the main things I found:

  1. Patents! (part 1) – Motorola has a portfolio of 17,000 patents which Google will now be able to license to other Android users like HTC and Sony. In addition, Motorola has 7,500 pending patents. This newly acquired patent portfolio could help Google in significantly expanding (and protecting) the capabilities of its Android platform.
  2. Patents! (part 2) – Probably the most vital reason for this acquisition is the protection Motorola’s patent portfolio should offer Android against future legal action from the likes of Apple and Microsoft. Android has already been subjected to a multibillion dollar lawsuit by Oracle and is facing ‘indirect’ legal challenges through the complaints brought by Apple against Android device makers including HTC and Samsung. Having an extensive patent portfolio in place should help to better protect Android in future.
  3. New commercial channels to explore – Google will also gain a new and valuable channel into users’ living rooms through Motorola Mobility’s profitable set-top box business, which makes receivers for cable TV operators.
  4. Vertical integration – In an attempt to learn from the best (i.e. Apple) this acquisition is also meant as a way to integrate vertically, with Google hoping to “supercharge” its future Android releases through seamlessly merging its hardware and software.
Main learning point: out of all the key reasons for the Motorola acquisition that I learned about, I feel that “patent” is the magic word here. Given that Android as a business is still in its infancy (it’s only been around for three years) it has to play catch-up when it comes to patent protection. Earlier this year, Google lost out to its direct competitors RIM and Apple in an auction of valuable Nortel patents and patent applications. Had it won this auction, it would have been like getting access to the holy grail for Google. With this recent acquisition of Motorola Mobile, Google is hoping to be better armed in the ‘intellectual property war’ that seems to have been sparked by its direct competitors.

 

Related links for further learning:

http://www.techradar.com/news/phone-and-communications/mobile-phones/google-to-buy-motorola-991889

http://googleblog.blogspot.com/2011/08/supercharging-android-google-to-acquire.html

http://investor.google.com/releases/2011/0815.html

http://techcrunch.com/2011/08/15/breaking-google-buys-motorola-for-12-5-billion/

http://www.computerworld.com/s/article/9219225/Are_Motorola_s_patents_enough_to_protect_Android_

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Posted by on August 18, 2011 in Digital Strategy, Google, Mobile

 

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