Google is now a hardware company as it announces acquisition of Motorola Mobility and its patents

Google is to acquire Motorola Mobility, a major manufacturer of Android handsets. Why? I believe this is the key statement:

We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.

What are the implications? This will assist Google in the patent wars and perhaps give it some of the benefits of vertical integration enjoyed by Apple with iOS; though this last is a difficult point. The more Google invests in Google Motorola, the more it will upset other Android partners. Google CEO Larry Page says:

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business.

It is unlikely to be so simple; and the main winner I foresee from today’s announcement is Microsoft. Nokia’s decision to embrace Windows Phone rather than Android looks smarter today, since for all its faults Microsoft has a history of working with multiple hardware vendors. The faltering launches of HP’s TouchPad and RIM’s PlayBook have also worked in Microsoft’s favour. I do not mean to understate Microsoft’s challenge in competing with Apple and Android, but I believe it has a better chance than either HP or RIM, thanks to its size and existing market penetration with Windows.

Microsoft will be clarifying its mobile and slate strategy next month at the BUILD conference.

Today’s announcement is also a sign that Google takes Android’s patent problems seriously, as indeed it should. The company’s policy of act first, seek forgiveness later seems to be unravelling. Oracle has a lawsuit against Google with respect to use of Java in Android that looks like it will run and run. FOSS patent expert Florian Mueller argues today that Android also infringes the Linux license, and that this is a problem that cannot easily be fixed. Samsung’s latest Galaxy Tab has been barred from the EU; not entirely a Google issue, but it runs Android.

Note of clarification: Google is acquiring Motorola Mobility, not the whole of Motorola. In January 2011 Motorola split into two businesses. Motorola Mobility is one, revenue in second quarter 2011 around $3.3 billion. The other is Motorola Solutions, revenue in second quarter 2011 around $2 billion.

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6 comments to Google is now a hardware company as it announces acquisition of Motorola Mobility and its patents

  • I fail to see how Microsoft can come back from its current <1% market-share so it can dominate or at least be considered a major player in the world of smartphones. Although Nokia might go Windows Phone all the way, that doesn't mean consumers will buy nokia smartphones: iPhone 5, the new android OS (icecream something ;)) and the truckload of hardware coming with it will be 'known and recognizable' by consumers. Windows Phone isn't. Not today and not tomorrow. Even a big player like Rim has a problem selling smartphones to their large consumer base.

    I don't see it happening for Microsoft in the mobile market. They had it with windows mobile 6.x, they totally lost it afterwards.

  • I agree with Frans. I can’t see any path that leads to Microsoft being relevant in this market any time soon.

  • Agree with Frans 100%.
    In the last 10 years Microsoft has perfected it’s tendency to follow the new hype and come late to the party with mediocre offerings delivered in a record time through some sort overpriced buyouts, investments or acquisitions. And then abandoning the whole established and invested-in ecosystems for the next hype that someone (and usually not Microsoft) is already monetizing in a big way.
    With Ballmer stagnating MSFT and Gates investing in toilets Google’s mobility strategy suddenly looks much brighter.

    Gleb

  • tim

    @Frans and others you could be right, though if Microsft makes sense of Windows 8 and tablets there may be a knock-on benefit for Win Phone (which is actually a decent product).

    Tim

  • Hunter Sheridan

    Thank you for the blog.

    With regards to some of the comments …

    I am all for speculative fun as to which technology player will “win/dominate/materially drive/strategically own” the key platform components of the mobile device computing industry, but I don’t think anyone would seriously confuse it for empirically sound projections of which horse will win.

    It is w-a-a-y too early in the race.

    Have fun
    Hunter

  • How do we know it’s so early in the race? Are you certain that first-mover status is easily erased in the mobile market?