Very early this morning, Larry Page (Google CEO) posted an entry on the official Google Blog detailing plans for Google to acquire Motorola Mobility. According to Google investor relations, Google has agreed to acquire Motorola Mobility for $40.00 per share—nearly double the closing cost/share last Friday.
It is important to note that Android is an open-source platform, with no licensing fees, and is used among a variety of hardware manufacturers. Page stated this will not change upon the acquisition of hardware manufacturer Motorola:
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. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.
One of the primary reasons cited for the acquisition was Motorola’s rather large portfolio of over 17,000 mobile-related patents. Google is building a portfolio to defend itself against patent litigation in an attempt to keep the costs of implementing Android on a piece of hardware as close to “free” as possible. This comes in response to recent attempts by Microsoft to enforce licensing fees on Android handset manufacturers.
Analysis: Google has been rather vocal in recent times about large companies such as Microsoft and Apple “attacking” Android via the patent system, claiming it to be “a hostile, organized campaign against Android… waged through bogus patents.” Microsoft claimed that they offered Google a chance to be part of the joint bid for the Nortel patent portfolio, but Google responded saying this would have undermined their ability to defend Android using the patents in question.
Ultimately, Google is waiting for the Department of Justice to make the same call on the Nortel patents as it did on the Novell patents: The DoJ intervened after the auction for the Novell patents forcing Microsoft to sell the patents it required from the deal, and making the entire CPTN consortium to give a license to the open-source community. However, waiting for the Department of Justice to make a decision after every large patent acquisition would leave Google vulnerable to attack in the event that the DoJ decided not to intervene. Because of this, Google is willing to spend a very large amount of money to acquire an arsenal with which to defend itself.
One of the primary problems with this acquisition is that it effectively puts Google in direct competition with the other hardware manufacturers with whom it partners. While Larry Page stated that Google intends to run Motorola as a separate business, he also said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers.” This directly implies the stark advantage Motorola gains as a hardware manufacturer owned by the software developer for their handsets. Google’s intentions may be good, but there is a direct conflict of interest here.
Ironically, the quotes Google provides from each of their partners regarding the acquisition all echo each other. Indeed, they all seem to support Google’s defense of its partners, but the lack of less robotic responses suggests they may all be worried this acquisition will harm their business models.
While many analysts suggest this is a move closer to Apple’s business model, I do not believe this to be the case. Apple provides only one choice in their mobile realm: the iPhone. They do refresh their hardware every year, but the fact still remains that there is only one choice. Google is keen on retaining a variety of choices in regards to Android; however, I feel that the acquisition of Motorola will narrow the range a bit. On a more positive note, this may yield a more solid user interface with fewer bugs since Google and Motorola can now work even closer than before and pool their resources.