Editor’s Note:
Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their views on hot topics across the wireless industry.
We all know that Google Inc. has acquired Motorola Mobility Inc. in one of the most dramatic and astounding acquisitions in many years. It wasn’t too many years ago when most people wouldn’t have been surprised to have woken up to hear that Motorola had acquired an upstart named Google. As Bob Dylan sang, “The Times They Are a-Changin’.”
It’s well known that, through the acquisition, Google gets a huge portfolio of patents in addition to a tier-one brand that makes scads of Android smartphones, as well as ‘hidden jewels’ like TV set top boxes. So, how did a major deal like this come about anyway?
I believe that it started with Motorola approaching Google to sell or license their patent portfolio to an organization that would be deemed to be “friendly.” Google was the natural prospect. And, since Google didn’t win out in the bidding on Nortel’s patent portfolio, they were keen to find a patent portfolio treasure like what is owned by Motorola. But, the simple exploration talks about patents turned into something much, much greater.
“Would you guys be interested in licensing some or all of our patents?” says Motorola. “You’re our partner in the Android ecosystem and could likely use a number of them to keep you armed in the wars with others like Apple Inc. and Microsoft Corp. We gain solid licensing revenue. You get the best mobile patent portfolio out there.”
“Would you all be willing to sell us the patents instead of licensing them?” replies Google. “We prefer to own IP not just license it, and we would be willing to make it attractive to you and your board.”
“Ah, well that’s not exactly what we had in mind,” says Motorola. “You’d have to make quite an offer. What kind of number were you thinking? After all, if we sell the patents to you, all we’re left with is our smartphone design and manufacturing capabilities.”
“OK, let’s make this really worth it to you guys,” says Google. “How about if we offer you $12.5 billion for the patents, and you guys throw in the company to sweeten the deal?”
Silence – as in “you can hear a pin drop” silence.
“We checked with our board,” says Motorola. “It’s a deal as long as Motorola can continue to operate as a separate brand and company. After all, we have 60+ years of brand loyalty, and y’all need a good, solid brand in which you can make Android shine.”
“Done.”
If that’s not what happened, I suspect that it was close to a dialog like this.
What’s the outcome of this? I believe that Google will eventually drive product design and development for Motorola. It gives them the same kind of vertically integrated playing field that Apple has; only their OS is open to anyone, which doesn’t make any difference because the real value is in the user experience, applications and services.
Watch for a ton of innovative Google software and services to be developed in and around Android with Motorola . . . gCloud, gTunes and an entire family of “g” services.
In five years, I suspect that Motorola gPhones will be on par with or even exceed what Apple can produce. And, don’t be too shocked to see that Microsoft acquires Nokia for similar reasons. We’ve all seen what happens when a company builds the OS and associated apps and services (it’s called Apple and the ‘i’ products and services).
Integrating software, hardware and services in mobile is giving users the best experience. What happens to Samsung, LG, HTC and other Android licensees? Perhaps they will migrate to HP’s webOS. Or, don’t be surprised if HP acquires HTC for similar reasons, as well.
The end result here is that users are going to continue to see tremendous innovation and integrated software and services in mobile.
Kudos to Google. The mobile market is serious business. Serious enough for Google to drop $12.5 billion in cash to maintain a market leadership position.
