The news is spreading fast. Surprising the markets, Google just announced that it will buy Motorola Mobility (Motorola’s smartphone division) in a cash transaction valued at about USD12.5 billion. Evidently, despite the failure of the earlier Nexus One ‘experiment,’ Google still feels that to fully compete with Apple and also Microsoft-Nokia, it needs phones and tablets in its own portfolio.
Patents are an important part of this move (Motorola has many thousands). Google has been looking to strengthen its wireless and telecom patents portfolio for a while. Just recently, the company lost a bid for Nortel Networks’s patent warehouse against the Apple-led consortium that included Microsoft and Oracle. Google has also been rumored recently to be weighing up a bid for InterDigital, a mobile technology firm owning an extensive portfolio of wireless patents.
Although Google’s SVP of Mobile, Andy Rubin, stated that the company remains committed to its ecosystem and open source, the news will send a shockwave through its principal channel partners.
While Google justifies the acquisition as a step further to help it “create amazing user experiences” and “supercharge the entire Android ecosystem”, the news is definitely raising a lot of eyebrows in the partner community.
Google’s move will surely trouble critical partners such as Samsung, HTC, Toshiba, etc. The hardware manufacturer ecosystem in the mobility arena has been strongly polarized around Android. Microsoft was struggling to find its way through, which pushed it to engage in the highly critical strategic partnership with Nokia. Because of this tie-up, Google’s Android partners will not find it very palatable to jump ship to Windows.
The news may be even more frustrating for some partners as, just last week, sales of Samsung’s flagship tablet Galaxy Tab 10.1 were halted in Europe under claims of patent infringement and resemblance to Apple’s iPad. Apple is reportedly trying to do the same to Motorola’s Xoom. While, of all of Samsung’s products, the Galaxy Tab 10.1 is the least similar to Apple’s product portfolio (versus the Galaxy smartphone portfolio), the decision may be more politically motivated. However, given Google’s lack of reaction and its silence following the decision of the European court, many of Google’s hardware partners such as Samsung are likely to feel let down – another reason to look at alternative routes to sell their mobility hardware.
For the time being, it will be rather hard for Google to demonstrate to its key channel partners what the Motorola acquisition will bring for them. It will be very interesting to see how Google will play next, since the company has been more skillful in building the channel rather than constructing a vertically integrated mobility product.
by George Mironescu