Why Google’s acquisition of Motorola Mobility is a game changer

Google’s official blog post on the move to acquire Motorola Mobility for $12.5 billion explains that the move will help protect it against “anti-competitive patent attacks on Android” by companies including Microsoft and Apple.

Through the acquisition, Google will gain access to Motorola’s roughly 17,000 current patents and a further 7,500 patents pending. IDC experts agree that Motorola’s long-standing patent history (Motorola was founded in 1928) within mobility will “not only protect Google, but will allow the ability to challenge other vendors for patent infringement.” Potentially, Google can now delay pending lawsuits from the likes of Apple and Microsoft or settle out of court, said IDC.

But the search giant’s move from internet service to hardware manufacturing has far reaching consequences, particularly in the realm of mobile space. At present Google has promised to run Motorola as a separate corporate entity, to continue to hold Android as an open platform software, and to have Motorola continue to be a licensee of the software programme.

It’s a delicate balance, points out Ovum analyst Tim Renowden. “Any hint of favouritism or signs that Motorola is getting an unfair advantage and other key Android vendors will not be pleased,” he said. The risk for Google, he adds, is that this move may prompt the firms to reinvest in alternative mobile platforms “to keep Google honest”.

So far, comments gathered by Tech Digest from Samsung, HTC, LG and Sony Ericsson are all positive. But as Renowden pointed out, Google’s promise to “supercharge the Android ecosystem” with this acquisition implies that it will be working closely with the Motorola team – something that may cause the other vendors to change their tunes.

Another area Google is likely to target will be the media tablet space, where Android based tablets are trailing. According to IDC, Motorola’s Android media tablet, which was the first to market earlier this year, has been slashed in price due to slow adoption.

“Android-based tablets have failed to catch fire in the market for two major reasons: The operating system still lacks polish, and the first wave of devices launched at much too high a price point,” said IDC. Google’s ownership of Motorola will allow it to address both these issues. In controlling the end-to-end user experience, Google is mimicking rival company Apple whose tablet sales lead the market. This less competitive space is unlikely to upset other vendors and Google’s wealth will allow it to sell the tablets for less, speculated IDC.

Another area Google is now poised to enter is enterprise, a space it hasn’t performed well in due to security concerns. Motorola’s 'Ready for business' is the commercial brand for enterprise features within the Motorola Android Platform which include core mobile device management, mobile security and productivity tools. IDC experts say it would make sense if Motorola was offered deeper integration into enterprise functionality with a subset of it extended to other licensees so as not to alienate them.

While the deal itself, which is expected to close by the end of 2011 or early 2012, is not “market-shaking”, according to IDC, Google’s potential ability to launch smartphones in a closed ecosystem that it controls, has the potential to impact the mobile market as siginificantly as Apple’s offerings have. But it’s a hard act to follow, one that Nokia and Research in Motion (maker of the Blackberry) have attempted and had limited success at. 

This article first appeared on Campaign Asia