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Googorola brings moment of truth for Android ecosystem

by Scott Bicheno on 15 August 2011, 15:26

Tags: Google (NASDAQ:GOOG), Motorola (NYSE:MSI)

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First among equals

Such is the efficiency of the tech blogosphere these days that within seconds of the announcement that Google is acquiring Motorola there was a deluge of opinions on the implications of the deal.

While articles turned around in five minutes can hardly be described as analyses, there was instant consensus upon hearing the news: it's huge, it's bad news for other Android handset-makers, and it's about acquiring patents.

The latter two issues dominated the questions in the subsequent conference call, but the spokespeople - who included Google CEO Larry Page - pretty much stuck to the PR script dictated by the press release and blog post announcing the deal. Here are the key points from the call.

  • Motorola Mobility has been developing intellectual property for 80 years and owns 17,000 patents and has 7,500 pending. They should come in handy in protecting Google and Android from alleged "anticompetitive threats" from the likes of Apple and Microsoft.
  • Google is positioning this deal as enabling it to make Android better. Page said the top five Android OEMs had all expressed their support for the deal, and the lead-partner process which singles out one OEM for extra love when a new version of Android is launched will remain unchanged. Page stressed that there will be no change to the Android ecosystem.
  • Moto will be run as a stand-alone business and that it will immediately be accretive to earnings. Google thinks Moto has a lot of growth potential. They were also keen to point out that Google still has plenty of cash left in the bank for other corporate larking about.
  • Google is excited (Page said ‘excited' repeatedly, without ever sounding so) about the set-top box side of things, and Moto CEO Sanjay Jha said "There's a big convergence going on between the mobile and set-top box worlds." There's clearly a hope that this deal will resurrect the DOA Google TV.
  • They're not worried about competition regulators scuppering the deal because Google is not currently in the smartphone or set-top box hardware games and besides: anything that bolsters Android must be pro-competitive, given the threats posed to it by Apple and Microsoft.

 

The most contentious part of this deal concerns the owner of this supposedly open mobile platforms now owning one of the OEMs that make devices based on it, and thus compete with all the others.

Of course Google is going to great lengths to insist that it will be business as usual, and that Samsung, HTC and co will actually be better off due to all the extra expertise Google will inherit from Motorola. I believe that Google does still want the other OEMs to stick with Android - don't forget Google's business model relies on having its products used on as many devices as possible - but I find it hard to believe the OEMs are going to be too happy about this.

A lot of the rationale being offered is quite reminiscent of the reassurances Microsoft was offering its other partners when it announced Nokia as the new first among equals. Microsoft clearly favours Nokia and now Google will surely favour Motorola. The platforms and OEMs are partnering-up to combat the Apple complete ecosystem model and the game of musical chairs is drawing to a close.

Apple has Apple, Google has Moto, RIM has BlackBerry, Microsoft has Nokia and HP has Palm. So who do Samsung, HTC, LG, SE, etc have? I suppose Samsung has Bada, but the rest of them are currently in the position of running mobile platforms owned by companies who I presume favour one of their competitors. That's not a great position to be in.

Google is not in the business of making money from hardware; it just wants everyone to use Google products all the time and sell advertising against that traffic. So it won't necessarily be looking to give Moto a competitive advantage over other Android OEMs.

But if the Moto boffins get early access to Android code and are able to optimise devices more efficiently - the failure to do so clearly damaging the success of the Xoom tablet - then they will be at a massive advantage. And if Google doesn't plan to help out Moto with Android then you have to wonder why, apart from the patents, it made this acquisition.

 

Update - 16:00, 15 August 2011: Google has issued ‘supporting' quotes from Android OEM partners. Is it just me or do they seem a tad pinched?

"We welcome today's news, which demonstrates Google's deep commitment to defending Android, its partners, and the ecosystem." - J.K. Shin, President, Samsung, Mobile Communications Division

"I welcome Google‘s commitment to defending Android and its partners." - Bert Nordberg
President and CEO, Sony Ericsson

"We welcome the news of today‘s acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem." - Peter Chou CEO, HTC Corp.

"We welcome Google‘s commitment to defending Android and its partners." - Jong-Seok Park, President and CEO, LG Electronics Mobile Communications Company

 



HEXUS Forums :: 6 Comments

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This is all getting very interesting, it seems that google is trying to ‘shore up’ Android by buying Motorola and it's patents. This would hopefully curtail any patent dispute with the likes of Apple, as Google will then counter argue that Android is using Motorola patents not Apple's. Which would then force Apple to just have to seek damages/compensation for the past (limited) years where Android products have infringed on their patents.

More interesting will be how Microsoft will react, as they have a lucrative licencing/royalty fee on certain patents used in the Android ecosystem, which some of the big OEM's like HTC pay them for. How this gets tackled will also of interest, particularly for the OEM's.
LG was looking at Meego not too long back…………
BlackBerry has Blackberry
Perhaps this should be RIM has blackberry? Bit pedantic i guess but hey…

Whilst microsoft will clearly favour Nokia, i dont see this deal damaging the other OEMs too much. HTC have developed quite a large brand following and Google would be extremely unwise to alienate them for the reasons explained; the google eco system works byt having their products on as many devices as possible. Same goes for Samsung and their galaxy range really!
Biscuit
Perhaps this should be RIM has blackberry? Bit pedantic i guess but hey…

Yes on both counts.
It marks an interesting change to the current Android eco-system, if anything though having a handset manufacturer onboard should help deliver more innovations by having teams who are mixed hardware and software engineers.

The key thing for the partners to watch for will be “exlusive” deals to Motorola handsets, whereby only they can use specific parts of the Android OS, as long as things don't develop down these lines, ultimately I see this as positive for everyone.