Motorola Mobility: RIP or the Next Apple?

So, the big news this week in technology is the proposed purchase of Motorola Mobility by none other than search behemoth Google.  The purchase, currently valued at 12.5 billion dollars (US), caught the tech world by surprise. Indeed, Motorola Mobility’s Sanjay Jha was, in the last week or so, quoted as saying that the company was not married to the Android platform for its phones and could very well switch its attention to Microsoft’s Windows Phone 7 platform.

Motorola Mobility has bogged down recently, having reported a 56 million dollar (US) loss in the last quarter. It’s Xoom tablet has failed to sell in any significant quantity and issues have plagued it’s flagship phone.

So, why would Google want to sink so much into such a company?  Simple. Motorola’s patents. With a sizable patent portfolio, Google could strip off the hardware side and keep the patents and it would be money well spent.  Chances are, however, they will keep the phone business as well.  Motorola Mobility, which Google claims will operate separately, could become the leading Android manufacturer which could be a huge boon for Google and the Android operating system.  Here, though, Google needs to tread lightly.

Samsung, HTC and Sony Ericsson are huge supporters of Android. Yes, they market phones with other operating systems (HTC is also the biggest Windows Phone 7 maker, until Nokia starts, anyway) but Android is where they have the biggest investment.  Without at leas two of those three companies, Android would certainly falter.  Moto, likely, could not carry the brunt of the weight on its own.

There is precedence for that as witnessed by Apple, but Android does have a sizable share of the smartphone market that it would not have were it not for HTC and Samsung.

So, what does this mean?  Nothing in the short term as the deal has not passed all regulatory approvals.  Chances are that it will, but it is still six months or more away. A lot could happen in that time.  An asteroid could strike Earth, Apple could go bankrupt and HP’s webOS phones could become the predominate player.  Could.  But, of course, the likelihood of any of  that happening is nil. 

This move by Google could also backfire. If they do hang on to the hardware side of Moto, it may infuriate HTC and/or Samsung enough that they switch to something to, say, Windows Phone 7 or even the aforementioned HP webOS.  That could mean huge problems for Android.  HTC is currently locked in a bunch of lawsuits with Apple concerning Android. If they switch to Windows or webOS, Apple may be more open to settling the lawsuit and that would free HTC to go full bore with the Android replacement.  Imagine, quality phones with Windows or webOS that are being marketed by the big four in the US (and all of the major carriers outside of the US, like Orange in the UK) and you suddenly have a tilted market. Google/Moto would have to substantially step up their game to compensate and I just don’t think they could overcome that.  Moto has surprised me in the past, but then they do something dumb and end up back in the red as witnessed by its latest earnings report.

In the end, Google will still wins if for nothing more than getting that patent portfolio to be used against Apple and Microsoft, both of whom are gunning for Android.  And the consumer will win, no matter what, because they will get decent phones at more competitive prices.  And that is always a good thing.

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