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Google Ogles Moto Hardware

By - Source: Toms IT Pro

With Motorola Mobility on board, Google would become an integrated smartphone maker and an OS provider just like RIM, Apple and HP.

James Alan Miller

James Alan Miller is Managing Editor of Tom's IT Pro. He is a veteran technology journalist with over seventeen years of experience creating and developing magazine and online content. Founding editor of numerous business and enterprise computing sites at the network, James headed up the After Hours section at PC Magazine, as well as hardware and software sections of various Windows publications.

With Motorola Mobility, Google would become a smartphone maker and an OS provider just like RIM, Apple and HP. So where does that leave Android licensees and Microsoft?

Google announced plans to buy Motorola Mobility for the tidy sum of $12.5 billion today.  Should the deal go through, Google will become yet another company that supplies and owns both the hardware and software stacks for a major mobile ecosystem.

There’s HP with the WebOS, RIM with BlackBerry and QNX, Apple with the iOS and now Google with Android. Glaringly missing from that list is Microsoft.

Just last week, Motorola Mobility CEO Sanjay Jha talked publicly about being open to working with Microsoft on Windows Phones. At the time, it appeared a possible mobile lifeline for Microsoft was in the offing. Turns out those comments were really only aimed at strengthening Jha’s bargaining position with Google.

Motorola Mobility finalized its split from the mothership, Motorola Inc., earlier this year. Although it has struggled, on the smartphone front Motorola Mobility’s shipments have grown for nine consecutive quarters, according to research firm iSuppli. This bright spot’s been powered by the company’s successful line of Android-run models, the Droid series, released mostly through Verizon Wireless in the U.S. 

Today, along with HTC and Samsung, Motorola Mobility is among the chief suppliers of Google-run handsets. There are, in all, 39 manufacturers offering Android phones through 231 carriers in 123 countries globally, Google says.

No doubt Motorola Mobility’s tight integration with Android was one of the main things that attracted Google. “In 2008, Motorola bet big on Android as the sole operating system across all of its smartphone devices,” said Google CEO and co-founder Larry Page in a blog post announcing the acquisition. "It was a smart bet and we’re thrilled at the success they’ve achieved so far. We believe that their mobile business is on an upward trajectory and poised for explosive growth."

Prepping for a Patent War

Surely, Google had an eye towards Motorola Mobility’s roughly 16,000-patent portfolio, which could serve as a prophylactic against intellectual property claims by rivals for both Google and its Android partners, as well.  “From an intellectual property (IP) standpoint, the acquisition bolsters Google’s negotiating position with Apple, in the event that Apple goes after Android-based products the same way it did with Samsung in Europe,” said Francis Sideco, principal analyst, wireless communications, for iSuppli. “If nothing else, Google will be able to assert Motorola’s IP for the 3GPP and 3GPP2 cellphone specifications, which are used in both the iPhone and iPad.” 

According to David Wertheimer, CEO and executive director of the Entertainment Technology Center at USC, whether such patent wealth benefits end users, including businesses, all depends on how these IP portfolios are leveraged.  It could be a prelude to yet more patent fighting among mobile vendors.

“This is more evidence of the patent and litigation war that is brewing.  The companies with huge market caps are buying patents at a remarkable clip to defend their positions–we are beginning to see an oligopoly of patent portfolios emerging,” Wertheimer said. “Unfortunately, this has the potential to stifle innovation, which is the heart-and-soul of the technology world. Should Google use its ever-widening patent portfolio simply to support and defend its Android developers, then this will be good news.  But to the extent that Google uses Motorola's and other patents to stifle competition and innovation from start-ups and its competitors, consumers will suffer.”

Unhappy Licensees

My first reaction to today’s news: Samsung, HTC and all the other Android licensees can't be happy, despite Google’s assurances. And, well, there goes Microsoft's chances for Windows Phone.

Why? Because without Motorola, Microsoft's is apparently stuck with Nokia, the very definition of a struggling licensee. And, as Larry Dignan notes, software/hardware stack ownership and consolidation by single companies is today's reality for the mobile device market. This leaves very little room for third-party operating systems providers such as Microsoft.

Then again, the deal could very well end up giving Microsoft an entry point with manufacturers it did not have beforehand. That’s because no matter what Google's stated intentions are regarding the running of Motorola Mobility as an independent company and keeping Android open, the Android licensees of the world have got to be nervous about this deal’s prospects for them in the long term, especially as Motorola Mobility and Google won’t be able to help but become more tightly integrated.

“One thing that HTC, Samsung, LG & others loved about Android was that Google was a software company –an enabler, not a competitor.  This acquisition has the potential to change all of that and put Google in direct competition with its partners who manufacture handsets,” USC’s Wertheimer explained. “That may be good for Google because they can more tightly control the hardware-software linkage in their flagship products (like Apple does).  However, that competition may drive some companies like HTC, who have been totally committed to Android, towards Microsoft, causing this acquisition to backfire on Google.”

iSuppli senior analyst Tina Teng concurs. “Although Google has said Motorola will continue to operate as a separate company, this development has to raise questions among the other Android licensees as to the level of support they will get from Google in the future,” she said. “Even before this announcement, Motorola already had gotten preferential treatment, receiving first access to Honeycomb on the tablet side. While it’s unlikely that the other licensees will abandon Android, they could shift their priorities and focus more R&D toward Windows Phone from Microsoft.”

Time for Microsoft to Make A Deal?

If so, expect Microsoft to be very generous with the deals it inks with these companies, all of whom, at some level, must feel betrayed by Google. After all, the company that supplies them with the platform they use to run their mobile devices will now compete with them in the hardware channel, as Henry Blodget notes.

Okay, so Microsoft is now the only major smartphone OS supplier without its own hardware. That's bad if you consider that the only apparent way to success is through hardware/software/service integration as pioneered by RIM, revolutionized by Apple, and, just today, acknowledged by Google with its Motorola Mobility buy. So Microsoft may, in the heat of the moment, pull the trigger on a major hardware buy of its own

The likeliest candidate: Nokia, of course, which is already working on tightly integrating Windows Phone with its next generation handsets. That would put Microsoft in a similar position to Apple, HP, RIM and (now) Google as the purveyor of its very own mobile ecosystem.

Less likely, but more disruptive to the mobile industry, would be if Microsoft went ahead and bought RIM. That move could be more attractive to Steve Balmer and company, as it would give Microsoft instant credibility with enterprises and IT pros because of RIM's superior mobile device management capabilities. One caveat, however: even though it’s struggling of late, I don't foresee RIM's co-CEOs, essentially, giving up on themselves just yet.

Hey, maybe Microsoft will hedge its bets and try to pick up both Nokia and RIM—the former for its popularity with consumers (pretty much everywhere, at least on the low end, but the U.S.) and the latter for its business acumen. Stranger things have happened.