Google to acquire Motorola for $12.5 billion

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Search giant Google has just announced it will be acquiring veteran mobile handset company Motorola Mobility for $12.5 billion. We will see in the future that Android will be more competitive with this accuirement. Let's see what is the balance for this 2 company :

• 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.