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Tuesday, 16 August 2011

A Supercharged Android Ecosystem

Google's CEO Larry page announced today that the company has made its first significant hardware acquisition; the purchase of Motorola for the sum of $12.5 billion.  Naturally they paid cash.

At the time of this purchase Google has more than 150 million Android devices worldwide and each day another 550,000 devices are added through a network of about 39 manufacturers and 231 carriers in 123 countries.

While some may be worried that Google's commitment to running Android as an open platform might waiver, Larry page has reiterated that. Motorola will remain a licensee of Android and Android will remain open.

The purchase price also represents something of a coup for Motorola shareholders who were paid a premium of 63% n the closing price of Motorola Mobility shares last Friday, August 12, 2011.  Motorola hasn't been faring so well in recent years with only 3% market share.

One wonders what this purchase means for Google's current partners, HTC and Samsung in the long term?

Motorola's  hundreds of patents (24,5000 of them) add additional value as Larry Page acknowledges in his announcement:

"We recently explained how companies including Microsoft and Apple are banding together in anti-competitive patent attacks on Android. The U.S. Department of Justice had to intervene in the results of one recent patent auction to “protect competition and innovation in the open source software community” and it is currently looking into the results of the Nortel auction. Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies"

What Google Got For Its Money
There is another side to this purchase. Gigacom reports that if Google hadn't made the purchase they would have been in an even greater patent hole.

"Our sources say that Motorola was in acquisition talks with several parties, including Microsoft for quite some time. Microsoft was interested in acquiring Motorola’s patent portfolio that would have allowed it to torpedo Android even further. The possibility of that deal brought Google to the negotiation table, resulting in the blockbuster sale."
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