Google’s (NASDAQ:GOOG) $12.5 billion acquisition of Motorola
Mobility (NYSE:MMI) is a game-changer on several fronts, particularly in the
patent arena.
Android sits at the center of several ongoing patent
disputes, some of which have escalated into particularly vicious courtroom
battles. Earlier this year, Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) led
a consortium of companies in a winning $4.5 billion bid for some 6,000 wireless
technology patents and patent applications formerly owned by Nortel. In the
wake of the purchase, Google
made very public its concerns that those patents would be used to place
Android in a legal chokehold.
Now, those Android battles have led Google to take the
enormous step of purchasing Motorola, which comes with around 17,000 patents
with another 7,000 reportedly pending. By purchasing the handset maker, Google also takes a bold step into the
hardware-manufacturing arena, placing it in more direct competition with the
likes of not only Apple, but also Research In Motion (whose BlackBerry
franchise continues to battle Android in the corporate arena) and
Nokia.
“We recently explained how companies including Microsoft and
Apple are banding together in anti-competitive patent attacks on Android,”
Google CEO Larry Page wrote in an Aug.
15 corporate blog posting. “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.”
For its part, Microsoft declined to comment on Google’s
acquisition. Outside analysts, though, seem to regard Google’s move as a
potentially good one—so long as the search engine
giant can avoid irritating other manufacturing partners who use Android in
their devices.
“This will provide more balance and a better defensive
position for Android, which was getting
killed in court,” Rob Enderle, principal analyst of the Enderle Group, wrote in
an Aug. 15 email to eWEEK. The real issue, he added, “will be the licensees who
won’t want to compete with a company they license from, because it will put
them at too much of a disadvantage.”
Indeed, Kate Price, an analyst
with Technology Business Research, believes those manufacturing partners
have reason to be nervous. “On the one hand, Google and the OEMs share the
common objective of maximizing Android activations,” she wrote in an Aug. 15
research note. “On the other hand, Google is now a powerful, wealthy
competitor, one that is impatient with the long lead times in the hardware
business.”
In fact, she added, that could drive some of those
manufacturers to give a second look at Windows Phone, which Microsoft is
positioning as an Android alternative. “Microsoft will have to deliver a truly
competitive consumer mobile operating system to take advantage of this
opportunity,” Price wrote. “To leverage this
acquisition, Google will have to work closely with OEMs to reassure them that
they are still a trusted partner, and will have to resist the temptation to
work more closely with Motorola Mobility to shorten lead times and deliver
innovation faster.”
Google’s acquisition could also drive its competitors into
buying frenzies of their own. “RIM suddenly becomes very valuable for its
patent horde,” Ray Wang, principal analyst and CEO of Constellation Research,
wrote in an Aug. 15 email to eWEEK. “HP, Apple or Microsoft should quickly move
to buy RIM for its patents and also [BlackBerry Enterprise Server], the crown
jewel.”
In the shorter term, though, Google’s acquisition is likely
to disrupt the Android actions already in progress. Microsoft and Motorola, for
example, are locked in vicious courtroom battle over what each side describes
as patent violations, with Microsoft targeting Motorola’s Android devices. How
the Motorola purchase will affect that long-running war, as well as other
Android lawsuits in process, remains to be seen.
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