Image representing Google as depicted in Crunc…Image via CrunchBase
Motorola is a name long associated with mobile communications. Those Walkie-Talkies in World War II? That would be Moto. Car radios, moon missions and in 1983 the first commercial portable phone, all Moto. And now in the biggest innovation of all, Moto gets acquired by Google which makes its money attaching ads to web searches. Google spent $12.5 Billion (pending regulatory approval) for Motorola In January 2011, Motorola essentially split into two companies Motorola Mobility and Motorola Solutions.
Here are five reasons why the acquisition makes great sense and five reasons it is not so great. I’ll say in advance, it is a very good deal for both Google and Moto.
1. That 80-year-history of Motorola in wireless provides an unmatched patent portfolio. Despite all the major vendors championing innovation, patents have become the major high tech growth industry. Google needed to shore up its patent ammo supply in the face of Apple and Microsoft.
2. Idle cash is a dumb investment strategy. Google (and most of the high tech vendors) have been sitting on a mountain of cash. Burying your cash in the backyard doesn’t make sense for individuals or companies.
3. An integrated offering is the new mobile nirvana. Apple controls the software and hardware for its phones. Android from Google is popular but splintered. Google can now set a hardware/software agenda.
4. Google is still working at making an ad sponsored software model for mobility. Moto can provide a platform for sponsorship.
5. It is all about video. If Google wants to establish YouTube as the go-to mobile video solution, it needs to offer an integrated platform.
Five reasons that the deal is not so good
1. You buy a hardware maker, you piss off your other hardware partners unless you start carving our territories and markets which gets you into regulatory problems.
2. Microsoft needs a boost before falling into mobile obscurity. Now Microsoft can try to woo the Android hardware makers.
3. Software companies usually do a lousy job at bringing hardware companies into the fold.
4. Motorola Mobility has a culture very different than Google.
5. The acquisition leads to confusion about the Google partners while Apple continues on its merry way.
So, the patent lawyers are happy as patent challenges means continued legal fees. The partners are confused and need to be comforted.
And of course, users still want a mobile phone that works as both a strong signal phone and flexible mobile application platform. And those users would like a phone that does not cost too much initially or carry some onerous contract. If Google can get the users happy, then it is $12.5 billion well spent.
