Google’s $12.5 billion offer to buy Motorola Mobility was a huge coup for the Android developer. Not only was Motorola the company that brought Google into the big time with its Droid smartphone, it’s also a key player in the lineup of Verizon Wireless LTE (Long-Term Evolution) 4G phones. Motorola also developed the first real competitor to Apple’s iPad with its Xoom tablet.
But there’s a lot more to Motorola than a few cool devices. Motorola essentially invented the cell phone business. In the days long before smart phones-and even long before the Gordon Gecko brick-like cell phone (which was a Motorola device)-the company made the first really successful mobile cell phones. Many of those strange curly antennas on the back windows of upscale cars back in the ’80s were connected to Motorola mobile phones. But the company’s history goes farther back than that, to the days of early police radios, to the first short-wave mobile phones.
The reason for this history lesson? It’s simple. Motorola owns most, if not all, of the basic mobile phone patents. Motorola was making mobile phones before Apple computer existed. So when Google closes the sale on the Motorola deal, it gains a patent portfolio that is so basic that every company that sells a cell phone today must license its patents. This effectively shuts down Apple’s lawsuits against Android if only because Apple can’t afford to lose its licenses to use Motorola’s intellectual property.
While this might not put Google in the catbird seat in the mobile phone industry, it at least allows Google to compete on an equal footing with Apple and other phone makers, and it gives the other makers of Android phones a significant level of assurance that they won’t suddenly lose the right to use the Android operating system.
The acquisition of Motorola may also quell Apple’s quest to own every mobile patent on the planet, with even the flimsiest of claims, if only because there’s more to lose. But really, there’s a lot more to this deal than just patents. This also puts Google into the position to make its own phones, sort of in the same way that Apple makes the iPhone.
But I suspect that this will be a different situation than the iPhone. With the Apple product, the company controls every aspect of the design, pricing and distribution. With Android, anybody can play.
Motorola Deal Expands the Global Market for Android
It’s unlikely in the extreme that Google would follow Apple’s lead and keep Android to itself. More likely, Google would use its Motorola platform to develop Android to its maximum extent and then demonstrate to other manufacturers what’s possible. So by owning Motorola Mobility, Google could give iOS and the iPhone some serious competition in terms of the complete integration of hardware and software.
What’s even better from Google’s viewpoint is that Motorola makes some very good hardware. The company won’t have to start from the ground up in the smartphone business. This could effectively give Google a leg up on Apple for two reasons. First, it would be a second source of extremely well-integrated devices. Second, it would give Android makers and carriers of Android devices a way to expand into markets that Apple isn’t entering.
Right now, the Apple iPhone is a device for the elite. Owning an iPhone is sort of the smartphone equivalent of driving a BMW. It shows the world that you can afford the device itself, and that you can afford the significant cost of the data plan that goes with it. In the U.S., and in some parts of Western Europe, the purchase price is mitigated by rebates that make the out of pocket cost manageable; in the rest of the world, buying an iPhone means you just spent nearly $1,000 on your phone. The data plans vary according to where you are and which carrier you use, but they’re not cheap anywhere.
In contrast, Android phones are being offered at prices that are significantly lower in many markets, and they don’t always require an expensive data plan. Considering that the mobile phone market is truly global, if these devices are to grow, they have to do so everywhere, not just in places where the users are relatively affluent.
In effect, Google’s purchase of Motorola opens up a global market for Android devices that will reach an even broader audience than it has already. If Google wants to build Android devices that it can give away for free or that cost only a few dollars, it can do this and in the process provide an even more attractive alternative to Nokia and Microsoft. If Google wants to build an Android tablet that dramatically “underprices” the iPad, it can do that, too.
While this is all speculation at this point, the fact is that Motorola Mobility has not only the patents, but also the manufacturing knowledge to change the face of smartphones. And that’s a face that needs changing.