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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.