Should Google's acquisition of Motorola Mobility drive Microsoft to buy either Nokia or Research In Motion?
That's the question zipping around the blogosphere after Google announced it would snatch up Motorola Mobility for $12.5 billion. The search-engine giant and the handset maker already had something of a tight relationship, as exemplified by the latter's popular line of Droid smartphones.
By making Motorola Mobility a subsidiary, Google acquires a hardware arm. That brings it in line with not only Apple, which controls both the hardware and software behind the iPhone, but also RIM and Hewlett-Packard, which do the same with their respective BlackBerry and webOS franchises.
That leaves Microsoft out in the cold-and almost certainly searching for some sort of response. The company has already enlisted a number of manufacturing partners to create handsets running its Windows Phone. Will it take the ultimate step and purchase one of them?
Gigaom's Om Malik suggested in an Aug. 15 post that Microsoft had already extended feelers in Motorola's direction, with an eye on the handset maker's extensive portfolio. "That would have allowed it to torpedo Android even further," he wrote, alluding to Microsoft's dizzying array of lawsuits and "royalty agreements" launched against Android device manufacturers over the past few months.
Microsoft had also sought further leverage against Android with its $4.5 billion purchase (in conjunction with a consortium of tech companies, including Apple) of some 6,000 wireless technology patents and patent applications formerly owned by Nortel. Over the past few weeks, Google had made very public its concerns over the deal, which it insisted would be used to place Android in a legal stranglehold.
Now that Motorola Mobility's 17,000 patents (combined with 7,000 reportedly pending) give Android some air cover, Microsoft's Android-killing strategy might center on peeling away Google's hardware partners, who could be upset over Motorola's new position as favored child.
"The likes of Samsung, HTC and LG obviously don't have any other choice than to say at this point that they welcome the deal," Florian Mueller, an intellectual property analyst, wrote in an Aug. 15 posting on his blog. "But there's no way that they can compete with a Google-owned Motorola Mobility on a level playing field."
That might drive those players into the open arms of Microsoft. "This deal could throw Windows Mobile a temporary life-line," John McCarthy, an analyst with Forrester, wrote in an Aug. 15 corporate blog posting. "Forrester can hear [Microsoft CEO Steve Ballmer] and company pitching the Asian players on how Microsoft is the only hardware-agnostic player left and that HTC, Samsung and LG should increase their support for Windows Mobile as protection against Google."
It must be mentioned at this juncture that the name "Windows Mobile," technically, applies only to Microsoft's previous smartphone platform, which reached Mobile 6.5 before its discontinuation in favor of Windows Phone.
Of course, a Microsoft in search of a hardware arm could also purchase Nokia or RIM, which faces falling market share and analyst negativity that makes them possible targets for acquisition. However, Microsoft's existing deal with Nokia-which involves the Finnish phone maker abandoning its homegrown Symbian OS in favor of running Windows Phone on all its hardware-confers pretty much all the benefits of an acquisition without the costs and headaches of, well, actually owning a giant company.
Meanwhile, RIM's co-CEOs show zero willingness to sell the company, instead insisting that their upcoming QNX "superphones" will pull their market share back from the proverbial brink.
Nonetheless, both companies remain valuable for their patents. "RIM suddenly becomes very valuable for its patent [hoard]," 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."
But would it be worth acquiring an entire company and its product lines to gain access to those troves of intellectual property, especially considering some of Microsoft's recent patent deals? That seems somewhat unlikely-but then again, nobody seemed to see the Google/Motorola deal coming, either.