Is the Google-rola Deal a Win for Microsoft?


Congratulations go to Google today, for its decision to pay over $12 billion for Motorola Mobility. In one swell foop, the search king has expanded its IP portfolio in hopes of giving its Android mobile device OS a fighting chance in present and future patent litigation, while presumably annoying Android handset makers such as HTC and Samsung.


If the deal goes through, it will make Google the eighth-largest handset maker by market share, behind Nokia, Samsung, LG, Apple, ZTE, RIM, and HTC, and ahead of Huawei and Sony Ericsson. Although Google swears it's planning to run Motorola Mobility as a separate company, I've already started referring to the new acquisition as "Google-rola" because I have a sneaking suspicion that Google didn't make this purchase solely for the IP of Motorola Mobility - some 17,000 patents, according to some reports.

There's been so much first-day analysis of this deal already that I hesitate to chime in.

Okay, so much for modesty.

For some reason, my first reaction is "This is good news for Microsoft." No matter how many holes the Boss-Dude-Person has poked in my argument over the last few hours, I'm still convinced that the real winner of the deal will be the software titan of the Pacific Northwest.

I'll concede that at the moment, Microsoft is barely worth mentioning as a smartphone OS provider. Its market share for Windows Phone in the quarter just concluded is a virtually irrelevant 1.6 percent, compared to Android's 43.4 and iOS's 18.2 percent. Although Android vendors such as HTC and Samsung are already making Windows Phone devices, ZTE is also committed to doing so, and Huawei is looking into the idea, for now Windows Phone is indeed a niche platform.

But I'm not going to count Microsoft out of the game just yet. There's a small matter of that deal with Nokia to be factored into the discussion; from all reports, Windows Phone 8 will be the first release where the Finnish cell phone maker can make a difference in design and execution. Even though Nokia has given up on Symbian as a long-term option, Nokia currently leads manufacturers with a 22.8 percent share (Samsung's 16.3 percent share is a little more than two-thirds that of Nokia), and Symbian is used on almost one out of every four handsets sold today.

Let's be conservative and say that Microsoft can convert a quarter of Nokia's sales to Windows Phone 8. That would only bump Windows Phone up one notch, although by that time, if RIM keeps sliding, Microsoft could conceivably pick off some of those users.

The problem, of course, is that people as a rule don't buy phones based on the handset maker or the OS - Apple being the exception. That's because Apple has changed the rules of the game, which is now all about the apps. If Microsoft - with its partners -can figure out how to take away some developer mindshare from Android and iOS, it stands a chance of picking up enough of the action to make its mobile efforts worthwhile.

But in order for this to happen, Google (including Motorola Mobility) has to screw up bigtime. I'm not so sure that's going to happen in the near-term, but over the next couple of years, almost anything can happen. Google has already broken the convention of platform suppliers avoiding competition with their customers, and heaven only know what kind of mischief could happen after the deal closes.