Googorola: Why did Google just buy Motorola?

Google just bought Motorola’s smartphone and tablet division for $12.5 billion – and no one saw it coming. But what would Google want with Motorola? We investigate

In a move nobody saw coming, Google today confirmed that it had bought out Motorola’s Mobility division lock, stock and barrel for the princely sum of £12.5 billion. The deal, which was agreed by both company’s board members this afternoon, will be finalised before the end of 2011.

But why did Google just spend £12.5 billion on Motorola? It’s a lot of money – even for a company as powerful as Google.

We do have our theories, though. For one, Motorola does have 17,000 registered patents under its belt. This would certainly be an attractive proposition for Google – especially with all the patent battles that are going on at the moment.

Twitter is now ablaze with scathing remarks about the buy-out. Barry Collins, editor of PC Pro magazine, tweeted the following: ‘Ferociously expensive and stupid move by Google. Android could have been the Windows of smartphones.’

Gartner analyst Carolina Milanesi added: ‘Samsung, HTC, LG and SEMC might be unhappy about Google/Moto but not much they can do when their smartphones sales are so dependent on Android.’

But it’s not all doom and gloom. Some believe Google has done the right thing acquiring Motorola’s smartphone and tablet division.

‘Today’s announcement that Google is buying Motorola may be a surprise in terms of linking those two brands together,’ said Fred Huet, Managing Director of international telecoms and media consultancy Greenwich Consulting.

He added: ‘But Google’s intention to dominate the mobile ecosystem – beyond software – has always been crystal clear. Apple has demonstrated that to own the consumer you have to provide their device, which is an approach that Google will likely adopt, with a Google tablet device providing a mobile link into the ‘cloud’.’

Know Your Mobile had a brief chat with Quocirca analyst Rob Bamforth about the buy-out. He told us that the move by Google to buy Motorola Mobility is ‘certainly a bold one and one that gives the search giant a huge hardware innovation base to build upon.’

And in the smartphone sector, patents are king. Most recently Apple filed an injunction against Samsung, which prohibits the sale of its Galaxy Tab 10.1 in the UK, US and Europe. Then there’s HTC and Motorola’s on-going legal battles with Apple.

Many have accused Apple of dirty tactics, claiming that it’s attempting to systematically remove anything it sees as a threat to its growing market share – like the Samsung Galaxy Tab 10.1.

But does this necessarily mean that Apple is the Hitler of the smartphone/tablet market? Or is it merely protecting its intellectual property? We’re reserving judgement on this one (mainly for legal reasons) – but feel free to let us know what your feelings are on the matter.

We put a few questions to IDC analyst Rene Millman regarding today’s most talked about news.

‘I think that in the long term that is a good strategy for Google,’ said Millman. ‘Google, in my opinion, hasn't bought the company for the hardware and neither do I think that it wants to get into the hardware business.’

‘Rather, it is for the 17,000 patents that come with the deal. This gives Google a nuclear deterrent of a patent arsenal with which to protect itself and more importantly, its hardware partners.’

‘That's why the likes of Samsung, HTC and Sony Ericsson have welcomed the move. For them it is less about Google moving into the hardware business and more about stopping Apple, etc from suing them.’

But what about Motorola as a brand – will Google gradually usurp it in the long run in favour of promoting its own Google-brand in the hardware markets? After all, the company has produced two smartphones in the past and has plenty more coming out in the future, the next being the Google Nexus Prime.

Not likely, says Millman. ‘Motorola will stay as a brand. It’s far too valuable a commodity to ditch overnight.’

Richard Goodwin[source]