Google's plan to acquire Motorola Mobility for around $12.5bn cash has raised many eyebrows. Indeed, many watchers are already convinced that the move will undermine the growth of the company's Android software for smart devices, with major licensees such as Samsung and HTC potentially turning their back on the operating system. Would an acquisition based on acquiring intellectual property be worth that? So what is behind Google's thinking and what kinds of outcomes can we realistically expect?
Google's acquisition will not cause Android licensees to abandon the platform, although they may question the depth of their involvement. Most licensed alternatives don't offer the same level of service integration needed to attract buyers to their hardware.
Microsoft's Windows Phone is potentially the biggest gainer from the move through a more equitable division of effort across the two platforms among OEMs.
Buying Motorola Mobility offers Google the opportunity to challenge Apple more directly than its Android licensing program allows it, especially in terms of a more tightly integrated multi-screen proposition. Motorola's brand could also prove a useful marketing tool, especially in the US.
There is no guarantee of success for Google in the hardware business as it is starting from a very low market share. Motorola Mobility's IP portfolio at least offers a degree of insurance against the worst-case scenario.
More Android or better Android? A calculated risk
Google sought to reassure doubters on its investor conference call following the announcement, claiming that the top five Android licensees - presumably Samsung, HTC, LG, Huawei, and Sony Ericsson - support the move. Nonetheless, there is a chance that Google may put off some Android licensees from committing more deeply to the OS, with the increasingly expansionist Samsung perhaps the most likely to break ranks, especially given that it has its own platform strategy in the shape of Bada.
That's a calculated gamble on Google's part and perhaps it knows something we don't as to those vendors' future plans. The real question is whether Google's action will drive those same licensees away from Android completely and into the hands of other platform providers?
This seems less likely to us, at least at the time of writing. After all, the main alternative to Android, Windows Phone, is barely different to Android from a competition perspective. Microsoft too sees its mobile OS investment as a Trojan horse for its consumer services, and more broadly its consumer-related interests, including advertising.
So it would be a case of "out of the frying pan and into the fire" for most Android licensees if they were to take this approach, although there's nothing to stop companies such as Sony Ericsson from double-sourcing. Indeed, there may well now be more compelling reasons to do so.
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