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BLOG: Motorola buy sees Google having its cake and eating it

Tony Cripps | Aug. 18, 2011
Google’s plan to acquire Motorola Mobility for around $12.5bn cash has raised many eyebrows.

Certainly the future expansion of Google's core advertising business depends to a great extent on taking its message not only wider but also in deepening the level of engagement it has with consumers. If that also means that Google gains a foothold in the high-margin market for "smart" hardware so much the better. The company will benefit from a degree of diversification as insurance against a downturn or greater competition in online advertising.

Motorola may be a launchpad to challenge Apple

In this light, the acquisition of Motorola Mobility presents the strongest means at Google's disposal to challenge Apple, especially as that company finally turns its spotlight on the TV, as we're sure it will (Apple TV does not count - it has always been discounted by Apple as "a hobby"). Indeed, we would not be surprised if part of the subtext to this acquisition is to revivify Motorola and to restore it to its former position of US tech archetype, a position it only lost in the past few years to Apple.

Whether Google can pull that off remains to be seen. Motorola Mobility currently only boasts around a 2.5% share of the global handset market. But even as things stand, Google is acquiring a much more focused and streamlined business in Motorola Mobility than was the case when the company hit the skids in 2008. Motorola Mobility's portfolio of some 17,000 patents and another 7,000 patents pending globally is merely the icing on the cake for Google, following its recent failed bid to acquire Nortel's IP treasure chest against a consortium including Apple, RIM, and Microsoft.

If nothing else, Google's expanded patent portfolio will give it - and presumably Android licensees - more latitude to point the metaphorical intellectual property gun back at its rivals in cases of dispute in what is set to become a very litigious age in the consumer and communications technology spaces.

Tony Cripps is Principal Analyst, Ovum.

 

 

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