Motorola patent portfolio the key attraction for Google

Motorola patent portfolio the key attraction for Google

Google’s £7.6bn acquisition of Motorola Mobility will allow it to square up to Apple as an integrated mobile software and hardware provider. Google’s move indicates it realises that to really own the consumer it has to have the hardware as well as the software. It raises interesting questions over what Microsoft and perhaps Facebook will now do in response to the move.

Patent attraction

Ovum analyst Nick Dillon said: ‘As noted by Google, a key objective of the acquisition is to gain access to Motorola’s sizable patent portfolio, rather than just its hardware business. Having been outbid in the recent sell-off of Nortel’s patent portfolio, Google was clearly willing to look elsewhere to build up its arsenal of IP and in the light of the growing number of IP legal disputes in the smartphone market, this move will put Google in a stronger position competitively.'

Alison Hyde, technology fund manager at Cavendish Asset Management, agreed: ‘While details are still emerging, the key factor here seems to be Motorola’s impressive patent portfolio. Intellectual Property – particularly with regard to wireless technology - has developed into a key battleground as tech companies scramble to position themselves to dominate the promising smartphone market, attested to by the recent slew of patent battles involving names such as Apple and Samsung.
‘Only recently, in July, Google found itself massively outbid – by a margin of several billion dollars – for a slice of Nortel’s coveted patent portfolio by a consortium including Apple, Microsoft, and RIM. This is likely an extension of that strategy – an attempt to protect themselves as battles elsewhere turn ugly. Talk on both sides would seem to point in this direction.

“The prize of interest lies in the intellectual property assets, which also happen to come with an operating company attached. Mobility holds 17,000 existing patents and has 7,500 applications pending – no small number. This acquisition may put it on a firmer footing as it continues to fight its rivals for an ever bigger slice of the smartphone pie.’

How will rival Android manufacturers react?

The Motorola purchase may worry Google’s Android partners, especially Samsung, HTC, LG, Sony Ericsson and increasingly ZTE and Huawei. One of the main reasons why HTC and LG in particular developed Microsoft Windows Phones was to avoid having all their eggs in one basket. The Microsoft and Nokia alliance put them in an awkward position should Microsoft favour Nokia ahead of them. Now they find themselves in a similar position with Google.

Dillon observed: ‘However, the move raises concerns for the wider Android ecosystem as the acquisition means that Google will become a hardware vendor. With this, Google will move from the position of partner to that of competitor to Android handset manufacturers, potentially placing significant strain on the Android ecosystem.

‘If, for example, Google provides preferential access to the Android code to its own hardware division, this would place other vendors at a disadvantage and may lead them to question their commitment to the platform, potentially pushing some towards other platforms.

‘Given Google’s recent moves to exert greater control of the implementation of the Android platform, such as restricting access to the Android source code to select hardware partners, such a move is not beyond the realm of the imagination. One beneficiary of any move away from Android would be Microsoft and its Windows Phone platform, as many larger Android manufacturers such as Samsung, LG, HTC and ZTE are also Windows Phone licensees.’

Fred Huet, MD of international telecoms and media consultancy Greenwich Consulting, commented: ‘Google will need to exercise careful stakeholder management to ensure that their additional Android partners (Samsung, HTC etc.) foster continued growth of the Android OS outside of purely Motorola.  While the acquisition provides exciting growth potential, they will not want to put all their eggs in one basket.
He went on to say that while today’s announcement may be a surprise in terms of linking the two brands together, Google had always intended to dominate the mobile ecosystem beyond software.

Will Google develop its own computing products?

Huet added: ‘Following the acquisition, the market will likely see the development and launch of an iPad rival tablet device, as Google develops its own mobile computing products. 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. It will also be interesting to see how Google’s recent bold moves with Google+ and Google Wallet will be integrated with this acquisition.’

He continued: ‘The question everyone will be asking is how Google can turn this strategic advantage into a commercial success, and fast. Because in spite of Android’s stellar growth, when it comes to smartphones Apple still commands hearts and minds of consumers. With a backer as powerful and solvent as Google, players like HTC, LG and BlackBerry will not be writing Motorola off, while the Microsoft-Nokia team will be banking on a successful launch of its forthcoming device.

‘Another question to consider is, following in the footsteps of the Microsoft-Nokia partnership, does the Google-Motorola deal point to mobile future made on alliances? And if so, who will Facebook buy?’

Written by Mobile Today
Mobile Today


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