In 1998, Motorola—then the largest manufacturer of cellphones—was locked in battle with Nokia, which eventually stole its crown. That same year, two Stanford students named Larry Page and Sergey Brin filed for the incorporation of their new search company. The name on their filing: "Google."
Google, now a much larger company with dozens of products, today announced its intentions to purchase Motorola Mobility, one of two companies formed during a spinoff maneuver that started in 2008. (The other, Motorola Solutions, specializes in corporate and government communications tech.) It's a surprising story to say the least. Here's what you need to know.
Motorola's Android devices may become the best Android devices.
Motorola is the company behind the wildly successful Droid as well as a slew of other devices running Google's Android operating system; it was also the first to market with a real iPad competitor, the Xoom. More recently, though, Samsung and HTC have stolen Motorola's thunder by partnering with Google on its "Nexus" brand phones. But now that it's owned by the Android mothership, Motorola could gain a competitive advantage over other smartphone manufacturers. (Perhaps loyalty will pay off here: Motorola was one of the only companies that didn't pledge support to Microsoft's Windows Phone, instead staying all-in on the Android platform, which it switched to after .)
But we have no idea what this competitive advantage might look like.
Extreme vertical integration, as we see at Apple, would bring the work of Google's software teams and Motorola's hardware teams closer together. This, however, would alienate the other Android partners such as Samsung, HTC and LG—some of whom have significantly larger market share than Motorola. It would be an extremely odd move for Google to buy Motorola Mobility and then not take advantage of this new corporate closeness for special hardware projects. But maybe it's the most prudent move here.
While Motorola Mobility and Google operate in the same general space, they could not be more different.
only show two product segments: "Mobile Devices" and "Home." also contain just two items: "Advertising Revenues" and "Other." Google is an advertising company that gives away software; Motorola is a hardware company that sells hardware. This acquisition only makes sense if you take your eyes off the financials and look at the big picture. Which brings us to the next issue.
This purchase is as much about software patents as it is about cellphones, if not more. Software patents are the currency of power in the tech world, and Motorola has lots of them: It's been around since 1928, when the small, Chicago-based company was called Galvin Manufacturing Corporation and it made an assortment of basic electronic components. (Though the years the company also released the first-ever Walkie-Talkie, and its 1983 DynaTac 8000X is widely regarded as the first cellphone.)
Google's acquisition of the Motorola patent portfolio will help shield it against lawsuits by Apple and others, and provide licensing revenue for years to come. It's really quite remarkable if you think about it: Google is spending $12.5 billion on a device company not for its devices or manufacturing capabilities, but for intellectual property. It's less remarkable if you consider that Microsoft makes more money extracting patent licensing fees from Google and Google partners for Android than it does selling its own mobile operating system.
For a fantastic explainer about software patents as they relate to this merger, see .
Google hopes to have this purchase done by the end of the year.
This could prove challenging, as the company is currently the by the FTC as well as European regulators.
Speaking of international concerns, Motorola is one of the few remaining great American tech companies. Though I doubt this was a motivating factor in the acquisition (though it may make the actual process a bit simpler), this represents a consolidation of American tech power against Japanese, Korean, European and Chinese companies.
How does this affect the Android platform?
For one, it probably will purify it. It's hard to imagine Motorola's custom Android interfaces, such as Motoblur, will stick around through this merger. So that's an immediate plus for future Android users. The flipside is that Motorola doesn't seem to be bringing much to the table in terms of software design. Android needs some fresh ideas to stay ahead of its competitors; this may not be where they come from.
How does this affect Google's huge array of services, such as Gmail, Google+, Google Apps and Chrome?
It's hard to say for sure, but it probably won't. One possibility—and this is total speculation—is that Motorola's patent portfolio, which reaches back for decades and contains some extremely basic software functions, could allow Google to be more bold in rolling out new software features.
Finally, why didn't Google just buy a carrier?
Perhaps the patent issue overwhelms all other considerations, and it would have been much more expensive, but what better way for Google to flex its muscles and influence the market than by buying a wireless carrier? That would be headline to get excited about.