Google and Motorola Mobility announced this morning that Google will acquire the mobile handset manufacturer for $12.5 billion. Android will remain open and Motorola will remain a licensee of Android. Google will run the Motorola as a separate business. Across the world, there are Android-based original equipment managers that feel like they just got punched in the stomach, as Google’s entry into the hardware supply chain, no matter how benevolent the companies make it sound, is a huge wave that will have ripple affects across the entire mobile ecosystem.
It makes absolute sense for Google to buy Motorola. The last couple of weeks have seen Google take significant body blows to its Android vertical. First they lose the Nortel patents to Apple and Microsoft (among others) and then Apple comes out with its second quarter earnings statement to reveal that it now has $76 billion in the bank and making more than $10 billion in profit every quarter. Most of that is from iOS. Android is not making that kind of money for Google and the search giant has to be feeling that it missed an opportunity, especially considering that Apple only has 18.2% of the worldwide smartphone market and Android has 43.4%. How will Google’s addition of Motorola shake up the industry?
In a press release, Google’s CEO Larry Page, said, “Motorola Mobility’s total commitment to Android has created a natural fit for our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers. I look forward to welcoming Motorolans to our family of Googlers.”
What Page really means is, “I can’t believe how much money Apple is making. We need to get into the handset business now. We have always liked Motorola and since HTC and Samsung are kicking their butt, they come relatively cheap. No better time than the present to swoop in.”
Motorola has been a preferred Android vendor for Google since Day 1. The original Droid phone was from Motorola and the first Honeycomb tablet was the Motorola Xoom. Motorola only sold 10.2 million devices in the second quarter and not all of those were smartphones. Motorola, a once-proud company that dominated the mobile space in the years leading up to the Era of the Smartphone (remember the Razr?).
Regulators Cannot Block This One Since Apple Is So Big
The deal is subject to regulatory approval in both the United States and the European Union. Yet, unlike many of Google’s acquisitions in recent years, this one should go through relatively quickly. That is because of what Apple has done to the ecosystem. There is no way that regulators can look at what Google makes from Android, the worldwide smartphone market and the juggernaut that Apple has become and say that Google’s acquisition of Motorola is in any way anti-competitive. It is a necessary move by Google to keep pace with its biggest competitor in the mobile realm.
Yet, that is excluding the Android ecosystem itself. If Android is “open” (and many people doubt how open it actually is, even if it is licensed for free), then what is going to happen with Samsung and HTC? Do they still get preferential treatment, such as the ability to release the Nexus line of Android phones which are considered the developers’ build and the flagship of the operating system? Will they be allowed to use their own value-added products and skins on top of Android? What about LG, ZTE and Huawei that are making modest, if decent, livings off of Android? In the short term it is hard to speculate on how Google’s acquisition of Motorola will change the very large and complex dynamic of the Android ecosystem, but it is hard to imagine that Android would be more “open.”
How Does This Affect The Ecosystem?
Then again, nothing could change. Google could just start creating new devices through Motorola and HTC and Samsung remain strong and healthy competitors like nothing has changed (except for a likely inevitable rise in Motorola sales cutting into HTC/Samsung profits). Though, in the long term, what if Google (purposely or not) ends up driving HTC and Samsung out of the Android market in straight towards Windows Phone 7? Or maybe even to join the MeeGo project, which is still alive even without Nokia.
Android lovers should be excited that Google now has Motorola under its thumb. There should be more and better Android devices coming to market. Google lovers should be happy because it means that Google is defending itself in the patent wars and should raise the bottom line of the company. Apple, Microsoft, Nokia and the Android ecosystem should be wary because Google now has the capability of completing disrupting the balance of the environment in the same way that Apple has.
Do you think that Google’s acquisition of Motorola is a good thing for mobile competition or a reactionary, anti-competitive move by Mountain View? Let us know in the comments.