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Google got itself a Motorola: will this change the Android landscape?

Posted: , by Daniel P.

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Google got itself a Motorola: will this change the Android landscape?
Motorola DROID and Verizon's glitzy marketing behind it was the phone that gave Google's fledgling mobile operating system street cred and visibility two years ago, and the Motorola XOOM was the poster child for Android Honeycomb, Google's first effort for a tablet OS. CEO Sanjay Jha, on the other hand, turned the sinking Motorola ship around thanks to Android smartphones - quarterly losses of $1.2 billion are now history, and Motorola only lost $85 million last quarter.

Today both companies decided to tie the knot, and Google asked for the hand of Motorola from the shareholders by opening its coffers, and sprinkling them with 63% premium over the Friday's closing price for the company, which is actually a normal margin for such friendly acquisitions. The $12.5 billion Motorola buyout is the largest in Google's history, diminishing its $40+ billion cash pile quite a bit, but it makes sense from each and every angle you look at it, and has been unanimously approved by both boards.

Here's a quick recap of the conference call that we just listened to, where Larry Page and Sanjay Jha, the CEOs, answered the burning questions of analysts. Larry went down the memory lane back to the meeting with Andy Rubin in 2005, where he shared the vision for a common smartphone platform. Then he praised Motorola Mobility's transformation since they jumped on the Android bandwagon, with the assertion that Motorola will be a separate entity that will have the current management team intact. An interesting fact is that the home automation and TV set-top business were mentioned specifically.

Sanjay Jha, on the other hand, said that Motorola has been blessed with the arrival of Android, and has a lot to offer to further expand the ecosystem, being very strong in Latin America  - number one in Brazil, and very popular in Argentina and Mexico. He mentioned that Moto is also very strong in China - one of the top smartphone manufacturers there, with handsets tailored to the local market.

In the Q&A session that followed Google was asked about the legal ramifications on Android before and after the deal. Sanjay Jha clarified that Motorola has over 17 000 issued patents, and 7500 patent applications in process of issuing. "We believe we'll be in a very good position to protect the Android ecosystem now", commented Google. Let's not forget that Motorola started suing Apple on 18 counts of patent infringement in October last year, so Google can eventually use this as leverage in lawsuits that target Android.

It also turned out that Andy Rubin has spoken to the top 5 Android licensees, and all have showed enthusiastic support of the deal, since Google reaffirmed Android will be kept open and going as wide as possible. There will be no changes in how Android will be developed and run, and for Motorola it will be business as usual - the move is seen chiefly as protecting the ecosystem from litigation.

One analyst asked why Motorola, instead of partnering, or acquiring someone else. After all, he said, Motorola has physical assets, plants and so on, which is not Google's core competency. Larry Page answered that none of the others have the strong patent portfolio Motorola has, and, since the company will be run as a separate entity, Google won't be dealing with manufacturing facilities and the like. The deferred tax asset of Motorola Mobility have also been taken into consideration with the closing price.

Google apparently plans to leverage Motorola Mobility's home business too. The company owns the 4Home home automation communication platform, and offers set-top TV boxes in partnership with Comcast. Motorola is looking to expand convergence between the home and mobile business, leveraging Android@Home and other niceties coming from Google. For an overview what the company has done so far in the field of home automation, you can read our in-depth article here.

Last but not least, what will happen to the Nexus brand was answered. Google reiterated that every Christmas they start choosing a Nexus phone manufacturer, then work with it and chip suppliers 9-12 months to come up with a poster child for a new Android version. This process is apparently not going to change, and Motorola will have to bid together with the rest of the Android gang for the privilege to make the Nexuses of tomorrow.

In a nutshell, both CEOs tried to assure investors and journalists that nothing is going to significantly change in the Android ecosystem, except for the fact that it will be way more protected from patent trolls. Motorola Mobility will even remain a separate entity in the reporting aspect, too, and will keep delivering its own financial reports like it had been until today.

We find it hard to believe that Motorola won't be able to differentiate its Android handsets much more, now that it is owned by Google itself, but we will save judgment for the first phones conceived post-acquisition.We will also dive in the public filings as soon as they become available regarding the Google-Motorola deal, and see if there are any hints about possible future changes to Android now that Google got itself a hardware company. What's really interesting is the future value Google sees in Android, protecting it to the tune of $12.5 billion, despite that the revenue from its mobile OS pales in comparison with the core search business for now.

Are you surprised by the Google-Motorola deal, or do you think it makes sense for both companies?

25 Comments
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posted on 15 Aug 2011, 09:16 5

1. mr. sarcasm (unregistered)


Finally, I see this turning into an old fashioned "meet me at the slide after school, battle"

posted on 15 Aug 2011, 09:23 10

2. remixfa (Posts: 14056; Member since: 19 Dec 2008)


WOOO HOOO.

Now google has the patents to smack apple back and save the other manufacturers. Maybe this will mean more google branded moto phones and less blur from motorola. No offence to those that like blur, there isnt anything wrong with it... I'd just like to see more high quality vanilla phones being pumped out.

posted on 15 Aug 2011, 12:42 2

14. Thump3rDX17 (Posts: 2160; Member since: 10 May 2010)


none taken. Motorola phones are really the best phones to go Vanilla with.

posted on 16 Aug 2011, 01:45

24. Irad123 (Posts: 32; Member since: 01 Aug 2011)


though I maust say, the gingerBlur UI of the gingerbread motos is one of the best UI out there, so I wish to see more of that...

posted on 16 Aug 2011, 21:21

25. Thump3rDX17 (Posts: 2160; Member since: 10 May 2010)


yeah, so far the best experience aside from stock you can get on a Motorola phone is on the Droid 3. it's "Gingerblur" is leagues ahead of what's on the Photon, Atrix & X2 for some reason...

posted on 15 Aug 2011, 09:27 10

3. Bob (unregistered)


This deal screams 3 words..

F U Apple! :)

posted on 15 Aug 2011, 09:36 10

4. Sniggly (Posts: 7177; Member since: 05 Dec 2009)


Well, I'm surprised, AND I think this makes sense. Motorola is second only to HTC in the extent to which it has embraced Android, and its patent portfolio is in the strongest position to protect Android against Apple and the like.

I think this is what Jha REALLY meant when he made those comments that everyone viewed as traitorous.

The next several months will be very interesting indeed... what do you want to bet that Apple will scream "foul!"?

posted on 15 Aug 2011, 09:37 4

5. The Truth Squad (unregistered)


I wonder if Steve Jobs got much sleep last night. Reminds me of the bully showing up at a fight with a knife to find he is facing a AK47. Great move, Google!

posted on 15 Aug 2011, 09:41 10

6. SuperAndroidEvo (Posts: 4335; Member since: 15 Apr 2011)


Google is an extremely SMART company. They will not be bullied by Apple. Google HAS a responsibility to protect Android & Android's partners, most notably HTC & Samsung. By acquiring Motorola, those 17,000+ patents will drastically change Android's fate in the long run. Apple now can't compete with Google in the patent war & should FINALLY stop this belligerent attack on Android, HTC, & Samsung. I believe Google WILL keep Android open. If it ain't broke, don't fix it motto definitely applies. Android is #1 because of this & Motorola's future acquisition to Google will not affect this one bit. Now Google can concentrate & make killer phones. I guess it's safe to say Motorola will now make the Nexus Prime. Since Texas Instruments looks to be the chip on the next Nexus phone, & Motorola's great relationship with TI, it's got to be a no brainer. The future is extremely BRIGHT. I am VERY excited for Google & Android.

posted on 15 Aug 2011, 17:06 3

23. JayQ330 (Posts: 21; Member since: 15 Jul 2011)


i wonder if moto has any "cellular radio use in a box case design patent" kind of like apples crazy patents, hopefully they take something from apple for all the BS apple's been causing. headlines always mention microsoft as the bad guy, but theyre just doing it for profit & still lets them live by paying royalties...but its apple who just wants android to disappear out of sheer pussieness!

posted on 15 Aug 2011, 09:48 1

7. Timmay (unregistered)


That and the thousand IBM patents. Yeah Apple had better be glad it hasn't tried suing Google directly. By the way I second that motion, Fu¢k you apple. Fyi I personally liked apple on Facebook just so I can wake up every morning and go to their page and degrade them like the little Susan's they are.

posted on 15 Aug 2011, 15:21 3

20. Hallucinator (Posts: 344; Member since: 24 May 2010)


Your life must be a very sad existence.

posted on 15 Aug 2011, 09:48 3

8. remixfa (Posts: 14056; Member since: 19 Dec 2008)


Sae,
The article already said that the nexus process will remain unchanged and all manufacturers will still have to submit designs for the nexus. Motorola gets no preference. All the rumors point to a samsung nexus prime.

posted on 15 Aug 2011, 10:04 3

9. SuperAndroidEvo (Posts: 4335; Member since: 15 Apr 2011)


Well remixfa it's all rumors & stuff can change. I was just stating an opinion & it wouldn't surprise me one bit if Motorola makes a Nexus phone. You are probably right that Samsung might be making the new Nexus. Samsung's Nexus S had a bit of issues & maybe just maybe Motorola can step up & make a Nexus Prime for Google. Again this is all just speculation, but I see what you are saying! lol

posted on 15 Aug 2011, 15:04 4

19. remixfa (Posts: 14056; Member since: 19 Dec 2008)


lol, the nexus part isnt speculation, they asked google that and they said the process for all android and nexus stuff is unchanged.

I wouldnt mind seeing a moto-nexus. As long as i dont see a hawuaii nexus, I think im fine.. lol.

maybe apple will realize how much of a smackdown they just got and submit for an apple nexus.. lol. i think I'd fall out of my chair.

posted on 15 Aug 2011, 15:36 3

21. SuperAndroidEvo (Posts: 4335; Member since: 15 Apr 2011)


lol Could you imagine? THAT would be funny! I too would fall out of my chair! lol

posted on 15 Aug 2011, 10:05 1

10. WirelessCon (Posts: 309; Member since: 11 May 2010)


Good for Google.
Google makes money off advertising.
Tiered data plans, and capped data speeds allow less advertising.
Google should lobby for unlimted/uncapped data to protect itself and its customers.

posted on 15 Aug 2011, 11:13 5

11. Tmachaveli (Posts: 425; Member since: 01 Apr 2011)


this is a happy day for Android..where r the sheep at today?..its been very quite today lmao

posted on 15 Aug 2011, 11:24 1

12. DKMDROID (Posts: 102; Member since: 09 Aug 2011)


I like the way Google thinks i guess this was only for the patents? still.... not a bad idea but id love to see if maybe google comes up with a unique UI (launcher) would love to see the posssibilies that lie ahead for google although id lve to see more vanila android devices around thankfully Steve will go bark up somebody elses tree hopefully Blackberry or nokia...

posted on 15 Aug 2011, 11:29

13. corporateJP (Posts: 1759; Member since: 28 Nov 2009)


This is wild.

posted on 15 Aug 2011, 12:54 1

15. rockeye (unregistered)


So does this mean we should see another delay for the Bionic? Sounds like as good a reason as any to push back the release date.

posted on 15 Aug 2011, 14:19

16. Uzzelien (Posts: 131; Member since: 22 Feb 2011)


Yea but Apple isn't suing google they're going after the phone makers. Apple might not be able to sue google but going after HTC is still on I would think.

posted on 15 Aug 2011, 14:40

18. dandirk (Posts: 187; Member since: 04 Aug 2011)


MS is suing Moto right now, for the same license fees HTC and others are paying to MS for using Android.

Once those license contracts are up (have no clue how they do those deals), HTC and others may be able to stop paying MS.

This deal gives Google a reason to jump into the middle of this mess. IF the moto patents actually can apply.

If the patents CAN'T really apply then it could be a bluff situation, where companies may back down because Google has money to throw around. Though I am guessing both Apple and MS know what Moto holds.

Basically Google could go to both Apple and MS and say... back off, or we can go to the mattresses.

posted on 15 Aug 2011, 14:36

17. DKMDROID (Posts: 102; Member since: 09 Aug 2011)


I realize that but with google backing up more patents the point is that maybe it will help manufacterers that use the google os in this case htc .... but i think the main focus google should have is have more phones that have the google os working better with the hardware dont u think? people have power issues with android and other issues that make and break a sale of an android device dont u think that once google get android to work in perfect harmony with its hardware wouldnt it be a proper force to be reckoned with ... although for that to work i guess there would have to be stanardised hardware requirements..... which google isnt fond of and interupts the whole openess of the OS

posted on 15 Aug 2011, 15:47

22. taz89 (Posts: 2014; Member since: 03 May 2011)


This was out the blue...new google had plans but did not ever think this was going to be it...great move by Google...lol its like a chess game...

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