The tech world went wild yesterday upon the news that Google is looking to buy the manufacturing arm of Motorola, Motorola Mobility for $12.5 billion. The deal has not yet been fully ratified but is expected to be completed by the end of the year or early in 2012 at the latest. Google, of course, are behind the Android mobile operating system and have in the past said that they would never manufacture their own mobile phones. Why the change of heart? A lot may well be down to the on-going battle that they are having with both Apple and Microsoft. Google have accused the other two of trying to kill off Android through the use of patent infringement. In buying Motorola Mobility they also acquire an awful lot of patents. This would tie in nicely with Google’s buying strategy of late, including purchasing over 1000 it purchased from IBM and an attempt to purchase more than 6000 patents from Nortel.
The reason that Google might want to buy patents is to help protect itself from extremely costly lawsuits. By having a whole raft of patents in its arsenal Google can ward off potential lawsuits from other companies by looking for ways the other company has infringed on Google owned patents and then counter suing the company. The world of patents is very like the Cold War in the terminology that is used, including Mutually Assured Destruction. This is where one company can sue for damages that are so great that it would drive another company out of business and the other company can counter sue with the same result and this mean that neither company will eve r take the risk. Hence owning patents can be very beneficial for a company. Google has realised that it is very vulnerable to this sort of attack and over the last six months in particular has been very busy buying patents.
Motorola while still a major player in the mobile space is not the behemoth that it once was. If you go back to the mid 90’s then the major phone manufacturers were Motorola and Nokia. Google might well fancy having a crack at getting Motorola back to that once dominant position again. They would be able to market mobile devices, both phones and tablets, offering the ultimate Android experience. They might even start to look at attacking Microsoft’s hold on the enterprise market. With more and more services being offered via The Cloud then why not offer the scalability that The Cloud can offer to businesses of all sizes. Google would be able to provide the platform via the Chrome operating system for desktop workstations and mobile devices running the Android operating system. It is likely that Chrome and Android will eventually become more unified possibly even becoming one ecosystem.
The markets responded favourably to the news, with a number of companies seeing jumps in their share prices including Sony Ericsson, Samsung and Huawei who all manufacture Motorola phones. Other phone manufacturers that use the Android operating system such as HTC and LG Electronics also so share prices rise on announcement on the Google acquisition.