Google’s (NASDAQ:GOOG) $12.5 billion acquisition of Motorola Mobility (NYSE:MMI) is a game-changer on several fronts, particularly in the patent arena. Android sits at the center of several ongoing patent disputes, some of which have escalated into particularly vicious courtroom battles.
Earlier this year, Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) led a consortium of companies in a winning $4.5 billion bid for some 6,000 wireless technology patents and patent applications formerly owned by Nortel. In the wake of the purchase, Google made very public its concerns that those patents would be used to place Android in a legal chokehold. Motorola comes with around 17,000 patents with another 7,000 reportedly pending.
By purchasing the handset maker, Google also takes a bold step into the hardware-manufacturing arena, placing it in direct competition with the likes of Apple, Research In Motion (whose BlackBerry franchise continues to battle Android in the corporate arena) and Nokia. The company will also need to walk a delicate line with other handset manufacturers, such as Samsung and HTC, that license Google’s Android smartphone OS for use in their devices.
Pending regulatory approval, the bid is slated to close by the end of 2011 or in early 2012. Google intends to run Motorola Mobility as a separate business. "Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies," Google CEO Larry Page wrote in an Aug. 15 corporate blog posting
For its part, Microsoft declined to comment on Google’s acquisition. Outside analysts, though, seem to regard Google’s move as a potentially good one–so long as the search engine giant can avoid irritating other manufacturing partners who use Android in their devices.
Indeed, Kate Price, an analyst with Technology Business Research, believes those manufacturing partners have reason to be nervous. "On the one hand, Google and the OEMs share the common objective of maximizing Android activations," she wrote in an Aug. 15 research note. "On the other hand, Google is now a powerful, wealthy competitor, one that is impatient with the long lead times in the hardware business."
In fact, she added, that could drive some of those manufacturers to take a second look at Windows Phone, which Microsoft is positioning as an Android alternative.
In the short term, though, Google’s acquisition of Motorola is likely to disrupt the Android actions already in progress. Microsoft and Motorola, for example, are locked in vicious courtroom battle over what each side describes as patent violations, with Microsoft targeting Motorola’s Android devices. How the Motorola purchase will affect that long-running war, as well as other Android lawsuits in process, remains to be seen.
For more, read the eWeek article Google, Motorola Deal Will Affect Android Battles, Windows Phone.