The initial response to Google’s surprise announcement on Monday that it had inked a deal to acquire Motorola Mobility for US$12.5 billion was that it was a move largely to protect itself from the increasing patent attacks against Android. That could be why all five major manufacturers of Android devices appear to be thrilled with the deal.
Should they be? Putting aside the matter of patents, for the moment, and looking at the acquisition strictly from a technology perspective, some possible scenarios emerge that could radically realign the market for Android developers.
Google could let Motorola continue to pursue its own strategies, of course — but what if it were to pull Motorola under its wing with an eye toward tightly unifying the development of its mobile hardware and software?
It conceivably could create an operation akin to Apple’s highly controlled development of its mobile devices, with the goal of eventually manufacturing a premier Android phone under its own close supervision.
Yes, Motorola’s acquisition could help Google’s Android development in both hardware and software, Azita Arvani of the Arvani Group told LinuxInsider.
“One significant value that Motorola would bring to Android development is an intimate knowledge of what phone vendors have to go through to incorporate Android onto their devices,” she said.
However, Google has a steep path ahead if unifying hardware and software development is indeed its goal, noted Arvani.
“The acquisition will obviously create an opportunity for Google to build its own phones,” she said. “But focusing on this as a primary pillar for the merger is very risky. Google has always been a software company, and trying to transition into an integrated software/hardware company would be challenging.”
It could also alienate the other Android phone vendors, she pointed out.
A modified version of this scenario is more realistic, she said: “having Motorola come up with top-of-the-line Android devices as a reference for what can be done with Android.”
Avoiding Channel Conflict
It’s not likely that Google is interested in manufacturing its own devices, said Derek Kerton, principal analyst for The Kerton Group and chairman of the Telecom Council of Silicon Valley.
“Handsets are a terrible margin business, especially compared to online advertising,” Kerton told LinuxInsider.
Google has any number of partner manufacturers, such as Samsung, that could make a “super” phone for Google. Google could also turn to the contract manufacturing community, suggested Kerton. “There is no need to buy Motorola to make a phone.”
The understanding is that Google intends to run Motorola as independently as possible — most likely to head off channel conflict, he added.
“Channel conflict occurs when one member of a supply chain — say the Android OS supplier to many handset vendors — enters the handset industry,” he said.
Historically, the other vendors start to mistrust their OS supplier in such cases. They become more reluctant to use the OS and search for other options.
Just a Good Deal
The Motorola transaction is just a good deal for Google, and that is why it went after it, in Kerton’s view.
“The company was undervalued,” he said. “The market didn’t take into account the value of the patent portfolio, so Google grabbed it.”
Google declined to comment to LinuxInsider for this story.