Google acquires Motorola, replicating the Apple business model

Nokia’s already resolved to team up with Microsoft and abandon its own Symbian platform. Now it’s Google who’s surprisingly announced to acquire Motorola! The previous top 2 handset vendors are coincidently pledging allegiance to the current top 2 PC tech companies in the world. Motorola is in a tough situation no doubt. It had been the pioneer and leader of the cellular industry until it lost that position to Nokia in 1998. It briefly had its moments in 2005 with the RAZR as it almost challenged Nokia for the top spot. But it has been all downhill ever since 2006 when it peaked at 22% market share. It now has 3% share in the industry.

Is Google here to save the day? Google is a very shrewd company and even though it doesn’t succeed in all its acquisitions it always has its multi-faceted reasons and motivations.
In this case it’s clear that Google wants to become like Apple and it’ll pay whatever price it needs to achieve that objective. What Google lacks compared to Apple are 2 things: 1) a large IP pool and 2) an integrated hardware and software approach.

Apple lacked some of the IP required in the wireless space but that has been mostly resolved through its $4.5 billion bid for Nortel patents in July 2011. Google had lost on this bid and the Motorola acquisition looks like its plan B. So it won’t be long until we see Motorola actively defending the Android ecosystem as a proxy for Google.

Motorola will also be a useful partner in the smartphone, tv industry as it has a good R&D team in both smartphones and TV set-top boxes. This will prove to be valuable for Android and Google TV. On the other hand this is going to make other manufacturing partners uneasy as Motorola might get priority in new versions of Android and development tests.

So what can we expect? Google just spent $12.5 billion on Motorola which is not peanuts so it’ll make sure Motorola is making money, not just barely profitable type money, but decent money. So first thing, the current management team will have to shape up or get the ax. Second thing to expect is that, Google and Android will now be on the offensive in patent wars. But honestly there aren’t that many cards to play here for Motorola as they’re patents are mostly CDMA based. The third is that the delicate game of dealing with partnerships will start in the Android ecosystem. Google will work hard to cox the existing partners to continue prioritizing Android so Motorola in the short term could be treated with ‘reverse discrimination’ which means the proximity with Google could cause seemingly negative impacts in Android development for some time. Despite this many Android licensees will continue to work on an alternative or alternatives.

Tom is an expert in the telecoms industry with 14 years of experience. He provides practical advice for the short term goals of clients as well as insights for long term vision. Previously he was a celebrated world renowned analyst at Strategy Analytics. He first introduced value share and profit share. He also created the Smartphone Strategies service and headed the research growing it to become the largest service in the company. Tom also worked for LG Electronics within the Mobile Communications Company in various roles.

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