Googorola deal – the implications
Google announced plans to buy Motorola Mobility for $12.5 billion yesterday. The deal has huge implications for the smartphone market but also impacts Google’s pay-TV business and position when it comes to patents.
The deal will allow Google to take control of the mobile market. Android is already expected to become the number one smartphone OS this year, with over a 40% market share, according to In-Stat. But this acquisition will allow Google to compete as a hardware player rather than software-only, which will enable the search giant to set an Android standard – reducing fragmentation in the current Android market.
It will, however, mean it directly competes with other hardware manufacturers that carry the Android operating system. In-Stat says “it’s not likely that Google’s partners will leave the playing field, and if they did, where would they go? Windows Phone 7? No, they have little choice but to stay”.
Business Insider agrees that Android ‘partners’ such as HTC and Samsung – two of the leading Android-based smartphone makers – will stay put but as Google’s Motorola starts to gain share, it could create tension. “The only reason Android (and Google) have any share of the mobile game, after all, is because hardware makes like HTC and Samsung adopted Google’s software platform. And now Google is stabbing them in the back”.
There is also an issue around wireless operators. As Google and mobile operators start to compete more and more (think about mapping, navigation, mobile payments and mobile advertising), operators could reject Google smartphones. And, according to In-stat, operators will win because they control smartphones for customers.
Google will need to really push the Motorola handset brand as well, because so far it has struggled to compete with HTC and Samsung in the Android market.
But it is not all about mobile. For Google, the deal makes it one of the biggest patent-holders in the US, which will help solve some of the company’s legal problems.
“Motorola’s patent library is the icing on the cake, as Motorola Mobility’s mobile patent portfolio is quite rich,” In-stat says.
Paidcontent.org believes Google’s Motorola purchase will change the patent balance of power – “buried somewhere in Motorola’s trove of 17,000 patents, there’s likely to be a patent that Google can use for a counter-attack in almost any situation”.
And then of course there is the ability to enhance Google TV using Motorola’s well established set top box and IPTV infrastructure expertise. Google CEO Larry Page said: “Motorola is the market leader in home devices. We’re excited to work with them to accelerate innovation.”
Motorola’s Home business unit supplies video network infrastructure to some of the world’s largest pay-TV service providers. “The obvious synergy is for Google to incorporate its Google TV software into Motorola STBs, which are bought by cable and other pay-TV platform operators,” says future scape . “Google would likely provide the EPG, search and apps platform, for instance.”
“If Google can manage to get its software integrated into set-top boxes, while its Android operating system is also in a range of mobile devices (Motorola’s and third-party manufacturers’), there is a golden opportunity.”
future scape says Google could be ideally positioned to lead social TV by providing personalised and interactive ads with TV commercials and social TV discussions. “Potentially there’s everything to play for, but it won’t be an easy sell to the platform operators”.
Meanwhile, In-stat predicts that “this part of the deal will have minimal impact over the next 12 to 24 months, even with Google’s increasing emphasis on video products”.