What did Google really get with Motorola?

May 3, 2013
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Motorola-Mobility-and-google-logo

When Google announced they were buying Motorola, we were all a bit shocked. Google, a predominantly search-based company, was buying into the hardware game. Some questioned whether or not Motorola would get any special treatment, Google assured us that it would not.

However, the question remains, why did Google spend $12.5 billion on a company that was a mere shadow of its former self?

Google’s getting into the hardware game, whether you like it or not

The guys and gals at Mountain View have always been dancing to a different tune than the rest of the industry. People are always working a little too slow for Google’s liking and, until it bought Motorola, it was at the mercy of the OEMs.

With the acquisition of Motorola, Google could further its efforts in being the “stimulant” for the market. The Nexus 7 began Google’s charge at creating devices that were cheap, yet still powerful enough that you wouldn’t be enraged by the lag and chuck it in a closet. It even made Apple jump into the cheap “lower cost” tablet market, after they claimed they wouldn’t.

Google and Motorola Mobility together will accelerate innovation and choice in mobile computing. Consumers will get better phones at lower prices.

Then came the Nexus 10, the first Android tablet that bested the iPad’s “Retina” display. With it, Google still found a way to undercut the iPad. The Nexus 4, although plagued by availability issues, came out and said “Hey, you don’t need to sign up for a 2 year contract to get the best smartphone technology”.

But possibly the biggest piece of evidence of Google’s “stimulant” devices strategy, is the Chromebook Pixel. The tagline, “For what’s next”, told everyone Google was serious about Chrome OS and it wanted OEMs to start building better laptops to showcase the web in all its glory.

With Motorola, Google can finally ditch the middlemen and bring its vision for the smartphone to the world. Who knows, maybe we’ll see an updated Xoom tablet in there as well.

The supply chain issues

The mobile devices market has a very small pool of parts supply chain. Apple too has found out how much of a problem this is, as it tried to pull away from Samsung as their main parts supplier, as Samsung became a major competitor.

Google has always had to ask someone else to build its devices, as it would take time and money to build a supply chain. Now that it owns Motorola, it can skip all of those processes and get right into building devices in house.

The Nexus 4 was a perfect example of the supply chain issues Google faces. Attempting to buy a Nexus 4 was harder than trying to get to the moon. Even if it was in stock, you’d be lucky to get through to actually purchasing the device. The launch was a shamble and it took months for LG to ramp up production to satisfy demand.

Sony Xperia Z vs Google Nexus 4 aa (25)

This wasn’t necessarily LG’s fault, as it wasn’t going to ramp up production of a device that it may have barely been making any profit with. That would cost more money, and it had an agreement in place to fulfill those agreements.

For the next Nexus, Google will surely have learnt its lesson, and if a potential Nexus maker balks at Google’s stringent requests, it can always look to Motorola as a safety net. With Motorola in tow, Google has a much stronger negotiating force when building the next Nexus.

You’ll need weapons to defend your castle

It would be hard to write an article on Google’s acquisition of Motorola without mentioning the fact that in the patents game, Google was hopelessly outnumbered. Motorola’s 17,000 patents, while not the whole story, were definitely a factor in the process of deciding to buy Motorola.

We acquired Motorola to level the playing field in patent attacks against Android and draw on Motorola's long history of innovation.

In 2012, Google was being attacked from all angles. Apple was going thermonuclear, and Microsoft was searching for royalties. Without Motorola’s patents, Google could do little but be a bystander. With them, Google was a force to be reckoned with.

The assault didn’t go exactly as planned. Most of Motorola’s injunctions against Apple have been thrown out, and the lawsuit against Microsoft valuing those Motorola patents at $4 billion, was reduced to a miserly $1.8 million.

The price of the acquisition is now being questioned: is Motorola really worth $12 billion? The patents don’t seem to be worth as much as Google originally thought, and problems are starting to arise.

Where are Google and Motorola headed?

2012 was the year that Google slimmed down Motorola, gearing it up for a wicked 2013 and beyond. A few oddities showed up like Google’s sale of Motorola Home, especially since Google has been making its own set top boxes for Google Fiber. It could be that Google realized that it had overpaid for Motorola and were looking to recoup some of its losses.

New rumors of the X-Phone are always unleashed, almost on a daily basis. It’s safe to assume that the X-Phone is real, and is the first of many devices that Google is working on in conjunction with Motorola. Google will hopefully negotiate admirably, and get the X-Phone onto all the major carriers, as it is crucial to the success of the X-Phone… and perhaps even Motorola.

google-x-phone-render-1

Google has shown a sudden interest in colors recently, as with Google Glass, where it made the point of colors creating more attachment to our devices. The rumors of the X-Phone coming in 25 colors could be as a result of Google’s recent color epiphany. Maybe it won’t stop there, as other reports say we could customize our smartphone like we do on computers, this is definitely a plus towards Motorola’s acquisition if Google can make it happen.

Wrap up

The Motorola purchase had many scratching their heads, but in reality it’s a smart move for Google. It resolves many of Google’s long standing problems, and accelerates its progress towards what it envisions the world should be. Whether Motorola was worth $12 billion is yet to be decided. If the X-Phone sells like hotcakes, these questions all start to go away.

Comments

  • amine ELouakil

    Is this a copy of the Verge artical?

    Well anyway, even if google payed 12billion $ Motorola, but with the tax reduction the final cost to google is more around the 1.5Billion according to Forbes