If there is one company I trust to not screw this up it's Google and I think they have a good shot at getting this right. I'm sure their partner companies are going to be a bit ansy to start but they all compete on hardware / price anyhow which this doesn't change. A few points that pop to mind:
A. They already had to compete with Motorola, so they haven't lost or gained a new competitor.
B. They don't pay for Android so Motorola hasn't gotten some new financial edge. Google just has to ensure that all companies still get source releases at the same time. What they do with them is up to them. (aside: I expect we will see MotoBlur disappear with some of its key features rolled into future Android releases)
C. This will allow Google to protect Android much better which is very beneficial to their bottom lines, especially if it keeps patent licensing costs off of their products.
D. Google just has to be sure they don't play favorites but from what I have seen up until now they have been good about that.
E. This may have just brought the competition for who gets to build the next Nexus to an end. (unless the next Nexus is already basically "done" at another partner company)
I think they can get this right... and now hopefully we can get a whole line of nice Motorola hardware with current Android and unlocked boot-loaders, etc. I might have to reconsider the Droid 3 again (more like Droid 4 one day, since 3 is already in the wild as is)
a) there will be at least 1 company focused on android which will be protected with the cloth that is Google's legal team.
b) Google can make Motorola better
c) Google can make hardware to go with their software.
d) Google can finally make Motorola phones running android open.
e) We can finally see what it means for a hardware company to exist with a motto: "Don't be Evil". Sure Google is not perfect, but all other companies have the motto: "Money first, morals second."
f) Google can make an incredible experience which would become the de-facto standard for Android phones. Finally killing off HTC sense.
A) But they didnt have to compete with Google so they have a new competitor
B) There is a lot at stake here, a good solution would be to donate android to an independent "Android foundation"
D) Still, google's phones will always be one step ahead with technologies that are hard to compete, like voice recognition, navigation and search.
In any case this could be a phenomenal move, and may even be a big boost for android tablets and other embedded devices, an unexploited area. It sounds like Google would like to try android on anything from cars, tvs and washing machines, but 3rd partners were unwilling to take the risk. Now they have their own hardware division.
Only part of Motorola, and not generally the part considered the "original". :)
Motorola mobility was spun off of the main company in January - I think at the time there was commentary on the stock markets that it was done with the aim to get someone to buy it.
So Motorola will exist still - as Motorola Solutions (it is the bigger & more profitable part of the company anyway) and Google get a phone manufacture division under their control.
They did it for the patents. Larry Page: "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."
Seems like the best jobs at Google will soon be the lawyers, not the engineers.
What exactly is "Motorola Mobile" and what is the rest of Motorala? I saw that in the news headline and figured there was going to be a lot of confusion over what actually got bought.
"Motorola’s total commitment to Android in mobile devices is one of many reasons that there is a natural fit between our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere"
and
"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."
One further thought on the patent portfolio. Don't forget that Motorola is widely considered to have "invented" the first practical cell phone. Their patent portfolio isn't just going to be stuff like "Using shades of gray in a UI". It's going to run deep into what constitutes a mobile device.
Those patents would have been issued in the 70s and long since expired. Even the first generation digital cell phone patents should be mostly expired. I'm not sure how involved Motorola was in the consortiums that developed the 2G/3G/4G standards, but my impression was that they were dominated by the chipset vendors (Qualcomm etc) and the telecom guys (Nortel etc).
Of course, there were competing standards, and who primed which varies, but I don't think Motorola primed any of them.
Keeping Android open whilst treating their own phone manufacturing fairly will be a big challenge for Google. I hope they manage it. If done correctly the result should be a improvement in Android for all manufacturers, as the internal demands of Motorola will want to be heard, but cannot be prioritised.
I am still puzzled as to how Skype cost $8billion.
If they have any sense they are already negotiating the sale of the physical business on to someone else. Keep the patent portfolio and recuop $6 billion of the initial outlay.
This will indeed be a challenge: keeping the interests of their own cell phone division and third party hardware makers. Might be just another "HTC Sense" type skin added to Android...
63% premium...insanity. This is all about patents, isn't it?
Instead of spending $4billion for patents, spend 3x as much, get a huge portfolio (I don't know how large, but it's supposedly quite large)..and a part of a company as well.
Patents are probably part of it. Another motivation may be that Google wants to avoid the Android ecosystem to spiral out of control. Android phones vary widely in quality, both with respect to hardware and software (thanks to vendor 'extensions'). Maybe they are hoping to produce an Android phone under tight control, to set a benchmark for the rest.
Also, Apple has shown that piles of cash can be made on good, though slightly expensive margins.
I'd say this was probably plan b, for if their previous patent purchase didn't happen.
The problem with Google, or any software company buying a hardware company is that generally the street values hardware at a lower multiple so this has the chance to pull down google's market cap.
We'll see how the market reacts to this during today's trading.
Google wouldn't have done it just for patents. They want to enter the hardware game as well. Both to show others how Android phones should be made, but also to make many billions from selling devices, as well. I think this is just the beginning for Google as a hardware company, and in a way it was inevitable. They are a strong tech brand, and they could become very successful selling tech products.
Almost certainly. The only other thing I can think of would be that they want to get out of the OEM business and make phones internally, but they'd probably buy a better phone manufacturer in that case. Motorola is loss-making.
Patents are a big part sure, but it's more generically about strengthening Android's position overall -- partly in the legal system through patents, and partly in the market through Google having direct control of a major cell phone manufacturer with direct lines to the providers.
To make a broad point without going into details about patent quality:
Nortel: $4.5B / 6,000 patents = $750k per patent.
Motorola: $12.5B / 14,300 patents = $856,164.38 per patent.
Plus 6,700 patents pending.
Plus a hardware company.
There are obviously a lot of other factors, but it seems like a pretty good deal, and maybe a smarter way for Google to go about acquiring patents without having to deal with bidding wars with consortia of their competitors.
Either way, it seems the lawyers are winning. Everywhere.
The other critical factor is whether the acquisition is a cash deal or a share based deal, a share arrangement would be very efficient indeed, hard to find meaningful details of the acquisition.
you need to adjust for the fact that Motorola has 3 bil in cash and some deferred tax benefit of roughly equal amount -- the actual cost to Google is around $7 billion.
you could adjust for the fact that Motorola has 3 bil in cash and some deferred tax benefit of roughly equal amount -- the actual cost to Google is around $7 billion.
It's fascinating to see the behemoths (Apple, Microsoft, Google) positioning themselves for the fight ahead. The importance of this fight cannot be understated.
Microsoft won the last fight like this and they have dominated our desktops for 15 years (OK, maybe not all HN devotees) and pocketed gazillions.
Apple are ahead right now (manufacturing handsets, selling software, etc), Google are second and Microsoft are lagging behind in third, but this Motorola deal means that Google might be able to pull ahead of Apple for a period and alienated phone manufacturers who are using Android might flock to Microsoft, inflating their sails a little.
Interestingly, this means the only manufacturer-neutral smartphone OS is now Windows Phone 7. iOS is on Apple, Android is on Motorola/Google, Blackberry on RIM, and webOS on HP/Palm. I wonder if this means we'll see an increase in WP7-based phones from HTC, Samsung, and LG...
I've wondered the same thing. It's not necessarily an either-or situation. If Google's willing to spend X billions of dollars on defensive patents, why not spend even a fraction of that on lobbying for software patent reform. If any company has the will and the means to do so, it would be Google.
While you can certainly throw some money behind a favorable legislation, I don't think it's as easy as making out a check to Washington DC and have your words be law. Politics are still a complicated, slow and cumbersome process.
One interesting side note: Sprint/Nextel has always heavily relied on Motorola phones, and a few months back, Sprint and Google rolled out tight integration between Sprint service and Google Voice (http://googlevoiceblog.blogspot.com/2011/03/sprint-integrate...)
So now I'm wondering 1) Was Spring anticipating this merger, and 2) will Google's purchase of Motorola be a boon for Sprint?
I'm not a Sprint customer, but in the name of keeping more competitors in the mobile market, I do want to see them stay in the game.
He mentions patents specifically as one of the reasons for the acquisition.
"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."
"Billionaire investor Carl Icahn urged Motorola to shop around its patent portfolio to cash in on interest in wireless technology from companies like Google Inc and Apple Inc."
This is probably going to make some of the other handset manufacturers (HTC, Sony-Ericsson, etc) complain about Motorola having an unfair advantage when it comes to implementing Android.
Wonder if any of them are about to regret basing their smartphone offerings on Android? The move ought to strengthen the competition among the handsets, though, as Google can now ship their "dream-version" of an Android-phone.
If Google hope to get better vertical integration it's my guess they are in for a surprise.
On the surface these acquisitions always sound like they are a good idea. Combine X strenght with Y strenght.
In reality you have two very strong cultures that have to work together. That's simply not going to happen.
Vertical integration is not just a question of having the skill all the way down to manufacturing. It's even more about being able to carry a design vision all the way trough.
Anyone who worked in or with a large organization know how plausible that is.
What's the worst case scenario vis-a-vis Android openness and competitiveness?
Google can't take back the code it's already released other than the non-open source apps like Google Mail. But it can stop releasing new code. HTC et al are making too much money from Android, I doubt they'd stop investing in the platform, resulting in slow platform divergence a la Unix in the 80s and 90s.
3.2 hasn't been fully released to the open source community, but HTC and all the important players have it already, and I doubt that their license allows Google to yank it unilaterally.
Google does have to keep releasing code it based on GPL'd work, primarily the kernel, but that's a very small portion of the Android IP.
The first litmus test will be the release of Honeycomb.
Best case scenario? To me, that would involve Google moving towards a more open development model similar to what virtually all other successful open source projects employ.
They will be forced to make moves to placate HTC and all of their other partners, but whether those moves benefit us is the question.
> The first litmus test will be the release of Honeycomb.
You mean Ice Cream Sandwich? Google has made it clear that they won't be making a Honeycomb source drop. Instead, ICS would contain the 'converged' codebase from their phone (Gingerbread) and tablet (Honeycomb) trees.
I'm of the mindset that this is chiefly for the patents... But.
The real benefactors of this? The former Danger team that made the TMobile Sidekick, one of whom created Android.
If you recall, shortly after the last I/O the gang was announced reunited at Google working on a plethora of hardware toys. I think Google just bought them a new playground to play in.
Does this include any of the H264 patents that Motorola hold? If so this makes this story even more interesting, the cases for WebM/VP8 would change substantially.
"Parties with patents or patent applications determined by MPEG LA’s patent experts to be essential to the H.264/AVC standard (“standard”) so far include Columbia University, Electronics and Telecommunications Research Institute of Korea (ETRI), France Télécom, Fujitsu, Matsushita, Mitsubishi, Microsoft, Motorola, Nokia, Philips, Polycom, Robert Bosch GmbH, Samsung, Sharp, Sony, Thomson, Toshiba, and Victor Company of Japan (JVC)."
At first this made absolutely no sense to me. Totally random borderline crazy, reasonable for defense but a huge risk. Why would Google buy a low margin phone builder thats struggling to make money, its just not reasonable unless they dont want to make money on phones.
Google isnt about the sky its about the floor. Yeah Google does all sort of crazy crap with self driving cars and wind energy but the real focus has always been raising the base. Look at Chrome and Android raising our expectations for speed, usability, security and cost. Google doesnt want Moto to build the Android iPhone, Google wants an Android Razr. The Android Razr would be a rugged dirt cheap smartphone. A new base level 'free' phone that out classes any feature phone. Its in Google's best interest to get a smartphone into the hands of every single person on the planet. How many Google searches can you do on a free AT&T Samsung Rugby® II, probably not that many. Its not a bad move and if executed well this could mark a huge push for the internet and personal communication devices.
Don't forget MotoMobile also got Moto's cable box business. Think of every new Comcast, TWC, etc. subscriber suddenly having a Google TV box by default; which is fully integrated with their cable system. Apple and Roku's boxes wouldn't stand a chance.
[+] [-] 51Cards|14 years ago|reply
A. They already had to compete with Motorola, so they haven't lost or gained a new competitor.
B. They don't pay for Android so Motorola hasn't gotten some new financial edge. Google just has to ensure that all companies still get source releases at the same time. What they do with them is up to them. (aside: I expect we will see MotoBlur disappear with some of its key features rolled into future Android releases)
C. This will allow Google to protect Android much better which is very beneficial to their bottom lines, especially if it keeps patent licensing costs off of their products.
D. Google just has to be sure they don't play favorites but from what I have seen up until now they have been good about that.
E. This may have just brought the competition for who gets to build the next Nexus to an end. (unless the next Nexus is already basically "done" at another partner company)
I think they can get this right... and now hopefully we can get a whole line of nice Motorola hardware with current Android and unlocked boot-loaders, etc. I might have to reconsider the Droid 3 again (more like Droid 4 one day, since 3 is already in the wild as is)
[+] [-] dlikhten|14 years ago|reply
a) there will be at least 1 company focused on android which will be protected with the cloth that is Google's legal team.
b) Google can make Motorola better
c) Google can make hardware to go with their software.
d) Google can finally make Motorola phones running android open.
e) We can finally see what it means for a hardware company to exist with a motto: "Don't be Evil". Sure Google is not perfect, but all other companies have the motto: "Money first, morals second."
f) Google can make an incredible experience which would become the de-facto standard for Android phones. Finally killing off HTC sense.
[+] [-] junkbit|14 years ago|reply
[+] [-] ristretto|14 years ago|reply
B) There is a lot at stake here, a good solution would be to donate android to an independent "Android foundation"
D) Still, google's phones will always be one step ahead with technologies that are hard to compete, like voice recognition, navigation and search.
In any case this could be a phenomenal move, and may even be a big boost for android tablets and other embedded devices, an unexploited area. It sounds like Google would like to try android on anything from cars, tvs and washing machines, but 3rd partners were unwilling to take the risk. Now they have their own hardware division.
[+] [-] bobby9997|14 years ago|reply
[deleted]
[+] [-] ErrantX|14 years ago|reply
Motorola mobility was spun off of the main company in January - I think at the time there was commentary on the stock markets that it was done with the aim to get someone to buy it.
So Motorola will exist still - as Motorola Solutions (it is the bigger & more profitable part of the company anyway) and Google get a phone manufacture division under their control.
Interesting move.
[+] [-] hammock|14 years ago|reply
Seems like the best jobs at Google will soon be the lawyers, not the engineers.
[+] [-] tpatke|14 years ago|reply
[+] [-] lurker14|14 years ago|reply
[+] [-] ristretto|14 years ago|reply
[+] [-] ristretto|14 years ago|reply
[+] [-] amirmc|14 years ago|reply
"Motorola’s total commitment to Android in mobile devices is one of many reasons that there is a natural fit between our two companies. Together, we will create amazing user experiences that supercharge the entire Android ecosystem for the benefit of consumers, partners and developers everywhere"
and
"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."
[+] [-] 51Cards|14 years ago|reply
[+] [-] bryanlarsen|14 years ago|reply
Of course, there were competing standards, and who primed which varies, but I don't think Motorola primed any of them.
[+] [-] Jabbles|14 years ago|reply
I am still puzzled as to how Skype cost $8billion.
FYI Motorola Mobility had 24,500 patents when it was launched. http://mediacenter.motorola.com/Press-Releases/Motorola-Mobi...
[+] [-] cincinnatus|14 years ago|reply
Also, "open" in name only.
[+] [-] joelhaasnoot|14 years ago|reply
[+] [-] latch|14 years ago|reply
Instead of spending $4billion for patents, spend 3x as much, get a huge portfolio (I don't know how large, but it's supposedly quite large)..and a part of a company as well.
[+] [-] microtonal|14 years ago|reply
Also, Apple has shown that piles of cash can be made on good, though slightly expensive margins.
[+] [-] chollida1|14 years ago|reply
The problem with Google, or any software company buying a hardware company is that generally the street values hardware at a lower multiple so this has the chance to pull down google's market cap.
We'll see how the market reacts to this during today's trading.
[+] [-] BvS|14 years ago|reply
[+] [-] nextparadigms|14 years ago|reply
[+] [-] rsynnott|14 years ago|reply
[+] [-] nknight|14 years ago|reply
[+] [-] joebadmo|14 years ago|reply
Nortel: $4.5B / 6,000 patents = $750k per patent.
Motorola: $12.5B / 14,300 patents = $856,164.38 per patent.
Plus 6,700 patents pending.
Plus a hardware company.
There are obviously a lot of other factors, but it seems like a pretty good deal, and maybe a smarter way for Google to go about acquiring patents without having to deal with bidding wars with consortia of their competitors.
Either way, it seems the lawyers are winning. Everywhere.
[+] [-] justin_hancock|14 years ago|reply
[+] [-] rmrm|14 years ago|reply
[+] [-] rmrm|14 years ago|reply
[+] [-] RuadhanMc|14 years ago|reply
Microsoft won the last fight like this and they have dominated our desktops for 15 years (OK, maybe not all HN devotees) and pocketed gazillions.
Apple are ahead right now (manufacturing handsets, selling software, etc), Google are second and Microsoft are lagging behind in third, but this Motorola deal means that Google might be able to pull ahead of Apple for a period and alienated phone manufacturers who are using Android might flock to Microsoft, inflating their sails a little.
[+] [-] kylec|14 years ago|reply
[+] [-] gahahaha|14 years ago|reply
[+] [-] yuvipanda|14 years ago|reply
[+] [-] zacharypinter|14 years ago|reply
[+] [-] zyb09|14 years ago|reply
[+] [-] mingramjr|14 years ago|reply
[+] [-] esun|14 years ago|reply
[+] [-] billybob|14 years ago|reply
So now I'm wondering 1) Was Spring anticipating this merger, and 2) will Google's purchase of Motorola be a boon for Sprint?
I'm not a Sprint customer, but in the name of keeping more competitors in the mobile market, I do want to see them stay in the game.
[+] [-] alf|14 years ago|reply
He mentions patents specifically as one of the reasons for the acquisition.
"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."
[+] [-] iamben|14 years ago|reply
http://uk.reuters.com/article/2011/07/21/us-motorola-idUKTRE...
"Billionaire investor Carl Icahn urged Motorola to shop around its patent portfolio to cash in on interest in wireless technology from companies like Google Inc and Apple Inc."
[+] [-] haasted|14 years ago|reply
Wonder if any of them are about to regret basing their smartphone offerings on Android? The move ought to strengthen the competition among the handsets, though, as Google can now ship their "dream-version" of an Android-phone.
[+] [-] ThomPete|14 years ago|reply
If Google hope to get better vertical integration it's my guess they are in for a surprise.
On the surface these acquisitions always sound like they are a good idea. Combine X strenght with Y strenght.
In reality you have two very strong cultures that have to work together. That's simply not going to happen.
Vertical integration is not just a question of having the skill all the way down to manufacturing. It's even more about being able to carry a design vision all the way trough.
Anyone who worked in or with a large organization know how plausible that is.
[+] [-] da_dude4242|14 years ago|reply
[+] [-] bryanlarsen|14 years ago|reply
Google can't take back the code it's already released other than the non-open source apps like Google Mail. But it can stop releasing new code. HTC et al are making too much money from Android, I doubt they'd stop investing in the platform, resulting in slow platform divergence a la Unix in the 80s and 90s.
3.2 hasn't been fully released to the open source community, but HTC and all the important players have it already, and I doubt that their license allows Google to yank it unilaterally.
Google does have to keep releasing code it based on GPL'd work, primarily the kernel, but that's a very small portion of the Android IP.
The first litmus test will be the release of Honeycomb.
Best case scenario? To me, that would involve Google moving towards a more open development model similar to what virtually all other successful open source projects employ.
They will be forced to make moves to placate HTC and all of their other partners, but whether those moves benefit us is the question.
[+] [-] antrix|14 years ago|reply
You mean Ice Cream Sandwich? Google has made it clear that they won't be making a Honeycomb source drop. Instead, ICS would contain the 'converged' codebase from their phone (Gingerbread) and tablet (Honeycomb) trees.
[+] [-] jeffool|14 years ago|reply
The real benefactors of this? The former Danger team that made the TMobile Sidekick, one of whom created Android.
If you recall, shortly after the last I/O the gang was announced reunited at Google working on a plethora of hardware toys. I think Google just bought them a new playground to play in.
[+] [-] justin_hancock|14 years ago|reply
[+] [-] andybak|14 years ago|reply
"Parties with patents or patent applications determined by MPEG LA’s patent experts to be essential to the H.264/AVC standard (“standard”) so far include Columbia University, Electronics and Telecommunications Research Institute of Korea (ETRI), France Télécom, Fujitsu, Matsushita, Mitsubishi, Microsoft, Motorola, Nokia, Philips, Polycom, Robert Bosch GmbH, Samsung, Sharp, Sony, Thomson, Toshiba, and Victor Company of Japan (JVC)."
On the other - I don't see Motorola here: http://www.mpegla.com/main/programs/AVC/Pages/Licensors.aspx
So I'm a bit confused about whether Google just managed to buy into AVC/h264 or not.
[+] [-] jahmed|14 years ago|reply
Google isnt about the sky its about the floor. Yeah Google does all sort of crazy crap with self driving cars and wind energy but the real focus has always been raising the base. Look at Chrome and Android raising our expectations for speed, usability, security and cost. Google doesnt want Moto to build the Android iPhone, Google wants an Android Razr. The Android Razr would be a rugged dirt cheap smartphone. A new base level 'free' phone that out classes any feature phone. Its in Google's best interest to get a smartphone into the hands of every single person on the planet. How many Google searches can you do on a free AT&T Samsung Rugby® II, probably not that many. Its not a bad move and if executed well this could mark a huge push for the internet and personal communication devices.
[+] [-] presty|14 years ago|reply
Could this be a genius move?
I don't know how good MM's patent portfolio is but not only they get lots of ammo for the patent war, they also get their own phone manufacturer.
And MM seems to in more than just phones, could they lead the way for the future of Android, namely Android@Home and Android Open Accessory?
[+] [-] ConstantineXVI|14 years ago|reply