Google Enters the Mobile Handset Business

In a not-so-surprising move, Google announced recently it’s intention to purchase Motorola Mobility for $12.5 billion. This gives Google access to Motorola’s treasured handset technology, and more importantly, their patents.

But what does this mean for Samsung, HTC and other handset manufacturers that have invested billions of dollars into their Android handsets? Will they now be competing with Google itself? Will Google have an unfair advantage? It may seem like a straight-forward opportunity for Google to easily enter the hardware business with a well-established base. But some think otherwise.

Patents, galore.

So what’s the most logical reason Google would pay a 63% premium for Motorola Mobility over it’s current stock value. Most says it’s obvious – Motorola Mobility currently holds over 17,000 patents worldwide. This puts Google into a great position to defend itself against the onslaught of patent infringements suits that have been launched against the Android OS by Apple, Oracle and others. If Google gains access to this arsenal, other companies may not be so quick to sue Google if they know Google might turn around and sue them for some infringement. Google’s CEO Larry Page confirms this in his blog post:

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.

But, is it backfiring on them? Last week, Apple filed motions claiming that Motorola has effective lost it’s patent rights due to it’s pending acquisition by Google.

The Future

It still remains to be seen how the other Android hardware partners will REALLY react if the deal goes through. Right now, they are supporting Google’s move — and rightly so. They certainly don’t want to bite the hand that feeds them. And according to Larry Page,

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.

There’s also the thinking that Google will spin-off the handset business to keep it separate from the Google name. Only time will tell if this, and other predictions will come true.

How do you think Google’s acquisition will effect the Android product lines, or mobile handset innovation in general?

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