Buying Motorola gives Google hardware and software, says J Gerry Purdy. It will move to vertical integration like Apple
Motorola Mobility shareholders on 17 November overwhelmingly approved Google’s $12.5 million (£8m) acquisition of the company.
While friendly mergers typically result in 60 to 70 percent of stockholders approving the deal, the fact that 99 percent of Motorola’s shareholders approved Google’s offer shows the group believes the company would do better as a subsidiary of the search-engine giant than as an independent business.
Will Motorola get favoured Android access?
If there was any concern at all about Google buying Motorola Mobility, it was the idea that Motorola would get advance access to future releases of Android. This would create an unfair advantage against other Android partners such as Samsung and HTC. Google has assured regulators and Android licensees that this is not the case. Motorola, Google says, will be treated just like other licensees and will get advance versions of Android at the same time.
As far as Android is concerned, I do expect that senior executives at Motorola will have a lot to say about the future of the mobile operating system. While they may not get access to the final releases of Android any faster than, say, the folks at Samsung, Motorola executives will be “all over” the Googleplex in Mountain View, Calif., giving advice and making recommendations to Andy Rubin and his Android team on what features they want Google to incorporate into future releases of Android.
However, there is going to be a massive change in the opposite direction: Google is going to play an instrumental – perhaps even a leadership – role in the product-development process at Motorola. After all, Google will own Motorola and will be able to direct the management of the Motorola Mobility subsidiary regarding what products the company decides to design and build.
And this thought — that Google will direct product development at Motorola — is likely one of the major reasons that Google acquired Motorola Mobility in the first place (besides the treasure chest of patents).
… or will Google get phone expertise?
During the past couple of years, Google has tried rather unsuccessfully to build a smartphone. The Nexus One was an attempt by Google to build a smartphone and offer it directly to consumers as an open device that buyers would then register on the wireless carrier network of their choice, more like the way in which mobile handsets are acquired in other parts of the world.
Google wasn’t able to successfully get consumers to buy the Nexus One, primarily due to the strong position carriers have in setting lower price-points for mobile devices and then making up the loss as part of the monthly contract with the customer.
However, Google felt it needed to have more control over the development of smartphones, tablets and other mobile devices. Google executives also wanted a place where they could test new Android concepts.
Andy Rubin and other Google executives likely discussed their need to have a closer relationship with at least one mobile-device manufacturer. Someone in a meeting perhaps commented whimsically, “Well, we could go out and buy one of them.” And the rest, as they say, is history.
Now, with Motorola Mobility running as a wholly owned subsidiary of Google, here are some of the things we can expect to happen:
- Google will have a direct say in what products are built and the features in each product.
- Motorola will make a lot of recommendations on the future of Android.
- Through Motorola, Google will have a design test-bed in which it can test new Android concepts.
- Motorola will take more risks and develop a number of innovative mobile products. One example might be an Internet data-only device that does not include cellular voice technology but enables voice call through voice over IP — think “Skype phone.” Another possibility is devices for specific vertical markets such as health care.
- Android will become a better mobile OS with synergies happening between executives at both Google and Motorola.
- Motorola will likely offer a number of Google assets, such as cloud services, Google Music, Google Books, the integration of Google Wallet and Google Offers, and ways to manage rich media through Picasa. In this manner, Google will end up operating more like Apple and Amazon, and have the ability to better integrate its own content and services into future devices.
- And finally, through this acquisition of Motorola, Google is going to end up operating more like Apple where software and hardware are clearly integrated. Now, Google is producing both software (Android) and hardware (via Motorola).
While it’s easy for many to say that Google’s Motorola acquisition will allow Motorola to have preferential treatment at the expense of other smartphone manufacturers, there is much more to the story.
Google’s deal for Motorola will create a whole new field of synergies between Android software, Google’s search and cloud applications and the actual hardware itself. The result will be better and more creative devices that have the potential to benefit both business users and consumers, while making Google more competitive against the likes of Apple, Amazon and Microsoft.
This deal allows Google to operate, overall, more like Apple with vertical integration of hardware and software.