Wednesday, April 3, 2013

Google acquisition of Motorola : Competitive Advantage or Long term Benefits or Both!!

Google mission statement says “Google’s mission is to organize the world’s information and make it universally accessible and useful”

How does the acquisition of Mobile handset maker Motorola fit into this long term strategy?
A few reasons comes to our mind –
  1. Google might want to integrate the hardware with their existing popular software “Android”. To contradict this reason, Google came up with three devices Google nexus 4, 7, and 10 after acquisition of Motorola but none of them was manufactured by Motorola mobility. Rather they were manufactured by Samsung, Asus, and LG.
  2. Motorola has a set-up box business which can be integrated into the Google TV later. It might give them edge in their fight again Apple TV. But none of this has been confirmed by Google.
  3. Google wanted to acquire huge stack of patents from Motorola so that they can defend themselves against patent infringement lawsuits from Microsoft and Apple. Acquiring Motorola is about "protecting the [Android] ecosystem, and extending it as well," said Mr. Larry Page. Also, they lost the bid to acquire the patents from bankrupt “Novell”. The bid was won by Microsoft & Apple collectively. To gain a competitive edge over these powerful competitors in these circumstances, the acquisition of Motorola made sense.

From these reasons, Apparently Google acquired Motorola to give them armor(or arsenal) in patent war against Microsoft and Apple.

Next question that comes to mind is, is the pile of patents worth 12.5 billion$? To answer this, Motorola has 17000 patents with 7500 pending. In 2011, Microsoft claimed 15$ from Samsung on every Android phone manufactured by it on the basis of patent infringements. Google blamed Microsoft for being anti-competitive by charging phone makers for making use of android operating system. Considering the huge market share that android holds today or may hold in near future, 12.5 billion$ does not seems to be an astronomical figure anymore.

Also, Android on more number of phones means people are spending more time on Google ecosystem which aligns with their long term strategic vision. Also, this approach gives them competitive edge over competitors such as Microsoft and Google.


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