In May 2012, Google revealed that they were going to acquire Motorola Mobility, which was previously based in Illinois. Because this was a deal between two of the larger tech companies, it did cause people to question the benefits and motives of the deal for both sides. When the deal was struck, Google came out with a statement about why they purchased this specific division of Motorola. With the power of two large companies with seemingly infinite manpower and resources, they would be able to increase the rate of innovation, which would allow their customers to receive quality mobile phones for cheaper and cheaper prices. In addition, Motorola had a patent portfolio that was very enticing to Google due to the sharp increase in patent litigation cases in the smartphone landscape. This portfolio would grant higher levels of protection for the Androids on the market.
While the deal did make sense, one may ask why specifically Motorola as opposed to the 5-10 other large mobile developing companies? Because Motorola was fully committed to Android, it was a great fit for both sides and the transition would be more seamless. In addition, both companies were not as strong in their counterpart's major area of expertise. Motorola had expertise in devices, while Google had the expertise in developing software for these devices. For all of these reasons, the acquisition seemed like a no-brainer for both companies and went through without much resistance from either side.
While the deal did make sense, one may ask why specifically Motorola as opposed to the 5-10 other large mobile developing companies? Because Motorola was fully committed to Android, it was a great fit for both sides and the transition would be more seamless. In addition, both companies were not as strong in their counterpart's major area of expertise. Motorola had expertise in devices, while Google had the expertise in developing software for these devices. For all of these reasons, the acquisition seemed like a no-brainer for both companies and went through without much resistance from either side.
I agree with the fact that Motorola and Google's union seems to make perfect sense. After all, one is a hardware company and the other is a software company. It's a match made in heaven. Plus, 12.5 billion for 20,000 or so patents ($625,000 per patent) is a pretty good deal considering considering Rockstar paid about $750,000 per patent. Still it may seem a little extreme. And at the end of the day, they're selling Motorola right to Lenovo. Makes me wonder if Google bought Motorola mainly for the patents but happened to pick a company that looked good on paper as a partner because of their specialties. Did Google really plan on using Motorola for any of its products?
ReplyDeleteI agree with Amy that I don't think the intention was to ever keep Motorola for long-term. They sold off a lot of devisions that Motorola had and kept the patents, only to sell Motorola to Lenovo. I think that the deal definitely was a positive for Google because of the immense patent portfolio that they got. However, there was a much larger amount paid for the company that what was received from it. This makes me think that Google maybe thought of this as a strategic play. They knew Android makes them more money, so it made sense to take a loss to acquire the patents and therefore be at a competitive playing field in the ensuing patent wars. I still think that the sale to Lenovo proves that patents were really the main goal for Google and that they saw the acquisition of Motorola as just a way to get patents.
ReplyDeleteHi Amy, it was a little unclear from the article whether Google actually ever planned on using Motorola for any of its products. I think that regardless of their initial intentions, they soon realized that the majority of the value in the Motorola Mobility division was, in fact, in the patent portfolio.
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