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back to article Google SHOCK! Snaps up Motorola phone biz for $12.5bn

Google has made its largest-ever acquisition, and biggest corporate gamble, by splashing out $12.5bn for Motorola's phone division, Motorola Mobility. The deal puts Google into the hardware business in a serious way – and into direct competition with licensees of its Android operating system, who woke up this morning thinking …

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Headmaster

Interesting that Google has chosen such a strategy.

They could have for their own version of the alliance between Nokia and MS. The fact that they did not and have gone for a complete buyout at a premium price per share suggests very strongly that Moto's IP portfolio was indeed a key element in this deal.

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Happy

Intelligent, defensive strategy

Yes, Google needed something to fend of the nastiness of Apple + Microsoft patent attacks.

No one ever accused The Reg of being a reputable, neutral IT rag, but all the venom and instant-negativity of this article seems more than a little biased. Google has shared its wealth, innovation, and IP in the past (for example: Android, VP8, web services, open source projects, and their web advertising exposure has helped may companies grow), they have done very well as a result of this, so it seems reasonable to expect that they will continue to behave this way, as a good corporate citizen should. If they said they will use their patents to help others, that is probably exactly what they will do.

On the other hand, the "proprietary twins" (Apple & Microsoft) seem intent on killing off every other corporation (including each other) with their constant patent threats and anticompetitive lawsuits. However, it is kind of funny to watch them trying to "band together" against Google (contrary to their natural predatory instincts). Just imagine how hard it must be for Jobs or Ballmer to mouth the words "trust" and "cooperate".

So, unless Apple and Microsoft are paying the bills, perhaps the Reg could give Google the benefit of the doubt, or at least write articles from a slightly less biased viewpoint?

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Pint

yeah, that article seemed a bit over the top

though Google has been really sloppy about the patent law issues.

Of course patent law is a childish mess, but that's the mafia-rule of the land, so unless you're in blessed asia, you can't ignore it

Well, if vendor interest for Android really does implode, I hope vendors like Samsung, HTC, Sony, are moving to MeeGo, and not crappy M$ windphone, or else, I'll be forced to get out of smartphones alltogether with only the choice of walled garden and walled ghetto.

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They know

Oh those partners have been briefed with exactly what to say, its no surprise:

Peter Chou, CEO, HTC:

We welcome the news of today's acquisition, which demonstrates that Google is deeply committed to defending Android, its partners, and the entire ecosystem.

Bert Nordberg, President & CEO, Sony Ericsson:

I welcome Google's commitment to defending Android and its partners.

Jong-Seok Park, President & CEO, LG:

We welcome Google's commitment to defending Android and its partners.

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Meh

I know!

They could all sign up for Meego....oh wait....

This is somewhat troubling news. My Nexus One is a faithful and solid little beastie - not the fastest but never crashes. My next phone will probably be a Nexus S. My first Android phone was the Motorola Milestone and the build quality was lacking to say the least. Not sure how well it will bode for Google's supposed flagship range if it's being made by the same people.

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Anonymous Coward

"defending Android and its partners"

Defending its partners? What with? a jolly good shafting...

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With lots and lots of patents

Motorola pretty much invented modern mobile telephony, hence must hold a bunch of critical patents.

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Alert

Defending Android and its partners???

Defending Android and its partners??? Not very likely.

Based on Google's recent behavior, Yes, Google will defend Android - but only at Motorola.

LG, Sony, et all will get the short end in the form of late releases. Of course, Android firmware engineers that sit down with rivals can pass on their phone plans on to Motorola.

What OS will everyone else go with now?

(Microsoft enters Stage Left)

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I expect it boils down to this

HTC et al are getting picked off one by one because Microsoft / Apple can threaten them with patent lawsuits and their partner Google hasn't got much to throw back the other way. By buying Motorola they would have a veritable raft of patents that they can fight back with. So it affords some protection to everyone in the Android camp.

I don't know what Motorola aside from patents has to offer Google. I joked the other day that Nokia and Motorola should merge so they could fail everywhere. Motorola really is a has-been provider in Europe and foundering elsewhere. It's kit is uninspiring and/or very expensive and the lack of updates is frequently commented on. Maybe Google intend to use them for Google branded phones and tablets and it's therefore seen a good fit for the long term.

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Alien

Translation

"I, for one, welcome our new chocolate factory overlords."

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Anonymous Coward

mobile telephony patents

Question is, do the significant patent threats to Android come from mobile telephony IP space or from elsewhere (e.g. Oracle and Java).

It would be tempting to assume that Google have thought about this and that their Moto purchase ("thanks for all that IP chaps, close the door on your way out, kthxbye") reflects their need for a big bat in the upcoming patent deathmatch. But then again.

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"oh wait" what?

Meego is the angle I thought of. I dunno what your "oh wait" was - Nokia dropped out, but Meego's still running. Admittedly mostly from an IVI and tablet angle, but this could well give at least one other major handset manufacturer sufficient incentive to crash the Meego party.

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Anonymous Coward

Meanwhile back at headquarters ...

The CTOs are busy figuring out which platform to move to in the next year or so as Google completely takes over the Android handset market.

Really, who would want to build Android devices to go up against Google's own Android devices? This could actually end up killing Android in the long run.

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Not really

No they didn't. They were the last in the digital era and their first release was a failure; one carrier sold it and pulled it shortly thereafter. All the other carriers is failed to pass the network tests. They were also late to the smartphone market as well. See a theme there? They are not innovators and focused on analog and then CDMA. They have done very little to truly modern mobile telephony.

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Windows

@Joe K RE "They know"

Yes, such choral recitals from a very obvious communal song sheet do have a tendency to arouse a certain degree of (understandable) cynicism. However, it may also reflect a certain degree of truth here inasmuch as they (the other OEMs) may not like the situation but that they may very well understand that Mountain View felt that it had no choice and that (to some extent) it *may* help Google to support its OEMs when the next cloud of sub-orbital writ delivery systems start taking off from Cupertino.

Although, I also have to say that it may very well be that events of the last year (Nokia-MS alliance and now this) portend a shake up and restructuring in the mobile communications and computing market that we might not quite have anticipated as recently as a year ago.

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JC_
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Elop & Nokia

Not such a bad move after all?

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You've just broken the first rule of mobile OS commentary...

You used the word "Elop" without the mandatory "trojan horse" reference.

;-)

I'd agree - having gone with Google would now leave Nokia in the same soup as Samsung or HTC.

Whatever way this is spun, it's bad news for the other Android vendors; now Motorola will have an inside track on upcoming Android development, and Moto will get what Nokia demanded (and were refused): the ability to influence the development of the OS. Android will no longer be a "one size fits all" OS (if it ever was); soon you'll need a Motorola device to get optimum performance.

Outside of the US, Motorola's sales are not worth the potential harm this acquisition will cause - pissing off Samsung in particular may backfire badly on Google. Samsung are still (barely) a Windows Phone licensee, and they're playing a long game with Bada.

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Windows

@JC RE "Elop & Nokia" Ssssh, you are not supposed to say such things here.

You are supposed to repeatedly howl the following:

1. Nokia has been BORGED.

2. Elop is Micro$oft's Bum Boy

3. Bye, Bye Nokia.

Didn't you get the memo?

Memo to El Reg, can't we please have a satire icon, hmmm?

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Coat

Borged? What are you talking about?

Nokia's a finnish company, and has nothing to do with Victor Borge, who was from Denmark.

Dangit, now I'll have to reread the article with phonetic punctuation.

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JC_
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Elop, Elop, Elop

Only 8 negative reviews to 4 positive - where've all the Android-fanboys gone? ;)

Seriously, how would it look for Nokia if they'd signed up to Android and then this had happened? No doubt the existing Android phone manufacturers are re-evaluating their options - there's not much point in helping your competitor.

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WTF?

All about the patents?

With all the hassle Android has been getting about patent infringement, you have to wonder how much of that $12.5bn is for IP rights they can use to counteract Apple and Microsoft's lawyers.

Aside from that, it's an odd purchase; after the debacle of Nexus One, you'd have thought they wouldn't bother, but maybe the issue wasn't so much Google making a phone as the way they half-heartedly marketed it.

Time will tell; the smartphone & table market is still relatively new and there's time for a lot of changes to unfold.

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Facepalm

re

Debacle? You don't know much,do you. The phone did exactly what it was supposed to do and performed admirably. It was a proof of concept for Android and it convinced all other phone makers to endorse it as a platform.

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RE: All about the patents?

the debacle of Nexus One was started by Motorola. This is payback on Google's behalve!

Now the following scenarios could unfold.

Either Google kills off Motorola completely and indeed persuis it's initial goal to produce one reference phone which is to be commercially available every year. This phone is to be made by one of it's "partners" (the ones that dont complain that is)

Or Google will eventually downscale it's "partnerships" and become a full-time competitor to Apple with both hardware and OS in their own pocket (just like Apple and Nokia used to be).

This means that the only available "open" OS to off-the-shell ARM-based smartphones will be Windows Phone. The word "Open" here is, open for phone-manufacturors to purchase and put on their devices.

Unless some would be tempted to use Symbian and/or Meego. Perhaps Nokia was bit to quick to disband it's Symbian workforce.

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Mushroom

Not too quick

Given how bad Symbian is and how much of that is the fault of the group developing it I'd say disbanding it happened too late not too quickly.

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Well...

I guess beta level chip designs and firmware patches every 3 days will now become the norm ;)

Pity they didn't buy Nokia.

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Anonymous Coward

Why pity

Nokia has its own corporate culture which is neither here nor there. It is one of the examples where consultants tried to improve the "business orientation" of the R&D and destroyed both the R&D and company in the process. It will take someone with the Czenghis Khan complex to fix that mess and Google clearly does not fit the bill.

Nokia is deeply entrenched in defending a number of delusional business models in telecoms like IMS. These models put the operator in the driving seat of any billing process and are fundamentally incompatible with the ideas behind app stores and putting the phone vendor in control of billing.

Nokia carries a big load of "legacy phone" baggage in having a significant part of its revenue coming from S40 platform and in developing countries.

All of that does not fit Google plans. Compared to that Motorola is a rather neutral option. It can be assimilated and does not carry a big chunk of legacy baggage. It already got rid of it.

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Linux

Where will they go?

Joining forces with the Linux Foundation and Intel to promote MeeGo devices could be an interesting "fuck you" from the hardware boys to both Google and Microsoft (not to mention Nokia).

It will be interesting to see if Google can maintain an independent software business in parallel with it's hardware business - this is where Nokia failed with Symbian. However, if Google can pull it off maybe Microsoft will finish the job and snap up what remains of Nokia.

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Anonymous Coward

"But where will they go?"

I heard Meego was going cheap...

or maybe Elop is right and only MS and WinPho7 can compete with the might of the Googlemeroid. That's compete for the scraps left by Apple, natch.

does anyone care about webOS and more to the point, does HP license it to OEMs?

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@enigmatix

Aha, you obviously do reckon that Elop is right as you've gone on to reproduce what may well be the fundamental flaw in his WinPho strategy with your WebOS inquiry.

In the real world, "does anyone care about webOS" is *waaaaay* more to the point than whether or not you can get a license for it....

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Meh

a

"But once Google has a preferred hardware partner that it owns outright, it is hard to see why its former partners – now rivals – would wish to continue with Android.

Expect to hear a splashing sound as dozens of OEMs dump their green plastic robots overboard. But where will they go?"

Why would they ditch it? Unless Google starts pissing about and pre-releasing stuff only to Motorola, the change is that Google now has a LOT more skin in the game, and a lot more ammunition to defend Android. Like I said, predicated on Google not pissing about and favouring Motorola. Given their model's driven by advertising, rather than hardware, I can't see them trying to shut the ecosystem like that.

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(Written by Reg staff) Bronze badge

Re: a

Maybe it matters less than it once did, but you don't rely on a key supplier that directly competes with you. It's not a level playing field.

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Anonymous Coward

The $12.5 billion fact

Do you think Google just dropped $12.5 billion on Motorola, a company which was bleeding money - may mean future cash injections - as some sort of defence of the platform and won't play favourites?

So Google will have to recoup that investment on advertising alone?

I'm sorry I don't believe that for one minute.

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Anonymous Coward

Er ... "don't rely on a key supplier that directly competes with you"

Apple - Samsung ?

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Anonymous Coward

@AC 13:38

See how that turned out.. Only proves Andrew's point.

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WTF?

No

"So Google will have to recoup that investment on advertising alone?"

They intend to recoup it by not having to fend off patent trolls.

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Re: a

This has parallels with Google & Mozilla. Google have their Chrome browser, with Mozilla Firefox being one of their main competitors. Google still pump tens of millions of dollars into Mozilla while Firefox tries to take market share from Android. Why? Because Google win either way, their market is advertising and they get a slice of the pie from either browser.

As long as you make more money than you would otherwise, jumping into bed with a competitor is often not the worst thing to do. Strengthening the market sector you're in may benefit others in that sector, but as long as it take share from other sectors (i.e. Apple) you're all quids in.

Companies like these will always have had a plan B at the back of their minds, even before this news, as Google could have messed up with Android in many different ways. It was never a proven platform. But at the moment, and perhaps for the foreseeable future, Android is still a better bet than the alternatives (Windows, Meego etc.). Google has the potential to drive a lot of advertising dollars its way through a diverse, happy Android ecosystem, probably a lot more than Motorola hardware sales could bring in. Google, and these other manufacturers, know this. Everybody wins (in the Android world, at least) if there is plurality in the Android harware market.

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YES!!!!

An excellent and timely acquisition! Not only does it give them a greatly expanded hardware backbone and expanded IP portfolio, but also gives them access to some of the most talented communications engineers on the planet.

Purchasing Nokia could be next as their step if the stock price keep plummeting. They have a market cap of 20 Billion right now which is a deal as long as they get rid of the old guard that gutted the company so badly.

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Share price up

Nokia's share price has gone up 9% since the announcement. The markets obviously expect them to be next. A good chunk of mobile telephony patents are held between Nokia and Motorola.

It's a sad day when the phone market descends into patent trolling. This is going to cost us all.

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Headmaster

@Neill Mitchell RE "Share price up "

I may be mistaken but I do not believe that MS presently believe that it is in their business interests to actually *buy* Nokia. Why should they when they can get Nokia's divided attention (given Nokia's situation in the market) *and* that the combination of Nokia and MS have little to fear from the "Patent Wars" that have recently been declared by The Man from Cupertino? Google was in a *very* different situation, a situation where they *badly* needed Moto's patent portfolio, *that* is what this is all about.

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FAIL

Odd conclusion

"But once Google has a preferred hardware partner that it owns outright, it is hard to see why its former partners – now rivals – would wish to continue with Android."

Wow, 10/10 for conjecture.

Every now and again, different manufacturers are selected to produce the flagship model (HTC, Samsung, LG). This doesn't result in all the others throwing a hissy fit.

Neglecting manufacturers other than their own subsidiary would dismantle the Android community. Any particular business reason for that?

Compared to ads, Android isn't a huge moneyspinner for Google. It's about establishing a platform for their services and advertising that they can't be locked out of, like Chrome.

Most other commentators have reasonably figured that the 24,500 patents might have something to do with it.

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Headmaster

@OhFFS RE "Odd conclusion"

I agree with you. Whilst one cannot discount the possibility of poor judgement completely I have to say that I doubt whether Google seriously intends to shaft the rest of their industrial partners. Any more in fact than it is likely that MS will because of *their* alliance with Nokia. In both cases such behaviour would be unbelievably stupid. I have no doubt that their other OEMs (whether they are Android or WP7 OEMs or both) are a bit nervous but I suspect that both Google and MS will regard it as in their own best interests to reassure their various partners. This has (IMO) far more to do with drawing the battle lines with regard to the coming Patent Wars (Armageddon II coming to a cinema near you). What will be left on the battlefield in the aftermath is not something that is easy to predict.

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Anonymous Coward

Motorola's rebel attitude

Wasn't Motorola the biggest Android rebel, always poking at Google by going with Bing as the default search engine for some of their Android phones and entering into a deal with Skyhook location instead of Google's own service?

Should be interesting to see how the two work out. Google may find that Motorola can be quite the beast to tame.

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Anonymous Coward

I think you'll find

that the choice of search engine in the Motorola Droids was down to the carrier, Verizon, who had their head turned by none other than Microsoft offering bags of cash (surprise, surprise).

As it happens, Verizon were pretty much the only reason Motorola remained afloat.

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Anonymous Coward

@AC 14:23

That may be so, but what about the Skyhook contract?

Or Motorola Mobility's own CEO Sanjay Jha blaming crappy Android apps for poor phone performance:

"some 70 percent of returned Android devices are brought back for this very reason — apps are decimating performance, and in turn, the user experience." [1]

Doesn't sound like an easy to tame crowd.

[1] http://thisismynext.com/2011/06/02/motorola-ceo-blames-crappy-apps-poor-phone-performance-blur-save-day/

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Stop

I guess there's always the chance...

...that by buying the Motorola IP portfolio Google may be able to support it's Android partners and prevent such shenanigans as Apple blocking Samsung from selling the 10.1" tab in Europe. Motorola have been around a long time and have excellence in radio design so maybe there is a quid pro-quo coming somewhere along the line.

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How?

How would this in any way stop Apple blocking the Tab's sale? That order was on the basis that the Tab looks an awful lot like an iPad, and nothing to do with any patents/copywrite that Android may or may not infringe.

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nope

nope. it was on the basis that the Tab looks an awful lot like a generic picture of a tablet (not an ipad) that Apple filed in 2004. read the legal docs, don't listen to the PR bods.

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Relevance to Oracle Lawsuit?

This may help Google with their Oracle lawsuit. Since Motorola is a J2ME licensee, then as a result of this purchase, Google becomes one also. The still would have to pay damages and such, but at least they would now have a license to ship Java in mobile devices.

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Java ME Vs Std Edition ?

I thought one of the big problems with Java (for Google) was that Sunacle would only allow Java ME on mobiles, whereas Google wanted the full-fat PC oriented Java Standard Edition ?

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Relevance to Oracle Lawsuit?

Er, that would be none as the whole thing's about the fact that Android eschews implementing J2ME in favour of an allegedly illegal[1] implementation of full-fat Java.

[1] If you're Oracle.

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