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Google Motorola: 8 crazy facts, and 3 possible outcomes

In General on August 18, 2011 at 20:07

Motorola - AndroidWell, i said Google needed to do something bold about Android, and that was bold! Spending USD12.5 billion on a company that is losing lots of money is either madness or masterstroke. The internet has hardly stopped buzzing about this. Here are the key points:

1. USD12.5 billion is nearly 50% more than the USD8.5 billion net profit that Google made last year.
— that’s a lot of money, and how are Google going to make that money back, given that 2.

2. Motorola lost money last year
— there is an element of desperation on Google’s part

3. Motorola owns 24,500 patents
— Google lost out on Nortel’s patent portfolio after bidding billions. 2011 is shaping up to be the year of patent wars, particularly in mobile. Android is thought to be vulnerable to attack.

4. The courtship lasted 5 weeks
— that’s a very short time for an M&A of this size. Another sign of desperation?

5. The breakup fee is USD2.5 billion
— that’s right, if for any reason, the takeover doesn’t take place, Motorola pockets all that money. Who do you think had the upper hand in negotiations.

6. The Android licensees, Samsung, HTC, etc, backed the move
— in scarily similar language. Scripted response of people who are scared to upset the boss?

7. Google is defending Android
— for the wider platform, or their own good?

8. Motorola has nearly as many employees as Google
— how can they all be absorbed, practically and in terms of the Google company culture?

Where will Google go from here?

Here are 3 possible outcomes.

Continue running Motorola as a handset maker
– Apple did it, but they had experience of making hardware. And Motorola has the disadvantage that it’s in very poor health. And existing Android licensees may not like it. But it could allow Google to equal Apple in mobile, at the expense of not building a ubiquitous platform (losing partners such as Samsung and HTC).

Sell the handset business, keep the patents
– this helps the Android platform, defending, in Google speak, so that partners can make better handsets without having to worry about lawsuits etc.

Move more heavily into TV
– Motorola has a huge proportion of the TV set top box market, which could be an in to the TV market.

Time will tell which, if any, of these, happen.

Other takeaways?

Microsoft must be very happy. Windows Phone is looking a lot more attractive to handset makers.

Apple will be surprised, wary, but not scared. It will just keep plotting its own course.

Larry Page has shown that he is not afraid to take big decisions. This points to a new age of Google.

Anthony Green — August 2011

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