Tuesday, August 16, 2011

Google the reluctant mobile phone manufacturer

After approvals are given by the government regulators, Google will officially be in the hardware manufacturing business. Albiet, it will be a reluctant player in the field. Why did Google make the bid to buy Motorala?

The Patent Wars. Apple and Microsoft have been suing manufacturers of Android devices. Google acquisition of Motorola gives it 24,500 patents (Source: PCWorld), approved and pending to fend off attacks on Android. 

And the Patent Wars. Motorola wanted to be bought. Despite the reprieve brought on by the Android Operating system, Motorola handset division was in trouble. Formerly the second largest handset maker in the world, next to Nokia, by 2010, Motorola's global market share had dropped to seventh place.

Just a few days ago Phone Arena reported, CEO Sanjay Jha hinted at a conference presentation that Motorola might start asking for royalties from other Android manufacturers:

"I would bring up IP as a very important for differentiation (among Android vendors). We have a very large IP portfolio, and I think in the long term, as things settle down, you will see a meaningful difference in positions of many different Android players. Both, in terms of avoidance of royalties, as well as potentially being able to collect royalties. And that will make a big difference to people who have very strong IP positions.

Motorola wanted to be bought, and let Google know that it was in a position to hurt Android. If Microsoft had been the buyer, it would probably have been the end of Android.

The interesting thing to see now, is what Google does with Motorola.

Where the Android community stand. From the standpoint of Samsung, HTC, Sony Ericsson and LG, Google's pending acquisition of Motorola will allow Google to better defend Android and prevent Motorola from claiming royalties from other Android manufacturers (I do not think a Google owned Motorola would do this at least), but it does reinvigorate a competitor that was loosing the battle. 

Should Google's run Motorola well, Motorola phones will increase their market share, which will eat into the market share of  other Android manufacturers. Google which has also been trying to push Android manufacturers to update their products and recently obtained a commitments from major Android manufacturers to support their products for a period of 18 months after release (hardware willing of course) will now have a stick, and not just a carrot to offer. Google can use Motorola to set the standard for support. Android manufacturers won't jump ship, but will be keeping a keen eye on Google and Motorola. They really have no reason to panic, except for Motorola and Sony Ericcson, the major Android Manufacturers all already produce Windows Phone 7 handsets.  Samsung also has its Bada OS. In a way, they have been smartly hedging their bets from the start.

As for Google, it is fighting for its future, placing a 12.5 billion US dollars bet on Android, over and above what they have already spent and now has to figure out what to do with its new baby. 

If you are among the Android faithful, Google just spent 12.5 billion US dollars to back up and defend what you already bought. Google has your back.

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