After being pushed into a corner by the Rockstar consortium that acquired a portfolio of 6,000 patents from Nortel Networks, Google has upped the ante in the smartphone arena by acquiring Motorola Mobility for $12 billion.
Google, on its official blog, announced its plan to acquire Motorola's portfolio of mobile devices and tablets, wireless accessories, end-to-end video and data delivery, and management solutions, including set-tops and data-access devices.
The deal is a tectonic shift that will alter the smartphone landscape dramatically, considering that Google heads the development of Android OS.
The immediate concerns the deal raises pertain to the future of Android's openness. Google attempted to assuage such fears, stating: "This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business."
Google made no bones about its intention to use Motorola's portfolio of patents as a shield against the Rockstar consortium, which includes high-profile members Microsoft, RIM, Sony, Apple, EMC and Sony Ericsson. Google underscored its patent-driven motivation to acquire Motorola saying: "Our acquisition of Motorola will increase competition by strengthening Google's patent portfolio, which will enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies."
Google has spearheaded the growth of the Android OS since 2007 by launching pure Android Nexus phones in conjunction with OEM manufactures like HTC and Samsung. Thus, it was able to address its hardware expertise deficit by partnering with OEMs to deliver well-integrated Android phones to set a precedent which other manufacturers could follow.
Having acquired Motorola Mobility, Google could possibly eschew its close partnership with Samsung and HTC to deliver the next rendition of the Nexus phone.
In conjunction with Google, Motorola had released the first version of Google's tablet specific OS, the Android Honeycomb, on Xoom in January. Motorola has adopted Android as the sole OS for its smartphone. Also, Motorola brings a successful portfolio of Android devices like the Motorola Droid series, Atrix, Photon and upcoming Droid Bionic phones into Google's stable.
And even though Google states that its relationship with other Android partners will not be affected, the deal raises questions because of the way Google associates with its partners.
Android's open status has been under review over charges that Google maintains a certain level of control over the OS implementation. Android is free for developers building applications but it comes with strings attached at the OEM end of the spectrum.
Google applies certain control tactics around Android handsets. Since Android has gained traction among phone manufacturers as an OS that gives room for differentiation at a low cost, Google uses this to its advantage. It makes available specific private code lines which are 6 months ahead of the public Software Development Kit (SDK), to the OEM manufacturers working on Android models, which allows them to stay competitive through differentiation. Thus it keeps the codes closed from non-partnering OEM.
Another area in which it maintains control is the speed at which it rolls out new updates to Android. Within a span of two years, Android has moved from version 1.6 to 2.3. Thus to keep pace with the evolution of Android OS, manufacturers have to stay close to Google to incorporate new features and patches for bugs.
Also, the SDK given to OEMs is not complete as they still require codes to add must-have features like Gmail, Gtalk, location services, radio integration and the like.
In the light of these factors Motorola Mobility will gain a competitive edge over other Android partners since it now becomes a Google asset. And while Google claims that the acquisition is an attempt to protect itself from patent infringement lawsuits, the fact that it has acquired a company with 80 years of phone manufacturing legacy, along with a host of top selling phones, means it will certainly attempt to generate returns on its $12 billion investment by furthering Motorola's product portfolio -- making it more competitive.