As you will no doubt read in reports in every other media, Google has ‘surprised’ the market by announcing its intention to buy Motorola Mobility activities for $12.5b ($9.5b nett of Motorola's cash). This was a 60%+ premium on Motorola’s previous closing price. Given that Motorola Mobility made a profit of just $76m in 2010, which ever way you look at it, it’s an ’impressive’ deal.
My views on this are:
1 – It proves, as if any HotViews reader needed any more proof, that the space to be is the Mobile Internet. The leaders here will eclipse all others within, perhaps, a very short period of time.
2 – Do you need to be in both the hardware and software parts of the Mobile Internet marketplace? Well, Apple seems to have blazed the trail here. Nokia has shown that without software you are an also-ran. Same applies in reverse to Microsoft.
3 – But by going into hardware itself, Google will doubtless ‘upset’ the many other handset players (though they profess otherwise) who thought Google Android was agnostic. Well, not anymore!
4 – But, bluntly, this might not even be about any of this. It might just be about patents. Motorola has about 17,000 patents (and some 7500 patents pending) relating to the mobile space. Recently Apple and Microsoft have been buying up patents (eg the $4.5b for defunct Nortel's patents) and using that ‘muscle’ to keep others out of the market. Just look at how Apple is keeping Samsung out of the European tablet market right now. Google effectively had none and was therefore very vulnerable to attack over Android. Could it just be that the $12.5b is justified on patent grounds alone? Could it just be that Google will let Motorola run an independent route (as they have said today) and, perhaps, just waste away? I really do doubt that Google has too much interest in manufacturing and selling mobile phones – there is too much money to be made in the advertising.
I think the last point is the most intriguing. Indeed, it would make one ponder about how Microsoft will react. We have speculated for a long time on HotViews that Microsoft should/would buy Nokia – rather than just the current operating system tie up. Nokia has the grandfather of all patent collections in the mobile field. Indeed their price now looks cheap on patents alone!
The future just got a lot more exciting.