Google + Motorola — What Does It All Mean?

The headlines exploded earlier today as Google announced its plans to purchase Motorola’s mobile phone division, Motorola Mobility, for $12.5 billion.

The news is still sending shockwaves through the mobile tech industry, with many wondering what this all means and what the ramifications of it will be.

First off all, this doesn’t mean that Google’s relationship with other manufacturers will change. In fact, Google has made it clear that they intend to operate Motorola Mobility as a separate entity, with the same status as any of their other hardware partners. They even made it clear that Google’s official Nexus devices won’t necessarily be Motorola-sourced, as some had speculated initially.

According to a quote from Google’s Andy Rubin:

“We have this strategy where we have this Nexus program, and we have this lead device strategy. That strategy has worked quite well to help focus the team.

What we do is that we select each — around Christmastime of each year — we select a manufacturer that we work very closely with to release a device in that time frame. That includes, also, semiconductor companies and all of the components that go in the device.

Essentially the teams huddle together in one building. They jointly work in these development efforts — they go on for nine to 12 months. And ultimately at the holiday season, or right before it, devices pop out that are based on this effort.

We don’t expect that to change at all. The acquisition is going to be run as a separate business. They will be part of that bidding process, and part of that lead development process. And obviously Android remains open to other partners to use as they are today.”

So, the next official Google Nexus phone could be from anyone. However, considering the fact that HTC and Samsung already had a turn, Motorola would likely have been a prime contender for the next one regardless of this acquisition. Rubin might not admit it, but I wouldn’t be surprised if the next Nexus came from Motorola Mobility anyway. It is good news to see that Google intends to keep its working relationships intact.

I’m sure that comes with a sigh of relief to other manufacturers. According to various CEOs quoted on Google’s press page, they’re supporting Google’s move, saying it was necessary to “defend Android and its partners.”

In a nutshell, the acquisition here has much less to do with Google wanting to manufacture their own phones as it does with Google wanting to be in control of more patents for legal reasons. In case you haven’t noticed, the mobile tech industry has recently been plagued with petty legal battles over patents. Microsoft, Google, Apple, HTC, and more have all made headlines, with the most recent story being Apple’s successful banning of the Samsung Galaxy Tab in most of Europe due to its resemblance of the iPad.

Motorola, being the seasoned phone manufacturing experts that they are, have quite a few patents under their belt, some of which could be used in a counter-suit threat should any competitors (*cough* APPLE *cough*) come knocking on their door. In a way, Google’s purchase could very well help them protect their partners, rather than compete with them.

This news didn’t fare so well for InterDigital Inc, however. InterDigital is a company that uses its extensive list of patents in wireless technology to make most of its income, whether that means licensing or winnings from infringement lawsuits. Back in July, it was rumored that InterDigital was looking at a possible sale of the company, and that Google was likely one of the bidders. Upon the news of the Motorola purchase, InterDigital’s stock dropped 23 percent.

Meanwhile,  the exact opposite happened to Nokia, who’s stock jumped over 10 percent after the news. Nokia, once the leader in phone handsets, has quite a venerable amount of patents of their own, yet has been losing market value fast as they lose their foothold in the mobile industry. After rumors surfaced of a possible purchase by Microsoft or Samsung, the sale of Motorola to Google has sparked new interest in the value of Nokia as a company.

The bottom line here is that there’s no reason to start crazy speculations of a world where the Android-powered StarTac is king or making up celebrity couple nicknames for Google/Android and Motorola just yet (Androiola? Motogoog?). Not that much is changing in the realm of handsets, really. Well, not much aside from Google perhaps having more of a say regarding the next version of Motoblur, but that’s likely a good thing.