In what is viewed largely as a defensivemove, more valuable for its patent portfolio than its mobile devicemanufacturing capability, Google has purchased Motorola Mobility.Happy are the Motorola shareholders. Provided the purchase passesanti-trust scrutiny (and that appears likely), Google now has apatent bulwark against Apple, Microsoft, RIM, and others. Sincelosing out to this crew for the purchase of Nortel’s patentportfolio, Google needed better defenses to protect Android fromcostly licensing requirements. Most analysts expect the costlygambit to provide that protection.
The move also, of course, turns Google into a smartphone and tabletmaker. Owning Motorola means Google’s smartphones and tablets willbecome the de facto reference models for Android devices. A secondorder benefit of the acquisition could be (finally) a competitiveAndroid alternative to the wildly successful iPad. Thus far, no onehas matched the iPad’s elegance via Android. Google now has themeans to build a mobile ecosystem competitive to Apple’s verticalintegration of hardware, software, and services.
In terms of Motorola Mobility’s acquisition impact on payments,this should be good news for NFC-based endeavors. The acquisitionshould accelerate NFC deployment if Google’s serious about itsmobile commerce and wallet efforts. Google’s mobile commerce plansrely on strong NFC penetration. We should expect, then, thatMotorola devices should all be NFC-enabled. While Android has a 39percent share of the market, Motorola only has an 11 percent share(according to Nielsen). So it’s hardly a guarantee of NFC ubiquitybut it’s a good start. While it’s unclear what the impact will beon HTC, Samsung, and other Android device makers – Google declaresits commitment to Android as free, open source software – it’shighly unlikely they’ll dump Android in favor of Windows Phone anytime soon. That will put some pressure on these manufacturers toinclude NFC.
So, we see it as good news for NFC in the U.S. Google has added acompletely new industry to its portfolio. While it has someexperience with smartphone design (the Nexus S), manufacturing atMotorola scale is very different and notoriously challenging.Motorola’s recent history shows that as do the current troubles offormer market leaders Nokia and RIM. Unlike Apple, Google haslittle hardware DNA.
The acquisition would turn Google, which makesthe Android mobile operating system, into a full-fledged cellphonemanufacturer, in direct competition with Apple.
“This is an emphatic exclamation point that Google is a mobilecompany,” said Ben Schachter, an analyst with Macquarie Capital.”This is clearly a defensive deal, they were backed in a corner andthey had to protect the Android platform.”
