The Story of Googlemoto : The Bright Side
The breaking news around town these days is Search optimizations and Advertising giant Google acquiring Motorola Mobility Inc. After almost a year of anticipation, Google finally announced last week on 15th of August in its investor relations blog that it acquired Motorola Mobility Inc. (Listed as MMI at New York Stock Exchange) for approximately US$ 12.5 billion. Google bought Motorola paying $40.00 per share in cash which is actually 63% premium to the closing price of Motorola on Friday. Digging the money out of its 39 billion dollar cash reserve, this deal marks Google’s biggest acquisition ever. It is in fact quite interesting to see such humongous alliance activating as short as six months after Google present CEO, Larry Page replaced its former CEO, Eric E. Schmidt who acts as the current Executive Chairman at Google.
“This deal also brings a lot of value and confidence to the Motorola Mobility Stake holders” says Sanjay Jha, the Chief Executive Officer of Motorola Mobility Inc. Motorola Mobility houses top notch computer hardware production lines around the globe that are administered and managed by 19,000 expert employees. Motorola Mobility Inc. has been literally the pioneer of research and development of Mobile Devices industry for the last several decades. From the earliest introduction of the portable cellular phone, Motorola Research’s name runs along with numerous inventions related to mobile communications, Cable Networks, and In-Home Product lines. Motorola have been part of several firsts of the most popular technologies in the world. According to its Official website, Motorola Mobility owns approximately 14,600 (yes, you read it right. It is Fourteen Thousand Six Hundred) odd grated patents out of 24,500 patents that are owned by all segments of Motorola. That is approximately 60% of the whole of patents owned by the company. Furthermore, they have around 6700 pending patent application worldwide.
The “GoogleMoto” alliance as I see, has an enormous impact on the technology industry. As common as every business deal that takes place in the arena of technology, this deal too has its perks and drawbacks. In this article, I will discuss the Bright aspect of this alliance.
Acquiring Motorola Mobility will provide Google with a marvellous opportunity to build a solid foundation in vertical integration of Android Ecosystem. Vertical integration is achieved when several segments of a supply chain unite under one owner in pursuit of a common goal. This means that Google can finally use the full potential of the Android ecosystem through planning the future products of Motorola in a more android friendly manner. This integration can also lead Google to a vertical monopoly in the long run if GoogleMoto’s Contenders like Microsoft, Apple, WebOS, HP (Google rivals) and HTC, Samsung, LG, Sony Ericson (Motorola rivals) do not respond timely.
Google, throughout its history has tried several times to enter the mobile hardware industry through products in the Nexus family. Even then, Google had to depend on mobile device manufacturers such as Samsung for the fact that Google did not have its own handset production unit. Not anymore, as Google now have control over one of the market leading handset producers in the world. Google manages to break free from its dependence on manufacturers finally. http://www.onlinemarketing-trends.com reports Motorola as the 3rd leading mobile OEM with 16.5% share of subscribers in the US as at January 2011. In the same survey, Google leads the Smartphone Platforms Category with a 31.2% share which is also a 7.7% increase over a 3 month time period from October 2010. Gartner Inc., a leading research firm also reports that the market share of Google Android to be 43.4% in the Quarter 2, 2011 followed by Symbian (Nokia) and iOS (Apple) Worldwide as per their report on August 11,2011. These statistics show a great opportunity for Google to ally with Motorola to build the next generation’s smartphone in near future.
The stupendous portfolio of granted and pending patents that Motorola Mobility processes is the cherry on the icing cake of this deal. As mentioned above, approximately 21,000 granted and pending patents on mobile and in-home products segment will be under ownership of Google when this acquisition comes to completion. This will unleash Google with enormous possibilities to look forward in dominating the mobile communications industry in the coming years. Now that Google has gotten its own Mobile Hardware Labs and Factories with state of the art equipment and 19,000 best hardware experts in the world, we can look forward for a flawless range of smartphones in the years to come. This deal certainly matches up Google with its main contender Apple who already got full control over both its iPhone and iOS Divisions.
In his blog post, Larry Page further explores the opportunities of Motorola being the market leader in Home Devices and Video Solutions business. This can be interpreted as one of the key interests of Google to take such a humongous bid on Motorola apart from its eager attempt to stabilize the patent war against Android. Motorola Mobility holds as much patents related to H.264 advance video encoding technology, MPEG 4 (a term we all are familiar with), 802.11 Wireless Local Area Network protocols, and Near Field Communications (also known as NFC) used for payments using smartphones, file sharing and etc… Statistically, Motorola proudly boasts about approximately 1,900 granted and 1,300 pending patent applications on Home business segment.
“Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.“
Larry Page, August 15, 2011
We can clearly see Larry’s vision in revolutionizing the home entertainment business segment with a GoogleMoto alliance. The union will actually facilitate an integration of the most advanced, yet protected technologies in Home Entertainment Hardware, Cable Broadcasting, Internet Protocol, Advertising, Service Provision, NFC and various other technologies. The opportunities and possibilities of products and services that can be provided in the home business segment are quite immense.
There too is a dark side of this alliance which I will discuss in detail in my next article. For now, I pray that the brighter side turns out to be reality. It sure is big and it sure will mark a new chapter in the information technology industry. It could be for better, or for worse. But the destiny sure lies on the future decisions of GoogleMoto alliance.