The acquisition of Motorola Mobility by Google could be seen as the first time ever that an Internet company acquires an established hardware business. We are likely to see more acquisitions of this kind in the future, thanks to the strong investment force and cash availability of Internet giants, such as Google, Facebook or Twitter, that have the potential to absorb the most established tech businesses even beyond telecoms and media. As the telecommunications business converges with the multimedia business, integration is becoming imminent and Internet companies are better-positioned to make the new converged word a reality.
There are three obvious reasons for Google to acquire Motorola Mobility.
The first is Motorola’s strong patent portfolio. Bearing in mind that Google has just lost the bid for Nortel patents, the acquisition of Motorola will enable the software giant to inherit an essential base of patents that could be used as a trading power in the IPR landscape while easing the way for innovation.
The second reason is Motorola Mobility’s long history as a successful hardware integrator and a champion in the mobile industrial design world. These two qualities will enable Google to create a superior user experience through tight software integration. This is becoming important in a time where the competition is now evolving from an OS battle to ecosystem war.
In this war, two approaches have emerged: The open approach championed by Google around the Android ecosystem, and the vertical approach that is led by Apple and RIM and was also recently adopted by Microsoft.
Although the open approach seems to be winning, its future is under threat because of the potential technology fragmentation around it, the brand dilution, and the lack of effective business models that could be adapted to the mobile environment. Therefore, Google could no longer ignore the threats coming from the companies taking the vertical approach.
The third reason for this acquisition could be linked to Google’s ambitions to enter the home-networking market via Motorola’s connected-home business. If Google manages to create enough synergies between Moto Connected Home and its Android framework, this could make the company as a leading player in this nascent but lucrative business.