Why the Google-Motorola deal is bad news ?
Google’s $12.5 billion all-cash acquisition of Motorola Mobility, the mobile arm of the pioneering phone maker, will prompt all the other Android phone suppliers to assess their positions. While Motorola’s patent portfolio will strengthen Android, which is good, it will also mean that Google is competing with its own customers: manufacturers such as Samsung, Hp 530 battery ,HTC, LG and Sony-Ericsson. This is always bad news, which means it could be good news for Microsoft.
Google said in its conference call today that it will run Motorola as a separate business, but in reality, it’s either going to bankroll its likely losses or close the company down, costing many thousands of American jobs. Politically, that’s unlikely. Indeed, the other Android phone manufacturers will already have figured out that the money that Google makes from advertising will enable it to cross-subsidise Motorola or even to give its phones away. Would you want to compete with that?
This could be good news for Microsoft. As Forrester analyst John McCarthy was quick to point out in Google Motorola Mobility Deal Leaves Android OEMs HTC, Samsung,Dell inspiron 1520 battery and LG Out In The Cold: “Forrester can hear Steve Balmer (sic) and company pitching the Asian players on how Microsoft is the only hardware agnostic player left and that HTC, Samsung, and LG should increase their support for Windows Mobile (sic) as protection against Google favoring its own hardware play.”
A patent boost by http://www.batteryfast.com
The Motorola deal certainly makes sense for Google, which has a very weak patent position compared to rivals. It foolishly declined Microsoft’s invitation to join the consortium bidding for Novell patents [corrected], and then it bid against the Rockstar consortium, whereby Apple, EMC, Ericsson, Microsoft, RIM and Sony picked up Nortel’s patent portfolio for $4.5 billion. Buying Motorola Mobility is therefore a quick way for Google to buy 17,000 patents, as Ben Bajarin suggested last week in a “purely speculative” post, Why Google Should Buy Motorola.
But will this actually help Samsung, HTC, LG et al? Microsoft is already suing Motorola over patents, and Motorola has countersued, so the two companies might have been expected to arrive at the usual sort of settlement: a cross-licensing agreement with a small cash transfer to whoever has the most important patents. That could still happen, but it’s hard to see any agreement extending to other Google licensees, for whom Google provides no patent protection.
In fact, a cross-licensing dell wr050 battery deal between Microsoft and Motorola Mobility would give Motorola Mobility yet another financial advantage over other Android phone suppliers, some of whom are already paying Microsoft fees to use Android.
A similar argument applies to Apple lawsuits, only worse. Microsoft has been happy to license its technologies to rivals even if this helps them to compete against Microsoft products. For example, Microsoft licensed the technology to enable Apple and Nokia to connect their mobile phones to Microsoft Exchange email servers. However, Apple doesn’t appear to be interested in these small revenue streams. Its litigation against rivals such as Samsung (one of Apple’s biggest and best component suppliers) seems intended to drive it out of the market and grind it into dust.
Oracle attacks
Google is also under direct attack from Larry Ellison’s Oracle software corporation, which owns Java following its acquisition of Sun Microsystems. Google failed to license Java and created what is, in Oracle’s view, a knock-off that infringes Sun’s patents. At the time, Sun boss Jonathan Schwartz welcomed this, saying: “I just wanted to add my voice to the chorus of others from Sun in offering my heartfelt congratulations to Google on the announcement of their new Java/Linux phone platform, Android. Congratulations!” But Ellison is best buddies with Apple’s Steve Jobs and is evidently taking a different view from Sun’s pony-tailed former CEO.
The GPL of death?
Finally, there’s the potential GPL problem with the open source Linux on which Android is based. In a blog post today, patent expert Florian Mueller said: Most Android vendors lost their Linux distribution rights, could face shakedown or shutdown. Basically, GPLv2 says that not meeting the compliance requirements at any time “will automatically terminate your rights under this License”, which means that most Android vendors could now be sued.
Buying Motorola Mobility will help alleviate Google’s patent problems, as mentioned. However, it won’t necessarily solve the problems faced by Android phone manufacturers who are being sued by Apple and/or Microsoft. Nor, probably, will it help Google keep the Oracle wolf from the door, or remove any problems with GPLv2.
Under the circumstances, phone manufacturers would have to be either very brave or foolish to put all their eggs in the Android basket, but how many non-Linux alternatives do they have? Apple isn’t going to allow them to use iOS, and neither HP/Palm’s WebOS nor RIM’s QNX is openly available for licensing, which leaves Microsoft’s Windows Phone as the main contender. I suspect this will prompt a lot of new hardware development, though whether this will result in any hot-selling phones remains open to considerable doubt.
What do you think? Please leave your thoughts in the comments below.
Processing your request, Please wait....
