The tech world woke up to some stunning news: Google is buying Motorola for $12.5 billion. The software giant is buying the iconic mobile device maker, if regulators are sanguine about the deal, at least.
Most people think Google made the move for Motorola's 17,000 patents, not its actual hardware-making business, though the latter is a nice bonus.
The deal makes a lot of sense, especially given how much Google was willing to pay for the Nortel patent cache that Microsoft and Apple snatched up. In fact, one blogger, Staska at Unwired View put the whole thing together about two weeks ago. He nailed Google's rationale and made a deal sound imminent. It was. Here was his evidence, which was all lying around in the public domain.
- Google needed the patents. "Motorola's mobile business was hurting, especially relative to its Android-using competitors. "While Motorola's 80% Android device unit growth this year might seem impressive on the surface, it is actually very low. Their main Asian rivals are now growing much faster (HTC at 124% a year and Samsung at 400%) and from a higher initial unit base. Thus eating away at Motorola's market share and profits. After a few profitable quarters MMI started losing money again."
- Motorola's CEO signalled to investors that they might be ready to sell. " Staska quotes Motorola's CEO saying, " Do we expect Motorola to be an independent company? I don't know yet." Later, the CEO says he could see selling to a software outfit. Staska says, "And that "software outfit" they are talking about - can they mean anyone BUT Google here?"
- Motorola started talking up using their patent portfolio against 'new entrants,' i.e. Android. "[Motorola CEO] Sanjay Jha might be sending a veiled hint/threat to Larry Page: 'Just buy us, or else!'"
- The Motorola hardware R&D team would help Google improve Android. "Google will get a world class mobile device hardware R&D team, that can help push Android limits with a Nexus line. They then could use their Nexus devices as a state of the art reference models."
- Google could carve up the rest of Motorola to make some money. "As for the rest of Motorola business - the sales&logistics organizations, set top box business, etc; - they can sell it in pieces and make some nice profit in the end."
Staska concludes, "The more I think about it, the more Google buying Motorola makes sense. I'm actually struggling to find any reason for Google not to buy Moto. Can you name one?" It appears Google CEO Larry Page couldn't, even if he had to pay a 60% premium to the company's market price.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.